Seyfarth Synopsis: Countless California employers have found that veterans make outstanding employees. As we approach the Veterans Day holiday, read on for a list of the benefits of hiring veterans, as well as helpful resources for veterans seeking employment. We further discuss some state and federal job protections for employees who are in the military.

Why Hire a Vet? 

There are many good reasons to consider hiring veterans. First, employers can apply for federal Work Opportunity Tax Credits (WOTC) of up to $9,600. The California Employment Development Department is the WOTC certifying agency for California employers. You can learn more about this program here.

Moreover, veterans bring invaluable skills. They are trained to be team focused, mission oriented, responsible, dedicated, respectful, and accountable. And many have learned to work well under pressure, to adapt quickly to change, and to understand and respect the chain of command. These qualities can enhance the capabilities of any workforce.

California Resources for Veterans

For veterans seeking employment, California offers various services and benefits. Services include (1) helping veterans find jobs, (2) unemployment benefits while veterans seek jobs, and (3) apprenticeship and on-the-job training programs that pay veterans while they prepare for a sustainable career. The California Department of Veterans Affairs maintains numerous employment-related resources for veterans. It also sponsors a business enterprise program for disabled veterans who want to own a business.

Protection for Military Leave and National Guard Service

Employees who are called to active duty enjoy job protections, under both federal and California law. Protected employees include members of the reserve corps of the armed forces of the United States, the National Guard or the naval militia, and members of the California State Military Reserve.

Federal Law: USERRA

The federal Uniformed Services Employment and Reemployment Rights Act (USERRA) protects employees who need time off from their civilian jobs for military service. To be eligible for employment rights under USERRA, (1) the employee must hold or have applied for a civilian job, (2) the total length of the absence cannot exceed five years, and (3) the employee must report to work or submit an application for reemployment in a timely manner.

USERRA contains many complex provisions beyond the scope of this discussion. Generally, USERRA provides that returning service members are to be reemployed in the job that they would have attained had they not been absent for military service, enjoying the same seniority, status, and pay they would had if they had remained continuously employed. USERRA also requires employers to make reasonable efforts—such as training or retraining—to enable returning service members to qualify for reemployment. USERRA also provides that an individual performing military service is deemed to be on a furlough or leave of absence and is entitled to the non-seniority rights accorded to similarly situated individuals who are on non-military leaves of absence.

California Military Leave Laws

California, going beyond the protections afforded by USERRA, provides additional protections for all regular full-time, part-time, and probationary employees who need to be absent from work because of eligible military service, and also for military spouses.

Employees may be eligible to take up to 17 days of unpaid leave per year to engage in military training, drills, encampment, naval cruises, special exercises, or similar activities if they are a member of the reserve corps of the US armed forces, the National Guard, the Naval Militia, or the California State Military Reserve. California employers must not discharge a returning employee who was on active military duty with the National Guard, except for cause, within one year after being restored to the position.

In addition, employees who are the spouses or registered domestic partners have leave rights. California employers with 25 or more employees must grant up to 10 days of unpaid leave to employees who are married to a person who is on leave from a combat zone.

Workplace Solution: Next time you are hiring, consider whether a veteran might fit your bill. Your favorite Seyfarth attorneys are standing by to provide legal assistance with recruiting and hiring questions.

Seyfarth Synopsis: The California Legislature has just created yet another protected class of individuals entitled to sue employers under the Fair Employment and Housing Act. The new class of potential plaintiffs are applicants denied employment because of their conviction history, where the employer is unable to justify relying on that conviction history to deny employment.

We’ve reported on two January 2017 developments for California employers that use criminal records in employment decisions: (1) Los Angeles enacted a city-wide “ban-the-box” ordinance, and (2) the Fair Employment & Housing Council approved new regulations that borrow heavily from the EEOC’s April 2012 “Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964.”

The trend continues. Over the weekend, on October 14, 2017, Governor Jerry Brown announced that he has signed Assembly Bill 1008, which amends FEHA to add new Government Code section 12952. This section will restrict an employer’s ability to make hiring decisions based on an applicant’s conviction records, including a “ban-the-box” provision and a prohibition against considering conviction history until the applicant has received a conditional offer of employment. (It is only scant comfort to reflect that the final version of AB 1008 was not as stringent as the originally proposed bill, which would have placed even greater restrictions on consideration of criminal history.) With a fast-approaching effective date of January 1, 2018, California employers should review their policies and procedures now to ensure compliance.

