Let me start out by stating background checks are not required by law and in some respects are becoming a thing of the past. California has stated you can only do credit checks for those handling money. Keep in mind, Credit checks are a part of background checks which, effective January 1, 2018, can only be done after the job offer.
If you choose to conduct background checks (some organizations are required because of their type of business) yourself or hire a third party, thoroughness and full compliance with each standard helps avoid costly litigation.
Class Action Case Example
For instance, when conducting background checks in the State of California, there are two statutes that must be followed in addition to the federal government’s Fair Credit Reporting Act. The Consumer Credit Reporting Agencies Act (CCRAA) monitors reports on an individual’s “creditworthiness.” And the Investigative Consumer Reporting Agencies Act (ICRAA) focuses on gathering information that helps employers evaluate an individual’s character.
There are some differences in how this information is obtained and applied. And companies are expected to follow these statutes to the letter for employee fairness and the protection of consumers.
Observing these laws may seem tedious and following them to the letter may seem unnecessary to some. You might think that meeting the standards of one set of rules might prevent you from facing any penalties if you fail to fully meet standards of a second set of rules. But you may not want to take that risk. Some employers don’t even bother.
In the case of, Conner v. First Student, Inc. an appellate court is examining a prior ruling in favor of the employer. Connor filed a class action lawsuit on behalf of herself and over 1,200 coworkers who underwent another round of background checks after First Student acquired their former employer, Laidlaw. Initially, the California Supreme Court ruled that ICRAA requirements were “unconstitutionally vague” when used in conjunction with CCRAA criteria.
But the appellate court reversed that judgment and concluded that companies are obligated to comply with both ICRAA and CCRAA, and can do so without violating either.
Employers are liable for threats to consumers whether they conduct background checks themselves or rely on third-party reports.
While some background reports provide inaccurate (e.g., wrong person or information like expunged records erroneously reported) and/or incomplete (e.g., pertinent criminal history was excluded or not discovered) information, this doesn’t preclude companies from penalty.
An Uber case offers an appropriate example. Although Uber detailed their extensive approach to conducting background checks on drivers in the State of California, the company must pay the County of Los Angeles and the City and County of San Francisco 5 million dollars each – with millions more in stipulation fees if they fail to comply within a specified amount of time – because the State accused them of misleading passengers about the thoroughness of their driver screenings.
It turns out that some of their California drivers were registered sex offenders, had criminal records, and one had been convicted of murder. Employers are held accountable for relying on inaccurate or incomplete reports when making hiring decisions, even with independent contracting positions like this one.
Navigating the California background check landscape requires meticulousness:
1. Fully comply with ICRAA and CCRAA, even when there appears to be overlap in information provided by each report.
2. Obtain proper authorization prior to conducting a background check using stand-alone documents.
3. Outline the manner in which personally identifiable information will be used offshore.
4. If information will be used offshore, a separate statement or web page should be labeled, “Personal Information Disclosure: United States or Overseas.”
5. For online application permissions, a separate web page must conspicuously detail request and use of personal information for background checks.
6. Provide the applicant or employee with the option to obtain a copy of the report and to dispute any questionable information.
7. Derive as much information from primary sources as you can; don’t solely rely on electronic databases.
8. Authorization form must have a check box that allows applicant to obtain copy of background check report if he/she desires.
9. Be certain to provide consent forms in a language the individual understands (e.g., a Spanish translation for those whose primary language is Spanish).
If this whole process sounds overwhelming and even downright scary, you might consider not attempting it in-house. I suggest that you use a reputable background screening service that has experience in complying with the required regulations.