CHA News Article

California Supreme Court Reconciles State Background Check Notice Laws
Employers must comply with both ICRAA and CCRAA

Earlier this month, the California Supreme Court provided direction to employers that conduct background checks. In Connor v. First Student, Inc. the court held that the employer violated the Investigative Consumer Reporting Agencies Act (ICRAA) by failing to provide the specific notice required by the statute, as well as failing to obtain written authorization for the background check. This case illustrates that employers must be diligent in compliance and cannot necessarily delegate responsibility to a background check vendor. 

In Connor, the employer requested that its consumer reporting agency conduct background checks on its employees on three separate occasions in 2007, 2009 and 2010 to confirm that the employees were “properly qualified to safely perform their job duties.” The background reports included criminal records, sex offender registries, address history, driving records and employment history. 

Before conducting the background checks, the employer sent employees a booklet that contained a notice authorizing the background check vendor to prepare a consumer report or investigative consumer report. The notice provided that employees could view the file, receive a summary of that file by telephone or obtain a copy of it.

The notice also explained that employees could request an “investigative consumer report” that included “names and dates of previous employers, reason for termination of employment, work experience, accidents, academic history, professional credentials, drugs/alcohol use, [and] information relating to [the employee’s] character . . . which may reflect upon [her] potential for employment.” The notice included a check box that generally described the employees’ rights under ICRAA and indicated that they would receive a copy of the report if the box was checked. Connor’s lawsuit alleges that the notice did not satisfy ICRAA’s specific requirements and — equally importantly — that the employer failed to obtain the required written authorization to conduct the background check.

The employer defended the case, arguing that the background check was covered by the Consumer Credit Reporting Agencies Act (CCRAA) and the notice provisions complied with that California law. The court rejected this argument, concluding that “if an employer seeks a consumer’s credit records exclusively, then the employer need only comply with CCRAA. An employer seeking other information that is obtained by any means must comply with ICRAA. In 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.”

Hospitals must ensure that, prior to conducting any background check, they provide appropriate notice to employees and obtain written authorization if appropriate. Hospitals should also review this decision with background check vendors to ensure that all parties agree about legally compliant process and procedures.