Coverage

Section 12952, like other parts of FEHA, will apply to employers with five or more employees. Section 12592 exempts from its coverage only a small handful of positions:

  • positions for which government agencies are required by law to check conviction history,
  • positions with criminal justice agencies,
  • Farm Labor Contractors as defined in the Labor Code, and
  • positions as to which the law (g., SEC regulations) requires employers to check criminal history for employment purposes or restricts employment based on criminal history.

Inquiries About Conviction History

Section 12952 will make it unlawful for California employers to

  • include on a job application any question about conviction history, unless the application is presented after a conditional offer of employment,
  • inquire into or consider an applicant’s conviction history before extending a conditional offer of employment, and
  • consider, distribute, or disseminate information about criminal history that California already prohibits employers from considering, such as (a) an arrest not resulting in a conviction (except in the limited situations described in Labor Code section 432.7), (b) referral to or participation in a pretrial or post trial diversion program, and (c) convictions that have been sealed, dismissed, expunged, or statutorily eradicated pursuant to law.

Section 12952 expressly states that it will not prevent employers from conducting conviction history checks that are not covered by the new law.

Section 12952 borrows its definition of “conviction” from Labor Code section 432.7(a)(1), (3):  “a plea, verdict, or finding of guilt regardless of whether sentence is imposed by the court.” The term “conviction history” is somewhat broader, and can include certain arrests.

Individualized Assessment 

If an employer intends to deny hire because of a prior conviction, Section 12952 will require the employer to assess whether the individual applicant’s conviction history has a “direct and adverse relationship with the specific duties of the job that justify denying the applicant the position.” This individualized assessment must consider the nature and gravity of the criminal offense, the time that has passed since the offense and the completion of the sentence, and the nature of the job sought.

The employer, may, but need not, document the required individualized assessment.

Adverse Action Based on Conviction History

If the individualized assessment leads to a preliminary determination that the applicant’s conviction history is disqualifying, then the employer must provide a written notice. Section 12952 will require more than what the federal Fair Credit Reporting Act (FCRA) requires. Specifically, the written notice that Section 12952 will require must

  • identify the conviction at issue,
  • include a copy of any conviction history report (which means the notice is required regardless of the source of the conviction history),
  • explain the applicant’s right to respond to the notice before the employer’s decision becomes final,
  • state the deadline for that response, and
  • tell the applicant that the response may include evidence challenging the accuracy of the conviction history and evidence of rehabilitation or mitigating circumstances.

The applicant has five business days to respond to a preliminary notice. The employer, in then making its final employment decision, may, but need not, explain the reasoning for its final decision. (Note that the Los Angeles ordinance, by contrast, requires employers to document the individualized assessment and to give the applicant a copy of it before making a final decision.)

If the applicant timely notifies the employer that the applicant disputes the accuracy of the conviction history and is taking specific steps to obtain evidence, then the applicant has an additional five business days to respond. The employer must consider any information the applicant submits before the employer can make a final decision.

If an employer then makes a final decision to deny employment based solely or in part on conviction history, a second written notification must be provided to the applicant, which must include:

  • the final denial or disqualification,
  • any existing procedure the employer has to challenge the decision or request reconsideration, and
  • the right to file a complaint with the Department of Fair Employment and Housing.

Again, the employer may, but need not, explain its final decision. (Under the Los Angeles ordinance, new requirements arise when the applicant provides any additional information upon receipt of the employer’s first notice and its initial completed assessment: the employer receiving that additional information must then complete a re-assessment and provide the applicant with a copy of it while notifying the applicant of the final decision.)

Remedies 

Because Section 12952 will be part of the FEHA, an aggrieved individual may sue for the full range of FEHA damages available, including compensatory damages, attorney’s fees, and costs.

Next Steps

Most immediately, California employers should determine whether they need to revise job applications, interview guidelines, and policies and procedures for criminal background checks. Many employers will need to revise their pre-adverse and adverse action letters to comply with the many laws regulating criminal background checks, and to revamp the timing of events in their hiring process.

