Background Checks in California: A Complete Guide for 2020

Background checks are an essential part of the hiring process. However, the rules surrounding them can be hard to understand. This is especially true for background checks in California, which require special considerations.

Today, about one in three Californians has a criminal history. This means employers are virtually guaranteed to encounter previous convictions, arrests, and other considerations at some point in their hiring efforts.

To help you navigate employment background checks, we’ve compiled this comprehensive guide, which covers the legislation, requirements, and procedures you need to know about.

What are the Laws Regarding California Criminal Background Checks?

Here’s a breakdown of the state’s various background check regulations, as they pertain to California employers:

The Fair Credit Reporting Act

The Fair Credit Reporting Act, or FCRA, exists to protect employers and applicants. Specifically, the FCRA promotes accuracy, fairness, and privacy for the information contained in consumer reporting agency files.

The FCRA is the national standard for employment background checks. For applicants, it guarantees the right to obtain a copy of the background check. It also allows the applicant to file a dispute if the background check contains inaccurate or incomplete information.

California employers, like all employers, are required to follow FCRA guidelines. Today, federal FCRA guidelines apply when a hiring company uses background checks prepared by third-party providers. In these cases, the employer must do the following:

• Provide the applicant with written notice that a background check and report may be required.
• Obtain the applicant’s permission to conduct a background check via an authorization form.
• Obtain specific permission if the job requires the collection of medical information.
• Provide notice if the employer intends to use the applicant’s neighbors, friends, or associates as character references, or if the employer will interview these people about the applicant’s “character, general reputation, personal characteristics, or mode of living.” The FCRA calls this process an “investigative consumer report.”
• Notify the applicant if the information contained in a background check is used to make an adverse hiring decision.

If an employer compiles a background check report on its own, FCRA provisions do not apply.

ICRAA/CCRAA

According to a 2018 California Supreme Court ruling known as Connor v. First Student, Inc., both the Investigative Consumer Reporting Agencies Act (ICRAA) and the Consumer Credit Reporting Agencies Act (CCRAA) now apply to certain employer background checks.

Because of this, employers may need to comply with both laws, in addition to ensuring their background checks remain compliant with all applicable federal and state laws.

Here’s what you need to know about the ICRAA and the CCRAA.

The ICRAA

The ICRAA (Investigative Consumer Reporting Agencies Act) has specific notification requirements, reporting restrictions, and more.

The ICRAA contains several clauses that are stricter than the FCRA. The ICRAA supersedes the FCRA in any provision where its laws are more restrictive. Section 1786.18 of the ICRAA, for example, only allows for the reporting of criminal convictions and open cases. The ICRAA also establishes restrictions about when and how employers can generate background check reports.

According to Section 1786.16 (2)(B)(iv):

Any person described in subdivision (d) of Section 1786.12 shall not procure or cause to be prepared an investigative consumer report unless the following applicable conditions are met:

(2) If at any time, an investigative consumer report is sought for employment purposes other than suspicion of wrongdoing or misconduct by the subject of the investigation, the person seeking the investigative consumer report may procure the report, or cause the report to be made, only if all of the following apply:

(B) The person procuring or causing the report to be made provides a clear and conspicuous disclosure in writing to the consumer at any time before the report is procured or caused to be made in a document that consists solely of the disclosure, that:

(iv) Identifies the name, address, and telephone number of the investigative consumer reporting agency conducting the investigation.

Additionally, ICRAA requires adherence to the 7-year rule. It “limits the conviction information to seven years from the date of disposition, release, or parole…regardless of the subject’s anticipated salary.”

This is important since more general 7-year limitations under FCRA only apply to employees who make less than $75,000.00 annually.

The ICRAA goes on to clarify (in Section 1786.29) that investigative consumer reporting agencies must provide a series of notices on the first page of the investigative consumer reports they generate. Notably, the section requires reporting agencies to include a notification (in 12-point boldface type) that the report does not guarantee the accuracy or truthfulness of its information. It also requires the notice to disclose that the information within the report comes from the public record, and that identity theft and criminal activity may alter the accuracy of the results.

The ICRAA lays out additional requirements for investigative consumer reporting agencies in Section 1786.22, which compliance-minded employers should read in full.

CCRAA

The CCRAA follows alongside ICRAA in most ways but deviates concerning credit reports. According to CCRAA Section 1785.20.5, credit reports and investigative consumer reports are considered background reports.

This section states the following:

“The report to the user and to the subject of the report shall be provided contemporaneously and at no charge to the subject person.”

CIPA

The California Information Privacy Act, or CIPA, (Cal. Civil Code §§ 1785 et seq.) takes the minimum employee privacy protections set forth by the FCRA and expands on them.

Like FCRA, CIPA establishes strict requirements for employers who hire third-party companies to conduct their background checks, as opposed to employers who choose to do it themselves. For employers who DIY their investigations, CIPA requires the employer to give applicants the option to “opt-in” to receive a copy of their background check reports.

The checkbox must be located either in the job application or in the written notice of the background check, which is required by FCRA. If the applicant does opt-in, he or she must receive a copy of the report within three days of when the employer receives them.

If the employer chooses to hire a third-party agency to conduct background checks, CIPA requires the employer to issue what it calls a “clear and conspicuous” notice. This notice must be in writing and must cover the “nature and scope” of the background check [Cal. Civil Code § 1786.16(2)(B)(v)].

If the employer’s third-party background check company also intends to interview the applicant’s references, the employer must:

1. State the purpose of the investigation.
2. Give the applicant contact information for the investigation agency.
3. Give the applicant a summary of their rights to see and copy any reports about them.
4. Provide the applicant with a checkbox they can check if they want to receive a copy, which must then be sent to the applicant within three days of the employer receiving the completed report.

