California Supreme Court Addresses Background Checks

California Supreme Court Provides Helpful Guidance for Employers Conducting Background Checks

In Connor v. First Student, Inc., 1,200 bus drivers filed suit against their employer, a bus transportation company, alleging illegal failure to adequately notify them and obtain their prior written authorization when conducting background checks. At issue was the fact that the information procured by the investigation related to both the drivers’ character and creditworthiness, creating confusion as to whether the background check was governed by the Investigative Consumer Reporting Agencies Act (“ICRAA”) or the Consumer Credit Reporting Agencies Act (“CCRAA”). The California Supreme Court resolved this conflict and held that when there is overlap between the two acts, the employer must comply with both the ICRAA and the CCRAA depending on which is more protective of the employee.

The ICRAA and the CCRAA are California’s primary laws that regulate the collection and distribution of background information. The ICRAA governs investigative consumer reports which include information on a consumer’s character, general reputation, personal characteristics, or mode of living. Most notably, the ICRAA requires the person procuring the report to certify that they made certain required disclosures, and that the consumer give written authorization for the report’s procurement. The CCRAA concerns consumer credit reports on a consumer’s credit-worthiness, credit standing, or credit capacity, and the Act does not have a written authorization requirement.

In a unanimous decision, the Court held that an employer obtaining an investigative background check must comply with the stricter of the two laws when dealing with potential overlap and thus must obtain prior written authorization. The Court reasoned that because the background reports also elicited information about the employee’s general character; i.e., criminal records, sex offender registries, address history, driving records, and employment history, the employer had an obligation to obtain prior written authorization from the employee. Specifically, the Court noted that “[i]n the event that any other information revealed in an ICRAA background check contains a subject’s credit information and the two statutes thus overlap, a regulated party is expected to know and follow the requirements of both statutes, even if that requires greater formality in obtaining a consumer’s credit records.”

What This Means for Employers:

In what is a well-established recurring theme, employers must comply with the more protective of competing laws to insulate themselves from liability, even if these laws are vague and confusing. Background checks that contain both credit reports and information on the general reputation or character of an employee or potential employee requires compliance with both the CCRAA and the ICRAA. Employers should pay close attention to the types of information solicited in background checks and make it a practice to obtain prior written authorization. For questions or concerns regarding the implementation or review of background check procedures, please contact Barsamian & Moody.

The goal of this article is to provide employers with current labor and employment law information. The contents should neither be interpreted as, nor construed as legal advice or opinion. The reader should consult with Barsamian & Moody at (559) 248-2360 for individual responses to questions or concerns regarding any given situation.