Employers throughout the United States, and particularly multi-state employers, should continue to monitor developments in this and related areas of the law, including laws restricting the use of credit history information and the fair credit reporting laws.

 

Seyfarth Synopsis:  The California Fair Employment and Housing Council (“FEHC”) has approved new regulations, effective July 1, 2017, to limit employers’ use of criminal history when making employment decisions.

Request for a criminal background checkNew Regulation Highlights

Updating our prior post, the FEHC has finalized new regulations on employer consideration of criminal history, largely adopting the guidance set forth by the Equal Employment Opportunity Commission (“EEOC”) in its April 2012 “Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964.

  • Expanding the Types of Criminal History Employers May Consider: Employers will be prohibited from considering any non-felony convictions for marijuana possession if the conviction is more than two years old. (Current California law prohibits asking applicants to provide information concerning convictions for marijuana-related offenses that are more than two years old; detentions or arrests not resulting in conviction (except for those pending); convictions that have been judicially dismissed or ordered sealed; and information concerning a referral to or participation in a work/education program as part of probation.)
  • Requiring Notice to the Applicant/Employee of a Disqualifying Conviction and Providing a Reasonable Opportunity to Present Evidence of Factual Inaccuracy: Under the new regs, prior to taking adverse action, an employer must provide the applicant notice of the disqualifying conviction and give the applicant a reasonable opportunity to present evidence of factual inaccuracy. If the applicant produces such evidence, the conviction cannot be considered in the employment decision. The notice is only required when the criminal history is obtained from a source other than the applicant or employee (e.g., through a consumer report or internally generated search). This notice differs from the notice required by the Fair Credit Report Act (“FCRA”), which mandates notices only if the employer takes adverse action based on information contained in a third-party background check. This notice also differs from those in “Ban the Box” city ordinances, such as Los Angeles and San Francisco, where notice may be required if adverse action is taken from criminal history information from any source, including disclosure from the candidate.
  • Prohibiting Consideration of Criminal History When Doing So Will Result in an Adverse Impact on Individuals Within a Protected Class: Employers will also be prohibited from considering criminal history if doing so will result in an adverse impact (referred to by the EEOC as “disparate impact”) on individuals within a certain class (e.g., race, national origin, etc.). The regs bring California into explicit alignment with federal law on this point. Applicants bear the initial burden of proof with respect to establishing that the employer’s background screening policy has an adverse impact on a protected class, e.g., conviction statistics or other types of evidence. If adverse impact is demonstrated, the burden shifts to the employer to demonstrate that its policy is “job related and consistent with business necessity,” and tailored to the specific circumstances, taking into account factors such as those set forth in Green v. Missouri Pacific Railroad, 549 F.2d 1158 (8th Cir. 1975), i.e.,: (i) nature and gravity of the offense or conduct; (ii) amount of time since the offense or conduct and/or completion of the sentence; and (iii) nature of the job held or sought. (Bright-line disqualification policies that include convictions that are older than seven years create a rebuttable presumption that they are not sufficiently tailored.) Even if an employer can demonstrate job-relatedness and consistency with business necessity, an applicant or employee can still bring a claim if they can show that there is a less discriminatory alternative (such as a narrower list of disqualifying convictions) that advance the employer’s legitimate concerns as effectively as the current policy or practice.

Employer Outlook

Employers in California should review their policies on use of criminal history in hiring and modify any practices to ensure compliance with the new FEHC regulation (as well as the FCRA and applicable municipal Ban the Box ordinances, such as Los Angeles and San Francisco).

Pamela Q. Devata is a partner in Seyfarth Shaw’s Chicago office. Stacey L. Blecher is counsel in the firm’s New York office. If you would like further information, please contact your Seyfarth Shaw LLP attorney, Pamela Q. Devata at pdevata@seyfarth.com or Stacey L. Blecher at sblecher@seyfarth.com.

Seyfarth Synopsis: On March 13, 2017, San Jose’s new “Opportunity to Work Ordinance” takes effect, requiring covered employers to offer additional hours to part-time employees before hiring new or temporary employees. As the law’s effective date looms, the City has issued guidance clarifying portions of the ordinance and has released the notice form that employers must post.

