Conducting a Background Check of a Job Applicant in California? You Must Comply with the Federal and State Law

As an employer, you may consider conducting a background check on a job applicant. While it is permissible to do so, there are strict federal and state regulations that employers must follow. Employers that violate background check laws could face liability. Here, our California workplace solutions attorney for employers provides an overview of state and federal requirements.

Three Background Check Laws that Employers Should Be Aware of 

Any employer in California that conducts a background check on a job applicant or employee must comply with all applicable state and federal regulations. As a starting point, employers need to be aware of at least one federal law and two California state laws:

• Federal Fair Credit Reporting Act (FCRA): The FCRA is a federal law that regulates the collection, dissemination, and use of consumer information, including consumer credit information. Under the FCRA, employers must obtain an applicant’s consent before obtaining a consumer report. If the employer will use the consumer report for an adverse employment action, they must provide the applicant with notice.
• California Investigative Consumer Reporting Agencies Act (ICRAA): The ICRAA goes beyond the FCRA. It provides additional protections to employees and job applicants. This state-specific regulation requires that employers use investigative consumer reports—which include details on a ‘ ‘person’s character, general reputation, personal characteristics, and lifestyle— with explicit consent from the individual and notification about the nature and scope of the investigation.
• California Consumer Credit Reporting Agencies Act (CCRAA): The CCRAA primarily governs the behavior of credit reporting agencies within the state. Employers can only use credit reports for employment purposes under certain conditions. Further, the CCRAA mandates that employers must provide a copy of the credit report to the employee or applicant if the employer uses the credit report as a basis for an adverse employment decision.

NEXT: California Employers Cannot Ask About an Applicant’s Criminal Record Without Extending a Conditional Employment Offer

 In the Fair Chance Act (FCA), as expanded in late 2023, California has a comprehensive state law regarding criminal history of employees/job applicants. For employers with five (5) or more employees, the FCA prohibits employers from inquiring about an applicant’s criminal history until after the employer provides conditional offer of employment. The restriction ensures fair hiring practices by allowing employers to evaluate candidates on their qualifications first, without the stigma of a past criminal record. Employers may conduct a background check once a conditional offer is issued. However, employers can rescind that offer based on what they find in a criminal background check only if they provide certain written notices to the applicant and provide the applicant an opportunity to respond. Please note that any decision to revoke the conditional offer based on criminal history must comply with additional legal requirements—including conducting an individualized assessment of how the conviction relates to the job duties. The requirements under the FCA are extensive and complex, and employers should seek legal counsel before revoking such an offer.

 Contact Our California Employment Attorney for Employers

At Sloat Law Group, our California employer lawyer is standing by, ready to help. If you have any questions about background checks, we are here to help. Give us a call now or contact us online for a confidential consultation. We provide proactive, solutions-forward guidance and support to employers in the Coachella Valley, Riverside County, and throughout California.

 Sources: 

ftc.gov/legal-library/browse/statutes/fair-credit-reporting-act

icraa.com/

law.justia.com/codes/california/code-civ/division-3/part-4/title-1-6/