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Constitutional Challenge to California’s Background Check Law Rejected

By Mark S. Askanas
  • August 25, 2015

If a background check includes information about a job applicant’s character, California’s background check law applies, the California Court of Appeal has held, rejecting an employer’s challenge to the California Investigative Consumer Reporting Agencies Act (Cal. Civ. Code § 1786 et seq.) (“ICRAA”). Connor v. First Student, Inc., No. B256075 (Cal. Ct. App. Aug. 12, 2015).

Background

The plaintiff, Eileen Connor, was a school bus driver for Laidlaw Education Services, which was acquired by First Student, Inc. (“First”), in 2007. After the acquisition, First engaged HireRight Solutions, Inc., to conduct background checks on Connor and all other former Laidlaw bus drivers. The background checks included information from criminal record checks and searches of sex offender registries, as well as the employees’ address history, driving records, and employment history.

Before conducting the background checks, First sent employees a notice stating it planned to request an “investigative consumer report” that would include names and dates of previous employers, reasons for termination of employment, work experience, accidents, academic history, professional credentials, drug and alcohol use, information relating to the employee’s character, general reputation, educational background, and any other information reflecting on the employee’s  qualifications for potential employment. The notice said employees could view or obtain copies of their files, included a box employees could check if they wanted to obtain a copy of the report, and provided other disclosures required under the ICRAA.

Connor sued First, alleging the notice failed to satisfy the ICRAA because First failed to obtain her written authorization for an investigative consumer report. First moved for summary judgment, arguing the ICRAA was unconstitutionally vague and unenforceable because it was unclear whether it applied when a background check provided information regarding both an employee’s character and creditworthiness.
The trial court agreed with First. Following the reasoning in Ortiz v. Lyon Management Group, Inc., 157 Cal. App. 4th 604 (Cal. Ct. App. 2007), which held the ICRAA was unconstitutionally vague as applied to tenant screening reports containing information related to both creditworthiness and character, the court struck down the ICRAA, also finding the law unconstitutionally vague because it overlapped with California’s Consumer Credit Reporting Agencies Act (Cal. Civ. Code § 1785.1 et seq.) (“CCRAA”). The trial court dismissed Connor’s claim, and Connor appealed.

Applicable Law

The ICRAA provides that an “investigative consumer reporting agency” may furnish an “investigative consumer report” to another person only under limited circumstances, including for employment purposes. An “investigative consumer report” is “a consumer report in which information on a consumer’s character, general reputation, personal characteristics, or mode of living is obtained through any means.” The term excludes reports limited to specific factual information relating to a consumer’s credit record. Before obtaining an investigative consumer report for employment purposes, an employer must provide the employee with a detailed notice and disclosure and obtain the employee’s written authorization to obtain the report.

The CCRAA applies to “consumer credit reports.” A consumer credit report is defined as “any communication of any information by a consumer credit reporting agency bearing on a consumer’s credit worthiness, credit standing, or credit capacity, which is used . . . as a factor in establishing the consumer’s eligibility for credit . . . or employment purposes. . . .” The definition specifically excludes “any report containing information solely on a consumer’s character, general reputation, personal characteristics, or mode of living which is obtained through personal interviews.” The CCRAA does not require prior written consent.

ICRAA Constitutional

First argued that the ICRAA was unconstitutionally vague because an employer could not determine whether the CCRAA or the ICRAA applied to background checks containing both character and credit information. On the other hand, Connor maintained that, under its plain language, the ICRAA applied to the background checks conducted by First, and the fact that the CCRAA also might apply to the same background checks did not render the ICRAA void for vagueness.

The appellate court sided with Connor. It found the ICRAA applied to the background checks requested by First because they included information about the employees’ employment history, criminal records, and alcohol and drug use. Therefore, the Court said, the background checks fell within the definition of an investigative consumer report, and First must comply with the ICRAA’s disclosure and authorization provisions.

The Court also found that the CCRAA did not apply to the background checks in this case. There was no evidence the background checks sought any information regarding the employees’ creditworthiness. Further, even if such credit information was requested under the “any other information” provision of First’s notice, nothing in the ICRAA or the CCRAA precluded their concurrent application to one consumer report. The statutes’ legislative history, the Court said, also indicated the CCRAA always applied to reports containing character information bearing on creditworthiness, as long as such information was not obtain through personal interviews. Likewise, reports containing any character information, regardless of how it was obtained, are covered under the ICRAA.

The Court stated, “The fact that the two acts overlap in their coverage of some consumer reports does not render the acts unconstitutionally vague to the extent of that overlap.” Accordingly, the Court reversed summary judgment in First’s favor and returned the case to the trial court.

Jackson Lewis attorneys are available to answer inquiries regarding this case and other workplace laws.

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