An earlier post detailed the obligations that San Jose’s new voter-approved ordinance creates for San Jose private employers. The ordinance requires certain employers to:

  • offer additional work hours to existing, qualified part-time employees before hiring new employees, through a “transparent and non-discriminatory process,”
  • post a notice of the rights created by the ordinance, and
  • retain, for four years, relevant records such as work schedules, payroll records, and offers to current and former part-time employees.

With the ordinance’s March 13th effective date now knocking, the City has issued guidance on how to comply. We provide some highlights below.

For starters, employers can stop banging on the City’s door for the ordinance’s required notice. The City has issued the notice for employers to post with their other employment notices (click here for the notice in English, Spanish, Chinese, and Vietnamese).

The City has also published Frequently Asked Questions to shed some light on how the City interprets the ordinance. Perhaps most importantly, the FAQs define a “full-time” employee as an employee who works at least 35 hours a week, which means that “part-time” employees (who must be offered extra hours) are those who work fewer than 35 hours a week.

The FAQs also remind us that a “covered employer” is an employer that has at least 36 employees and that is subject to San Jose’s business tax (i.e., the ordinance doesn’t apply to government employers). The FAQs also explain that the employer’s total number of employees includes employees who work in locations outside of San Jose.

The FAQs go on to explain that only non-exempt employees count towards the 36-person threshold required to become a covered employer (this number includes part-time and full-time employees). Administrative and professional employees will not affect an employer’s coverage under the law; in fact, the FAQs explain that they are exempt from the law.

Further, the FAQs details how employers can comply. First, employers need to offer additional hours to part-time employees only at a particular location. Employers do not need to reach out to employees at other locations.

Second, employers can decide how to offer additional hours to part-time employees, provided that the employers adopt a process that is transparent and non-discriminatory. For example, an employer can give employees a limited window to accept additional hours of work before bringing on new labor. And employers need not rearrange their shift schedules to give more hours to part-time workers; the part-time worker must be able to work during the employer’s regularly scheduled shift.

Finally, for those covered employers who feel like the ordinance might knock them out, the City has provided a hardship application. On a case-by-case basis, the City will grant renewable twelve-month exemptions where a covered employer’s “work or need is unpredictable or requires a specialized skill and there is a need to essentially have Employees ‘on call.’ ”

This recent guidance, while not removing all uncertainty, certainly gives employers a better understanding of what lurks behind the Opportunity to Work Ordinance door, which will open on March 13.

Workplace Solutions. Compliance with new city ordinances can be tricky, especially since they are often relatively obscure. Knowledge is the first step. Compliance efforts are the next. If you would like assistance with ensuring compliance with this new ordinance, then please contact the authors or another attorney from Seyfarth’s Labor and Employment Group.

Edited by Michael Cross.

With the 2016 hiring season well under way, California employers are well advised to reconsider their use of criminal records in making hiring decisions.  Although employers are probably aware of “ban the box” and other legislative initiatives, they may not be as familiar with the liability exposure they may create by when using blanket policies to reject applicants because of their criminal histories.  On February 19, 2016, the California Department of Fair Employment and Housing (“DFEH”) announced proposed regulations governing the consideration of criminal history in employment decisions, which will enumerate limitations to the use of criminal history.

According to an EEOC survey, 92% of employers subject at least some candidates to criminal background checks.  Since issuing guidelines on the use of criminal records in 2012, the EEOC has embarked on an aggressive campaign against employer use of criminal records in employment prescreening.  While some EEOC lawsuits have failed, others have resulted in multimillion dollar settlements, such as a $3.13 million prelawsuit settlement with Pepsi.  Each time, the EEOC has focused on whether the employer’s reliance on criminal records has an adverse impact on applicants with protected characteristics, such as race, national origin, or disability.  Of particular note to California employers, the California Department of Fair Employment and Housing (“DFEH”), has recently become more active in pursuing individual and class-based claims, under the California Fair Employment and Housing Act (“FEHA”), California’s counterpart to Title VII, the Age Discrimination in Employment Act, and the Americans with Disabilities Act (“ADA”).

