Insights
Publications

California Supreme Court Clarifies Background Check Laws in California

8/27/2018 Articles

Employers which use background checks in their hiring process without obtaining written authorization may wish to review their practices. The California Supreme Court has rejected an argument that employers could not reconcile the state’s two background check laws: the Investigative Consumer Reporting Agencies Act (ICRAA) and the Consumer Credit Reporting Agencies Act (CCRAA). The Court concluded that complying with one act does not undermine the other – so employers must comply with both.

The issue raised was that employers may run credit checks under CCRAA without written notice, but the broader ICRAA requires both notice and consent. Many credit checks may intentionally or inadvertently gather information that is covered by both laws.

In Connor v. First Student, Inc. (August 20, 2018), the Court clarified that California employers must abide by the more restrictive ICRAA requiring written notice and consent from applicants and employees before conducting a background check if there is a possibility the check will include information that goes beyond a person’s credit history, delving into information relating to one’s general character.

Current and former bus drivers brought a class action lawsuit against employer First Student, Inc. for performing a background check that elicited information such as “criminal records, sex offender registries, address history, driving records, and employment history” without complying with ICRAA notice requirements.

CCRAA applies to background checks eliciting information regarding a person’s credit standing and character information obtained from sources other than personal interviews. ICRAA is broader and includes character information “obtained through any means.” ICRAA requires providing the applicant or employee a “clear and conspicuous disclosure in writing” of the Act’s disclosure requirements and the applicant or employee’s written authorization of procuring the report.

First Student argued that ICRAA did not apply to Connor because the statute overlapped with CCRAA and defendants had complied with CCRAA requirements. First Student argued that any requirement to comply with both statutes simultaneously was unconstitutionally vague. 

The Connor court found that ICRAA is not unconstitutionally vague because employers can comply with both CCRAA and ICRAA without undermining the purpose of the other. If an employer merely seeks a consumer’s credit records, the employer only need comply with CCRAA. However, if the background check possibly includes character information retrieved through CCRAA or “obtained through any means” the employer must comply with the stricter ICRAA requirements. 

Takeaway

Connor makes clear that where an employer uses a background check process that may include general character information beyond a consumer’s credit records, the employer must comply with ICRAA requirements. To minimize legal risk, including class action litigation risk, California employers should assess whether their background check procedures comply with ICRAA and CCRAA.

See Connor v. First Student Inc.

Firm Highlights

Publication

Under FTC’s New Proposed Rule, Employers Will No Longer Be Able to Rely on Noncompete Agreements

The Federal Trade Commission (FTC) has proposed a rule that would prohibit the use of noncompete agreements in employment contracts. Noncompete agreements prevent employees and independent contractors from pursuing certain forms of employment &ndash...

Read More
News

Jaya Bajaj Named to Lawyers of Color Hot List 2022

Read More
Publication

California’s New Pay Transparency Law

Welcome to EO Radio Show – Your Nonprofit Legal Resource . Every January brings a slew of new laws that take effect at the federal and state level, and it seems that there are...

Read More
Publication

Failures Are Valuable IP: Protect Your Startup’s Negative Trade Secrets

Technology companies and start-ups are familiar with protecting inventions with patents, and protecting their secret formulas, source code, and algorithms as trade secrets. But tech companies may not be aware of another powerful form of...

Read More
News

Farella Braun + Martel Announces 2023 New Partner Class

Read More
Publication

California Extends Presumption of COVID-19 as Workers’ Compensation Injury and Modifies Notice Requirements for Potential Exposure

In addition to AB 152 extending COVID-19 leave through December 31, 2022 , Governor Gavin Newsom has also signed into law two other COVID-related bills—AB 1751 and AB 2693—affecting employers’ policies regarding employees who...

Read More
Publication

Spotlight on Coalition of Immokalee Workers

The American Bar Association Section of Labor and Employment Law has awarded the 2022 Frances Perkins Public Service Award to the Coalition of Immokalee Workers (CIW) for its vital decades-long fight for the dignities...

Read More
Publication

How Companies Can Stop Trade Secret Disclosure in California

When an executive, founder, or employee with access to trade secrets or confidential information leaves a company to work elsewhere, employer trade secrets might be used by a competitor. Under two laws, California’s Uniform...

Read More
Publication

Employers Should Review Common Severance Agreement Terms Due to New NLRB Decision

Historically, employers have routinely included confidentiality and non-disparagement provisions in severance agreements with departing employees. Such provisions can be important for protecting sensitive personnel data or proprietary business information from disclosure. But in light...

Read More
Publication

New Laws and Compliance Updates for California Employers in 2023

California has passed several new or amended employment laws covering topics ranging from off-duty marijuana use, reproductive rights, California Family Rights Act, COVID-19, criminal law and the workplace, new avenues of enforcement against employers...

Read More