California Supreme Court Hands Down Ruling, Employers Should Take Note

A recent court case in California should put employers in that state on notice concerning their legal obligations concerning their use of background checks. The California Supreme Court ruled that when, in many instances while using background checks, employers must follow the requirements of California’s Investigative Consumer Reporting Agencies Act (ICRAA).

In Connor v. First Student, Inc. First Student conducted a background check on Eileen Connor. Connor alleged that First Student failed to provide proper notice for a background check and did not obtain her written authorization to conduct a background check. First Student argued that the ICRAA is unconstitutionality vague because the statute overlaps with the California Consumer Credit Reporting Agencies Act (CCRAA) and that they were not obligated to seek written authorization.

According to the lawsuit, First Student notified their bus drivers that the company may have an investigative agency prepare a report containing information about the applicant’s “character, general reputation, educational background, or any other information” reflecting on the applicant’s suitability for the job. In this instance an employer may need only inform the applicant that a report is being requested. No written authorization is warranted. But an employer seeking information beyond credit records must comply with the ICRAA. To follow the ICRAA, any employer that wants to do a background check that goes beyond the applicant’s character and credit record, should comply with the disclosure and authorization provisions of the ICRAA, rather than the more limited CCRAA disclosures.

Connor alleged that First Student violated the ICRAA, while First Student asserted they followed the CCRAA and were not obligated to follow the higher standards of the ICRAA. The California Supreme Court ruled in favor of Connor when they held that any partial overlap between the two statutes does not render one superfluous or unconstitutionally vague. The ruling held that First Student did engage in an investigative report that is subject to the stricter notice and authorization requirements of ICRAA. Obtaining a written authorization to conduct a background check is recommended as part of complying with the broadest applicable requirements of California state law.

Other legal restrictions on background checks in California include that credit checks can only be conducted on an applicant unless the job sought after falls within certain categories such as executive positions or within finance and looking into an applicant’s criminal record may not occur until a conditional job offer has been extended.

It should be noted that the reasons to continue a comprehensive background screening program far outweigh any negatives for all employers, including those in California. A strong screening program can help employers lower the risks of:

  • Negligent hiring lawsuits
  • Lost organization productivity and morale
  • Negative public opinion and damage to brand
  • Expensive re-boot of candidate search
  • Workplace violence

A comprehensive screening program can also be invaluable in verifying work history and experience. According to a CareerBuilder survey in 2014, over 50% of all resumes contain some sort of lie or embellishment. Typical embellishments include:

  • Dates of employment
  • Job title
  • Job responsibilities
  • Academic degree and credentials
  • Skill sets
  • Organizations worked for
  • Awards

Considering the average cost of a bad hire is at least 3 times the employee’s salary, the costs associated with maintaining a legally compliant screening program can be justified very easily. While there may not be a direct measurable to judge the return of investment for background screening, the cost of a background check versus the total amount saved by screening should tip the scale in favor of conducting a background screen of potential employees.

Keep these 5 things in mind when managing your background screening program:

  1. Put screening policy in writing
  2. Comply with all legal guidelines
  3. Apply consistent screening methods for each position
  4. Establish criteria to evaluate background check results
  5. Conduct regular background screening program audits

Lawsuits like Connor v. First Student, Inc. merely should remind employers to remain vigilant when utilizing background screening to remain compliant. But it’s obvious the benefits of a comprehensive screening program are numerous.

Any questions? Visit our website to find some answers. Also, it’s always advisable to consult a legal professional if you have specific questions about your program.

Want to find out more about the products available when screening? Visit our product page.

Need to know what type of product packages are available? We have packages specifically for pre-employment/volunteers, healthcare, and tenants, with the added ability to customize.

Learn more about the expertise IntelliCorp can offer, it’s vital to getting the most value from your program.

 

 

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