In recent years, we’ve seen individual and class actions asserting indirect discrimination, or “disparate impact” discrimination, primarily involving race and national origin.  Because about  one-sixth to one-fourth of individuals with a criminal record also have a diagnosable mental disability, we anticipate increased litigation by job applicants with disabilities who have a criminal record.  The disabled community has faced historical exclusion from the workplace, and a disproportionate number of them have criminal histories.  And, as mentioned, the DFEH has now become more active in initiating such cases.  Thus, when employers adopt across-the-board hiring practices that reject candidates with criminal records, they may be exposing themselves to lawsuits under the ADA or the FEHA.  This risk is especially prominent in California, because the FEHA defines “disability” much more broadly than the ADA does.  California law defines a disability as any mental or physiological disorders that limit major life activities, as opposed to the ADA definition, which requires that the condition substantially limit major life activities.

On the other side, employers have justifiable reasons for hiring practices that consider criminal background.  Employers must guard against theft and fraud and try to avoid liability for  negligent hiring.

Employers thus may perceive a dilemma of (a) not considering criminal histories at all or (b) facing potential discrimination suits.  Though there are as many solutions as there are questions, the best practice has always been to ensure that a criminal history is not the sole reason to exclude a candidate, and to use it in conjunction with other business reasons.  Each candidate’s qualifications deserve individualized attention, with an awareness of potential disability issues. Employers would also be well advised to structure narrowly tailored hiring policies to ensure that they prevent not only racial discrimination, but disability discrimination.  Categorical exclusions based on a criminal record invite a host of potential risks of litigation under the ADA or FEHA that risk-averse employers will want to avoid.

Edited by Michael A. Wahlander.

iStock_000015087680_LargeIt’s been said the best things in life are free. In California, where running a business is very expensive, an unpaid internship program might seem a perfect gift. Employers of all sizes and in virtually all industries use internships to train and identify the next generation of superstar employees. Interns frequently bring new ideas to challenging business problems and provide a regular flow of needed support staff, at a low cost or at no cost whatsoever. The benefits of internships are frequently so great that one can certainly imagine Santa staffing his busy workshop with hordes of elfish interns this time of the year.

Let Rudolph Be Your Guide

But the legal environment is not all candy canes and gum drops for unpaid or flat-rate internship programs, especially in California. The highest state and federal courts in California have not explicitly approved unpaid internships, and no California statute or regulation authorizes unpaid internships.

Some 60 years ago, the U.S. Supreme Court in Walling v. Portland Terminal Co. recognized the “special status” of interns and trainees as exempt from wage and hour laws, but Walling, alas, does not provide a clear legal standard. Apart from Walling, employers are left to follow varying sources of nonbinding “guidance” from state and federal labor agencies, and decisions from federal courts outside of California endorsing one of three multiple-factor tests: (1) the “primary beneficiary test,” (2) the ambiguous “totality of the circumstances test,” and (3) the less-than-clear “economic realities test.” Navigating this maze of tests and factors might just about require a holiday miracle!

The risks of missteps with internships are great. California has strict laws on meal and rest periods, minimum wage, and daily overtime. Many, if not most, internship programs are unpaid or involve stipends that fall below minimum wage based on hours worked, and thus do not meet California Labor Code requirements. Plaintiffs’ attorneys live on the thrill of seizing on these laws and their associated penalties to snowball employers with single-plaintiff lawsuits and class actions. For these reasons, the Abominable Snowman of wage and hour litigation appears poised to wreak further havoc on California employers using internship programs.

Don’t Shoot Your Eye Out, Kid!

So are internship programs in California akin to the often dreamed of “Red Ryder BB Gun”—a device whose potential risk outweighs the benefits? Many federal courts assess internships by asking who “primarily benefits from the relationship.” This is a good place to start when assessing your program. The DOL’s 2010 published “guidance,” including six criteria present in legal internships, deserves special attention, as it directly borrows from the U.S. Supreme Court’s only decision on the issue (Walling). Virtually all court decisions on internships, although outside of California, discuss the DOL’s factors in some degree. One important step in securing an internship from a legal Grinch is to integrate the internship with the intern’s formal education, through academic credit or a tie between technical work and classroom learning. The intern’s overall economic contribution to the business, weighed against the company’s resources dedicated to the internship program, should also remain in sight, as this is one means courts use to determine the “primary” beneficial party of the arrangement. One cannot hide the economic reality with pretty gift-wrapping. Simply labeling a job with the title “internship” is insufficient alone to ward off litigation and to keep coal out of your stocking.

