In Connor v. First Student, Inc., the California Supreme Court ruled that both the Investigative Consumer Reporting Agencies Act (ICRAA) and the Consumer Credit Reporting Agencies Act (CCRAA) may apply to certain employer background checks. Thus, employers may have to comply with both laws. Accordingly, employers should ensure that their background checks are compliant with all applicable federal and state laws.
Eileen Connor worked as a bus driver for First Student, Inc. (“First Student”). First Student requested that a consumer reporting agency conduct background checks on all of its employees, including Connor. As part of this background check, the consumer reporting agency inquired into criminal records, sex offender status, address history, driving records, and employment history. Before the background checks began, First Student provided Connor with a notice authorizing the background check. The notice included a check box, which described Connor’s rights under the ICRAA. The notice further stated that Connor could check the box in order to receive a copy of the background check report. Despite the check box and its mention of ICRAA rights, First Student did not seek Connor’s written authorization as required by the ICRAA. However, the background check notice did comply with the CCRAA.
Later, Connor and other bus drivers filed a class action suit against First Student and the consumer reporting agency that conducted the background checks. The suit alleged that First Student violated the ICRAA for the following reasons: the background check notice did not satisfy the ICRAA’s requirements, and First Student failed to obtain Connor’s written approval to conduct the background check.
The trial court granted summary judgment in favor of First Student, which the Court of Appeal reversed. The California Supreme Court then granted review.
The Court began its analysis by detailing the legislative history and background of the ICRAA and CCRAA. In doing so, the Court noted that the CCRAA generally concerns credit worthiness, but the ICRAA generally concerns consumer character. Additionally, the Court further noted that certain background check reports can be subject to both the ICRAA and CCRAA. Next, the Court used principles of statutory interpretation to analyze the ICRAA and CCRAA.
The Court held that if an employer exclusively seeks credit history or credit records, then only the CCRAA governs. On the other hand, if the employer seeks other background check information, the ICRAA controls. Further, the Court stated that if an ICRAA background check contains credit history information, the two statutes then overlap and both statutes must be followed. Thus, according to the Court, while there may be overlap, each statute regulates information that the other does not, and the two statutes are therefore not unconstitutionally vague.
Next, the Court turned to the background check report at issue in the case. According to the Court, the report was governed by the ICRAA because it reported on Connor’s character and reputation. While the Court also found that the CCRAA applied to the report, this did not exempt the report from the ICRAA’s requirements. Therefore, as required by the ICRAA, First Student needed to obtain Connor’s written authorization before conducting the background check.
What this Case Means
After Connor, employer background check reports inquiring into the credit worthiness and character of employees (or job applicants) must comply with both the ICRAA and CCRAA. If both laws apply, employers must, among other things, obtain an employee’s written authorization for the background check under the ICRAA.
If you are concerned that your background checks may not be compliant, please contact the attorneys at Palmer Kazanjian Wohl Hodson LLP.