October 30, 2018
Do you know the rules on conducting a background check in California? The legal requirements under the federal Fair Credit Reporting Act, the California Consumer Credit Reporting Agencies Act, and the California Investigative Consumer Reporting Agencies Act apply to any employer who seeks information about an individual’s creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living from a third-party reporting agency. [15 USC §§ 1681 et seq.; Cal. Civ. Code §§ 1785.1-1785.36 and 1786-1786.60.]
Employers might attempt to obtain documents such as an employee/applicant’s criminal background records, workers’ compensation history, medical history, driving records, references, verification of education or licenses, previous employment records, and credit history reports. The laws set limits on what employers can lawfully request or obtain when investigating an employee or job applicant. The laws do not prevent an employer from contacting an applicant’s previous employers for reference information.
Criminal Background Checks: There are legal requirements limiting criminal background checks on employees or applicants, some of which went into effect quite recently. These are discussed in another article on this website, entitled When a Job Applicant or Employee Has a Criminal Record. They are therefore not covered here.
Provide Proper Notice: Before you order a background report, you must notify the employee or applicant of your intention to obtain and use such a report. Notice requirements for background checks are rigorous and ever-changing, and they are the subject of a separate article on this website, entitled Background Checks: Employers Must Give Proper Notice Before and After a Background Check. Notice requirements are therefore not discussed in this article. Employers should be sure to review and understand them, to avoid potentially heavy penalties for failure to comply.
Obtain Authorization from the Employee or Job Applicant: As an employer, you must obtain the employee/applicant’s written authorization before actually requesting the background report. You must also certify to the agency from which you request a background report that you are in compliance with applicable laws.
If the employee/applicant requests a copy of the background report, you must provide a copy to the employee/applicant contemporaneously with your own receipt of the report. You may want to contract with the reporting agency to send a copy directly to the employee/applicant within the required time frame.
Taking An Adverse Action: If you intend to take an adverse action on an employee or applicant based on a consumer report you obtained from an agency, you must first provide the employee/applicant with a copy of the consumer report and a statement of rights before taking the adverse action. On taking the adverse action, you must provide the employee or applicant with the following:
- Notice of the adverse action;
- The name, address, and telephone number of the agency that prepared the consumer report;
- A statement that the agency did not make the decision to take adverse action and cannot provide any reasons for the adverse action;
- A statement that the employee/applicant may request a free copy of the consumer report from the agency; and
- A statement that the employee/applicant may dispute the accuracy or completeness of any information in the consumer report.
Conducting Your Own In-House Investigation of an Employee or Applicant: You can conduct your own in-house investigation using public records, but you must then comply with certain provisions of the Investigative Consumer Reporting Agencies Act (ICRAA). One requirement of the ICRAA is that you must provide copies of the records you obtain to the employee/applicant within seven days. However, if you are conducting the investigation because you suspect actual wrongdoing or misconduct, you may provide a copy of the records to the employee/applicant within a reasonable time, rather than within a fixed time period.
This article just touches on a few points from federal and state law regarding the procedure for conducting a background check on an employee or applicant. As you can see, there are many requirements, and they are not all simple or easy to follow. An experienced employment attorney can assist you in navigating what can be a complicated and exacting process.
Need more information?
ESKRIDGE LAW may be contacted by phone (310/303-3951), by fax (310/303-3952) or by email (geskridge@eskridgelaw.net). Please visit our website at eskridge.hv-dev.com.
This article is based on the law as of the date posted at the top of the article. This article does not constitute the provision of legal advice, and does not by itself create an attorney-client relationship with Eskridge Law.