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State Screening Laws

Background Checks in California Means Compliance with a Whole Different Set of Rules than Rest of US

October 28, 2014

California Background Checks: Different from the Rest of the United States

By Attorney Lester Rosen, Founder and CEO of ESR

Introduction

California has unique rules for background checks that go beyond those of the other 49 states and the federal Fair Credit Reporting Act (FCRA), which regulates background checks in the United States.While California employers always need to follow the FCRA, there are additional rules and requirements in the state when it comes to background checks for employment purposes.

California employers must follow these rules to the letter since applicants can sue for up to $10,000 for any violation regardless of damages. Employers in California, and employers doing business in California, need to be aware of these laws:

The San Francisco Fair Chance Ordinance

Background checks in CaliforniaAlso known as the Ban the Box Ordinance, this Ordinance took effect August 13, 2014. Ban the Box requires employers with San Francisco City or County offices and worksites who have 20 or more employees to follow strict rules about inquiring into and using criminal record history of job applicants and employees.

The Ordinance amends Article 49 of the San Francisco Police Code that outlines procedures for considering arrests, convictions, and related information in making employment decisions. With regard to hiring, the Ordinance prohibits employers from inquiring into an applicant’s criminal history in an employment application or first live interview.

Employers must post a notice informing applicants and employees of their rights under the Ordinance in a conspicuous place at every workplace. In addition, job postings must state that the employer will consider qualified applicants with criminal histories in a manner consistent with the requirements of the Ordinance.

Senate Bill No. 530

Senate Bill No. 530 (SB 530) took effect January 1, 2014 and provides significant new protection to ex-offenders who committed crimes, including felonies, when it comes to job hunting and what employers can legally discover or use.

The new law prohibits an employer from asking about, seeking, or utilizing criminal convictions that have been judicially set aside. Employers violating the new prohibitions can face civil penalties and even misdemeanor criminal charges if done intentionally. It also allows a convicted person to get a case expunged sooner.

Assembly Bill 218

Assembly Bill 218 (AB 218) was signed into law in October 2013 to reduce unnecessary barriers for adult Californians with arrest or conviction records, who are seeking employment. AB 218 requires the state, counties, cities, and special districts to remove the conviction-history question from their job applications and wait to ask the question when the applicant at least meets “minimum employment qualifications.” Employers such as law enforcement and school districts and job positions, subject to a criminal background check by occupational or licensing law, are exempt.

Senate Bill 909

Senate Bill 909 (SB 909) took effect January 1, 2012 and relates to “offshoring” of Personally Identifiable Information (PII) of consumers who are the subjects of background checks outside of the United States and beyond the protection of U.S. privacy laws.

SB 909 requires that consumers are to be notified as part of a disclosure before the background check of the web address; where they may find information about the investigative reporting agency’s privacy practices, and whether personal information will be sent outside the United States. SB 909 also requires background check firms to conspicuously post their privacy policy on websites with a statement that indicates whether the personal information will be transferred to third parties outside the U.S. In the event consumers are harmed by a background check firm negligently sending data outside of the U.S., SB 909 provides for damages to consumers.

Assembly Bill 22

Assembly Bill 22 (AB 22) took effect January 1, 2012 and regulates the use of credit report checks of job applicants and current employees by employers for employment purposes. AB 22 prohibits employers or prospective employers—with the exception of certain financial institutions—from obtaining a consumer credit report for employment purposes unless the position of the person, for whom the report is sought, is specified under the law. In addition, AB 22 requires the written notice informing the person, for whom a consumer credit report is sought, for employment purposes to also inform that person of the specific reason for obtaining the report.

Other Considerations

In addition to these laws, California has many existing rules for background checks in the state. Employers must understand the California Investigative Consumer Reporting Agencies Act (ICRAA), CA Labor Code, and the Regulations for the California Department for Fair Employment and Housing Act (FEHA). In California, all background checks are Investigative Consumer Reports (ICR), a different terminology than the FCRA, and employers face substantial civil exposure up to $10,000 for failure to follow the special rules for background checks that include the following:

  • Special CA Check the box rule for free report (similar to MN and OK)
  • Second checkbox if employer obtains public records directly
  • Special CA rules for the Consent and Disclosure including name, address and phone of CRA and right to obtain additional information
  • Special language on first page of each report about accuracy
  • Consent before each ICR

Special additional statements:

  • Special rule for employer certification-employer needs to certify additional matters above and beyond FCRA certifications
  • Spanish language form if applicant requests more information
  • 7-year limit on criminal records (unless governmental requirement) but math is tricky
  • Strong argument that California seven year rule is pre-empted by FCRA but no court has ruled to date
  • California is a “No Arrest” state (but a pending case can be reported)
  • Limitation on reporting diversion programs or arrest (with exception for certain hospitals)

Conclusion

Despite all of the laws and special rules in California, “due diligence” through background checks is still mission critical for employers in the Golden State. Employees are typically a firm’s greatest investment and largest cost, and each hire also represents a large potential risk. Every employer has the obligation to exercise due diligence in hiring since an employer that hires someone it either knew—or should have known through reasonable screening—was dangerous, unfit, or unqualified for the work can be sued for negligent hiring. The bottom line: California employers must maintain compliance with a whole different set of rules than the rest of the country when conducting due diligence background checks.

NOTE: The above information is provided for illustrative purposes only and should not be construed as legal advice.

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