Employee Background Checks in California

California employers performing employee background checks must follow the California Investigative Consumer Reporting Agencies Act (CA Civil Code Sec. 1786) and the federal Fair Credit Reporting Act (FCRA) or be subject to fines and/or legal
action.

Federal Law Regarding Background Checks

The FCRA covers “consumer reports” in addition to credit checks, such as employment background checks for hiring, promotion, retention, and reassignment. It only applies to employment background checks prepared by outside screening companies and
requires employers to do three specific things:

  • Notify the employee that an investigation may be performed.
  • Give the employee an opportunity to review the report and explain any negative information.
  • Notify the employee of information in the report if it’s used to make an adverse decision about him or her, usually termination of employment or not offering a job.

Employers must provide “pre-adverse action notices” and a copy of the background report before taking any adverse action such as termination or not hiring a candidate, or not promoting an employee. A second notice after adverse action is also required
explaining how the employee can dispute inaccurate or incomplete information.

California Law Regarding Background Checks

California law (CA Civil Code §1786) is broader than federal law regarding employment background screens. It covers employers who conduct background checks themselves, which the FCRA does not.  The California law differs from the FCRA with terms and notices. Employment background checks in California are called “investigative consumer reports” and are
covered in the Investigative Consumer Reporting Agencies Act (ICRAA), (CA Civil Code §1786).

  • The federal FCRA limits “investigative consumer reports” to personal interviews with friends, neighbors or business associates. The California ICR covers character, general reputation, personal characteristics, or mode of living” obtained through “any means.” California law calls companies that collect information for employers and compile reports Investigative Consumer Reporting Agencies (ICRA).
  • The ICR does not include credit reports, and if a California employer wants to see a credit report as part of an employment background check, that report is also governed by the Consumer Credit Reporting Agencies Act (CCRAA). (CA Civil Code §1785)
  •  As of January 1, 2012, California employers can only request credit reports for certain positions that allow a credit check, and must give notice that a credit check will be obtained and an explanation of why the check is allowed.

What California Employers Must Do

Before a California employer conducts a background check with an outside screening company, a notice must be sent to the employee or applicant stating:

  •  The purpose of the report
  •  Contact information of the screening company
  •  A summary of the individual’s rights to see and copy any report about them
  •  A box for the individual to check if they want a copy of the report

If the individual wants a copy of the report, the employer must send it within three business days of the date it’s received.  If a California employer conducts a background check itself without an outside ICRA, the employer is not required to give the same detailed notice that’s required when an outside agency is used, but must still give the individual being investigated the opportunity to receive a copy of the public records compiled in the report. This is usually offered with a box to check on the job application form.

For more information about employee background checks go to: https://www.privacyrights.org/employment-background-checks-california-focus-accuracy

 Contact PAYDAY for more assitance on employee background checks in California.

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About the Author:

As Director of Operations, Jessica oversees the day-to-day operations for payroll, human resources, tax, finance and client affairs. She also plays an active role in formulating corporate strategy and developing client programs. Jessica believes a company’s success begins with its people. She strives to build a team encompassing excellence and professionalism, and to play a large role in developing the staff on an ongoing basis. Her passion for strong client relationships drives her in ensuring that clients receive the highest level of personal service and the best products in the industry. Jessica joined PAYDAY in 2004, and quickly advanced to Development Coordinator in 2006, when she took charge of Human Resources. She was promoted to Director of Operations in September, 2011.

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