The internship test involves a multitude of factors. Employers must thus consider their internship programs from every angle. Don’t simply spin the dreidel this holiday season and hope your “letter” comes up. Take action and grab the reindeer by the reins! For starters, consider including arbitration and class/collective waiver provisions in written internship agreements. That could help avoid large-scale judicial actions. Our California Workplace Solutions lawyers can also help review the numerous and varying factors involved and advise on methods to make the program more defensible from BB pellets, snowballs, or whatever comes your way this holiday season and the year to come.

Responsive Web Design Concept. VectorSince New Jersey led the way in 1994, many states have enacted so-called Megan’s Laws, which establish public online registries of individuals who have been convicted of a sex-based offense. California’s version of Megan’s Law is codified as California Penal Code § 290.46.

Section 290.46 requires all convicted sex offenders to register with the state’s sex-offender Registry. California then publishes online the names, identifying features, and, in some cases, addresses of the 83,000 registrants—all for the world to see with just a few mouse-clicks.

Why Does Megan’s Law Concern California Employers?

A curious reader might now feel the urge to visit the Megan’s Law website to test a suspicion that some acquaintances appear on the list (indeed, your Cal Pecs blog author succumbed to that very temptation while preparing this article). But employers, in particular, should exercise caution when pursuing such a curiosity.

California employers usually may not use information from the Registry to refuse to hire, fire, or demote an employee or potential employee.

  • Section 290.46 expressly prohibits employers from using Registry information for employment purposes, except as otherwise provided by statute or to “protect a person at risk.”
  • Misuse of Registry information exposes employers to potential litigation and damages, fines, and attorneys’ fees.

Are There Any Exceptions?

The statute permits employers to use Registry information “to protect a person at risk.” Cal. Pen. Code § 290.46. But this vague term generally means someone who “is or may be exposed to a risk of becoming a victim of sex offense committed by the offender.”  Cal. Pen. Code § 290.45(a)(8). The “person at risk” exception could protect some employers (e.g., day care centers, hospitals, senior centers, etc.) from liability if they use the Registry to evaluate the fitness of their employees or prospective employees. But most people—employees as well as patrons—are not obvious “person[s] at risk.” Employers, therefore, should not assume that this exception covers Registry-based adverse employment actions. It likely does not.

In addition, some employers are subject to laws that prohibit them from hiring convicted sex offenders altogether. Section 45122.1 of the Education Code, for example, forbids schools from hiring persons convicted of sex offenses (and other serious crimes). Thus, some employers have statutory protection from liability if they use the Registry as a basis for an adverse employment action.

Why Can’t I Use Megan’s Law To Keep Offenders Out Of My Workplace?

Section 290.46 expresses California’s public policy that seeks to protect offenders from “additional punishment” or “retribution” once they have paid their debt to society and have resumed their place among their fellow citizens. California is “peculiar” on this front—most other states’ Megan’s Laws do not include similar restrictions on the use of the Registry in employment contexts.

This should not come as a surprise. Preventing someone from working based solely on their criminal history is coming under increased scrutiny in California, as in many other jurisdictions. Indeed, “ban the box” movements, which demand that employers not ask prospective employees about past criminal convictions, are gaining momentum throughout California and nationally. State and local government employers in California may no longer ask for criminal record information on job applications, and as of August 2015, San Francisco private employers of 20 or more employees cannot inquire about criminal history either. (See our earlier post here.)

So, the moral of the story is . . . unless you fall under an exception to Section 290.46, or your workplace contains obvious “persons at risk,” you need to treat any person found on the Megan’s Law Registry just as you would any other employee or applicant.

Workplace Solution: Employers must balance concerns about workplace safety with the twin public policy goals of (i) not punishing someone twice for the same crime and (ii) ensuring that everyone has a chance to earn a living, regardless of past convictions.

If you have Megan’s Law-driven concerns about a current or prospective employee, refrain from making a hasty decision. As always, don’t hesitate to contact your Seyfarth lawyer if you are facing this predicament and need advice on how to proceed.

