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California Supreme Court Rules on Background Check Standards

Posted by Eric Kingsley | Sep 23, 2018 | 0 Comments

Employment background check


ICRAA vs. CCRAA – California Employers To Comply With Strictest Background Check Standard

In a recent case, Connor v. First Student, Inc., the California Supreme Court ruled that an employer obtaining an investigative background check must comply with the stricter of two related general consumer and credit reporting state laws—the Investigative Consumer Reporting Agencies Act (ICRAA) over the Consumer Credit Reporting Agencies Act (CCRAA). The ICRAA requires employers, lenders, and landlords who frequently conduct background checks to obtain the individual's prior written authorization before conducting the check. The August 20th unanimous decision will impact those under these two laws when making any number of hiring, employment, credit, and housing decisions.

The case that led to a definitive decision involved 1,200 bus drivers who filed suit against First Student, Inc., claiming that the company violated the state background check law. The employees pointed to the company's actions with respect to the 2007 acquisition of LaidLaw International, Inc., where First Student retained third-party HireRight Solutions to run background checks on the thousands of acquired employees. The background reports elicited information about the employees, including criminal records, sex offender registries, address history, driving records, and employment history.

The two credit reporting laws at hand in this case are the ICRAA and CCRAA. The ICRAA covers background checks in which information on a consumer's “character, general reputation, personal characteristics, or mode of living” is obtained through any means. Among other things, ICRAA requires the person procuring the report to certify that they made certain required disclosures, and that the consumer gave written authorization for the report's procurement. The CCRAA, on the other hand, covers information “bearing on a consumer's credit worthiness, credit standing, or credit capacity,” and does not have a written authorization requirement.

California Supreme Court

At issue, in this case, were the employment background checks that called on both credit reporting laws because they obtained information relating both to character and creditworthiness of the applicants. The employer, relying on prior case law, argued that the overlap between these two laws renders the ICRAA unconstitutionally vague whenever the CCRAA also might apply. The California Supreme Court rejected that argument and the prior case law, stating:
“In interpreting ICRAA and CCRAA, we agree with the Court of Appeal and find that potential employers can comply with both statutes without undermining the purpose of either. 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 (e.g., seeking a subject's written authorization to conduct a credit check if it appears possible that the information ultimately received may be covered by ICRAA).”

California Employment Law

California employers should review recruitment policies, procedures and forms to ensure they adhere to both credit and background reporting laws above, especially the ICRAA which requires prior authorization. Should you have questions about employment background checks, ICRAA or CCRAA, don't hesitate to contact leading employment lawyers at Kingsley & Kingsley. Feel free to call us toll-free at (888) 500-8469 or click here to contact us via email.

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About the Author

Eric Kingsley

In practice since 1996, the firm's lawyer and co-founder, Eric B. Kingsley, has litigated complex cases and written numerous appeals in state and federal courts on behalf of the California law firm Kingsley & Kingsley, including More than 150 collective actions. Mr. Kingsley focuses his practice ...


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