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:
Continue Reading Checking Out Applicants (Part 2): Using Consumer Reporting Agencies for Background Checks