There is one notable exception. If the employer is conducting a background check because they suspect the applicant has engaged in wrongdoing or misconduct, CIPA waives the requirement to provide notice and obtain the applicant’s consent for the background check.

CA Labor Code 432.7

According to CA Labor Code 432.7, California employers, either public or private, are prohibited from asking a job applicant about some aspects of their criminal history, including the following:

1. Criminal charges that did not end in a conviction.
2. Pre-trial or post-trial diversion programs.
3. Dismissed or sealed convictions.

It is also prohibited for a company to make hiring decisions based on the factors above. California employers are, however, permitted to ask about any currently pending criminal charges.

Ban the Box and Fair Hiring Laws

Today, Ban the Box laws only apply to public sector employers in California. Under these laws, public employers may only inquire into an applicant’s criminal records after they have determined that the applicant meets the minimum requirements for the position in question.

Among other provisions, “Ban the Box” became the law in California with the passage of The

California Fair Chance Act AB1008, which seeks to provide candidates with criminal histories an equal opportunity to advance through the application process.

Essentially, the Fair Chance Act requires an employer to evaluate an applicant’s qualifications before conducting a criminal background check. The law prohibits California employers from asking about criminal histories or felony convictions before they issue a job offer.

How Far Back do Employment Background Checks go in California?

In California, criminal convictions can only be reported for seven years. Under California civil code (The Investigative Consumer Reporting Agencies Act), any misdemeanors, complaints, indictments, arrests, and convictions older than that cannot be reported on background checks. Full pardons, expungements and arrests that did not lead to a conviction, meanwhile, cannot be reported at all.

According to California law (Article 2 of Civil Code 1427-3237), employers must save all employment background checks for a minimum of two years. The code states:

Every investigative consumer reporting agency that provides an investigative consumer report to a person other than the consumer shall make a copy of that report available, upon request and proper identification, to the consumer for at least two years after the date that the report is provided to the other person.

As a California Employer, How Can I Stay Compliant?

Complying with laws like the Federal Fair Credit Reporting Act is critical, but even that is not enough to run a compliant screening program in California.

The penalties for violating California background check laws are severe. In some cases, employers can be required to pay actual damages, or up to $10,000 per violation, in addition to the applicant’s attorney’s fees and costs. Some courts may require employers to pay punitive damages, as well, which can be as much as ten times the amount of actual statutory damages.

With that in mind, here are four tips to remain compliant on background check laws in California, and avoid expensive fees:

1. Wait to Inquire About Criminal History

To protect yourself and your company, wait to inquire about an applicant’s criminal history until after you have issued a conditional offer of employment. This includes asking applicants if they have ever been convicted of a crime, ordering a background check, or making other inquiries into an applicant’s criminal history.

2. Conduct Individualized Assessments

If an applicant has prior convictions, conduct an individualized assessment to determine whether those convictions have a direct, adverse relationship with the job’s specific duties. If so, this would justify the denial of the candidate’s application.

3. Notify the Applicant of Potential Adverse Action

If you intend to take adverse action based on the findings of a criminal background check, you must notify the applicant.

Your notice must include the following elements:

• An identification of the conviction.
• A copy of the conviction history report – regardless of whether you prepared it internally or had it developed by a third-party company.
• Notification of the applicant’s deadline to provide clarifying information for the background check, such as evidence of inaccuracy, or rehabilitation documentation.

4. Provide a Final Adverse Action Notice

If you ultimately proceed with adverse action, you must notify the applicant of your final decision. You must also make the applicant aware of their right to challenge the decision, request reconsideration, and file a complaint with the Department of Fair Employment and Housing.

While complying with California background check laws can be challenging, following these guidelines can help you avoid issues. Keep in mind that, in addition to federal and state laws, Los Angeles and San Francisco have enacted their own versions of California “Ban the Box” laws.

Los Angeles, for example, passed an ordinance that applies to all city businesses with ten or more employees, as well as all city contractors. The law states that employers cannot investigate an applicant’s criminal history until after they’ve issued a conditional offer of employment. Additionally, employers must conduct an individual assessment of the applicant’s criminal background as it relates to the responsibilities and duties of the open position.

Can I Consider an Applicant’s Criminal Background During the Hiring Process?

Yes – with some exceptions. While employers are permitted to run background checks on applicants, they must adhere to California labor laws regulating when and how to conduct said background checks.

Additionally, California law requires employers to disclose certain information after they run a background check. Employers who want to remain compliant must familiarize themselves with these regulations and how to abide by them.

What Kind of Information Do California Employment Background Checks Contain?

Most of the information contained in an employment background check consists of public records, including documents about arrests that resulted in a conviction, indictment, civil judicial action, outstanding judgment, or tax lien.

Non-public information collected during a background check may include verifications of education credentials and verification of past employers.

How Long do Background Checks in California Take?

It depends on many variables, including whether you’re preparing the background check internally or hiring a third-party company to do it for you.

California is a uniquely complex state in which to conduct business. This is truer than ever when it comes to employment background checks. If you want a faster turnaround time, partner with a professional background checking company like iprospectcheck.

We conduct fast, accurate, and FCRA compliant background checks so you can make the wisest employment decisions for your company.

Contact us today to schedule a free consultation.

DISCLAIMER: The resources provided here are for educational purposes only and do not constitute legal advice. Consult your own counsel if you have legal questions related to your specific practices and compliance with applicable laws.