By Pam Devata and Dana Howells

Previously in this three-part series, we discussed employer obligations concerning background checks furnished by investigative consumer reporting agencies.  In this third and final segment, we highlight the requirements for California employers who do their own background checks without utilizing the services of a consumer reporting agency. 

Public Records Searches and Disclosure Obligations.  In the Internet age, many types of public records are instantly searchable. Employers who do their own public records searches (either on-line or using old fashioned techniques) must beware of a little-known California law.  Civil Code Section 1786.53(a)  provides broadly that any person who uses personal background information—even information that is a matter of public record—for employment purposes must provide that information to the consumer within 7 days.  “Public records” are defined as records documenting an arrest, indictment, conviction, civil judicial action, tax lien or judgment.

Here’s the most peculiar twist:  the obligation to provide the public records exists regardless of whether the employer obtained actual copies of  public records or simply obtained a verbal summary of the contents.  

By Pam Devata and Dana Howells

Both federal and California law impose additional requirements on the users of “background checks” over and above the requirements for “consumer credit reports.” California’s  most significant peculiarity is that it regulates not only background checks done by a consumer reporting agency, but also background checks done by employers in-house.  In this second part of a three-part series, we focus on California background checks done by an investigative consumer reporting agency.

Employers who use agencies to conduct background checks need a disclosure and authorization under both state and federal law.  However, California’s imposes additional burdens on employers.    

Disclosure Requirements.

Federal Law:  The federal Fair Credit  Reporting Act (the FCRA) imposes requirements on users of “investigative consumer reports.”  Investigative consumer reports are defined by federal law as containing information obtained through personal interviews of neighbors, friends, and other associates about character, general reputation, personal characteristics and mode of living.  

California’s definition is broader.

California Law:  The California Investigative Consumer Reporting Agencies Act’s (“ICRRA’s”) more expansive definition of “investigative consumer report” includes all third party collection of information about character obtained through “any means,” not just personal interviews with acquaintances. This broad definition would  include reference checks performed by a third party.  An employee could argue that any type of background check—other than a pure credit check—is covered by the ICRRA.  In several recent lawsuits, courts have found the ICRRA unconstitutionally vague because criminal background checks concern both credit-worthiness and character.  Therefore, it is unclear whether ICRRA or the less severe California Consumer Credit Reporting Agencies Act is the governing law.

Under California’s ICRRA, employers seeking authorization to procure an investigative consumer report must disclose: Continue Reading Checking Out Applicants (Part 2): Using Consumer Reporting Agencies for Background Checks

By Pam Devata and Dana Howells

Complying with the federal Fair Credit Reporting Act (the FCRA) is not easy. Compliance with both the FCRA and California restrictions on credit and background checks is much more challenging. Given California’s extra-strength privacy protections and penchant for workplace regulation, it is not surprising that California has peculiarities when it comes to credit and other background checks.  In Part 1 of a three part blog, we take a dive into credit checks—California style.

California is one of  a growing number of states with laws restricting use of credit history for employment. Effective January 1, 2012, California Labor Code Section 1024.5 generally prohibits the use of credit reports for employment purposes by private sector employers.  If an exception to Section 1024.5 permits an employer to use credit reports, California employers must comply with both the FCRA and the California Consumer Credit Reporting Agencies Act, which are not always congruent. 

Comparing and contrasting the FCRA with the California Consumer Credit Reporting Agencies Act

What FCRA requires—in a nutshell.  Prior to conducting a background check on an applicant or employee through a third party, an employer must:

  • Provide a notice/disclosure to the employee/applicant that the employer will seek a credit report.  The disclosure must be clear, conspicuous, and made in a document consisting solely of the disclosure.  This is a huge area of class action litigation.
  • Supply a copy of  “A Summary of Your Rights Under the Fair Credit Reporting Act.”
  • Obtain written authorization/consent from the applicant/employee. 

Prior to taking adverse employment action against an applicant/employee based, in whole or in part, on a consumer credit report (or investigative consumer report—more about those in Part 2), employers must follow a two-step notification process required by the FCRA: Continue Reading Checking Out Applicants (Part 1): California Credit Checks