Seyfarth Synopsis: California is rife with regulation of how employers may obtain and consider background check information for use in hiring and personnel decisions. The relatively new California ban-the-box law (effective January 1, 2018) and the older Los Angeles and San Francisco ordinances and amendments to the California Labor Code set strict rules on when
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.
- For example, an in-house researcher may give a verbal report that an applicant has convictions instead of obtaining hard copies of the court records. Does the employer have any disclosure obligations?…
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.
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:…
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: …
Not only is complying with California’s labor laws challenging, operating a business in San Francisco can be particularly challenging due to a number of San Francisco city ordinances regulating employers. Most recently, on February 17, 2014, Mayor Ed Lee signed the “Ban the Box” ordinance. While the ordinance sounds as if it belongs in the same category as other San Francisco environmental ordinances banning the use of plastic bags, this ordinance, formally known as the “Fair Chance Ordinance,” actually relates to what an employer can ask about relating to criminal history and when an employer can conduct a criminal background check in hiring. San Francisco is joining the ranks of many other states and municipalities who have recently passed similar restrictions “banning” the criminal history box (i.e., HI, MA, MN, RI, Newark, NJ, Seattle, WA, etc.). See our publications relating to these trends here and here.
The Fair Chance Ordinance requires private employers in San Francisco who employ 20 or more employees (in any location) to limit the use of criminal background checks during the hiring process. “Employers” is defined broadly to include not only private employers in San Francisco, but also employment agencies, contractors and subcontractors (with performance contracts in excess of $5,000 and for longer than 30 days), and housing providers.
Employers are barred from asking about criminal history or conducting a background check until the employer determines that the individual’s qualifications meet the requirements for the position. Specifically, the law requires removal of the box or question on an employment application asking “Have you ever been convicted of a crime?” The ordinance notes that an estimated one of four California adults has an arrest or conviction record and seeks to limit the “unnecessary and significant barriers to employment” created by such application questions. This is similar to the reasoning espoused in Equal Employment Opportunity’s Enforcement Guidance on the Use of Arrest and Criminal Records in the Hiring Process, which can be found here.
Employers in San Francisco may ask about a candidate’s conviction history after the first live interview, but must provide the candidate with a notice of rights (an applicable notice of rights will be published by the city within the next six months). Employers are also prohibited from considering (1) any arrests that do not lead to convictions, (2) offenses other than felonies or misdemeanors, (3) convictions more than seven years old, (4) an applicant’s participation in or completion of a diversion or deferral of judgment program, and (5) sealed, inoperative or juvenile convictions.
Similar to the federal requirements under the Fair Credit Reporting Act, 15 U.S. C. Sec. 1681 et. seq. and state requirements under the California Investigative Consumer Reporting Agencies Act, Cal. Civ. Code Sec. 1786 et. seq, the ordinance also provides that if an employer does run a background check and intends to take an adverse action against the candidate based on that information, the employer must:…
Since the 2013 portion of this California Legislative session concluded in mid-September, a number of employment-related bills have gone to Governor Brown for consideration. As of today, the Governor has signed 8 of those bills into law, covering:
✓ Minimum wage increase, from $8 to $10/hour, over two years
✓ Criminal …