California clarified criminal background check regulations

Employers which use background checks in their hiring process without obtaining written authorization may wish to review their practices. The California Supreme Court has rejected an argument that employers could not reconcile the state’s two background check laws: the Investigative Consumer Reporting Agencies Act (ICRAA) and the Consumer Credit Reporting Agencies Act (CCRAA). The Court concluded that complying with one act does not undermine the other – so employers must comply with both.

The issue raised was that employers may run credit checks under CCRAA without written notice, but the broader ICRAA requires both notice and consent. Many credit checks may intentionally or inadvertently gather information that is covered by both laws.

In Connor v. First Student, Inc. (August 20, 2018), the Court clarified that California employers must abide by the more restrictive ICRAA requiring written notice and consent from applicants and employees before conducting a background check if there is a possibility the check will include information that goes beyond a person’s credit history, delving into information relating to one’s general character.

Current and former bus drivers brought a class action lawsuit against employer First Student, Inc. for performing a background check that elicited information such as “criminal records, sex offender registries, address history, driving records, and employment history” without complying with ICRAA notice requirements.

CCRAA applies to background checks eliciting information regarding a person’s credit standing and character information obtained from sources other than personal interviews. ICRAA is broader and includes character information “obtained through any means.” ICRAA requires providing the applicant or employee a “clear and conspicuous disclosure in writing” of the Act’s disclosure requirements and the applicant or employee’s written authorization of procuring the report.

First Student argued that ICRAA did not apply to Connor because the statute overlapped with CCRAA and defendants had complied with CCRAA requirements. First Student argued that any requirement to comply with both statutes simultaneously was unconstitutionally vague. 

The Connor court found that ICRAA is not unconstitutionally vague because employers can comply with both CCRAA and ICRAA without undermining the purpose of the other. If an employer merely seeks a consumer’s credit records, the employer only need comply with CCRAA. However, if the background check possibly includes character information retrieved through CCRAA or “obtained through any means” the employer must comply with the stricter ICRAA requirements. 


Connor makes clear that where an employer uses a background check process that may include general character information beyond a consumer’s credit records, the employer must comply with ICRAA requirements. To minimize legal risk, including class action litigation risk, California employers should assess whether their background check procedures comply with ICRAA and CCRAA.

Source: Doug Dexter, Holly L. Sutton