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Long-Awaited Decision in California Clarifies Interpretation of Two State Statutes Affecting Background Screeners

On August 20, 2018, the Supreme Court of California held that the state’s Investigative Consumer Reporting Agencies Act (“ICRAA”) was not unconstitutionally vague as applied to employer background checks, despite some overlap with another state statute, the Consumer Credit Reporting Agencies Act (“CCRAA”).  In Connor v. First Student, Inc., a conflict between two courts of appeal about whether the ICRAA applied if a background screener did not obtain the information from personal interviews was resolved.  The case had a long and interesting history and had been pending for eight years.

While the statutes involved in this case have some differences, including the information they govern, the obligations and limitations they impose, and the remedies they provide for violations, they have something important in common.  Both the ICRAA and the CCRAA govern reports that contain information relating to character and creditworthiness, which was based on public information and personal interviews and used during the employment background screening process.  As such, the background check involved in this case was found to be an investigative consumer report under the ICRAA, triggering its application, and even though the CCRAA also applied, the defendants were not exempt from the requirements under ICRAA before conducting the background check.

Key takeaways from the court’s ruling in Connor include:

(1) partial overlap between two statutes does not render one unconstitutionally vague; and

(2) the ICRAA and CCRAA can coexist, as both acts are sufficiently clear, and each regulates information that the other does not.

With this decision, California companies should confirm with their background screener whether or not they fall under the ICRAA and are complying with its provisions, as well as with the CCRAA.

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