Did you know that California made a ruling that affects how employers must conduct their background checks?
According to HR Dive, California employers are “not exempt” from following the background check requirements of the Investigative Consumer Reporting Agencies Act (ICRAA) even if these laws “overlap” with the Fair Credit Reporting Act and the Consumer Credit Reporting Agencies Act (CCRAA).
There’s a difference between these three acts, but that is not enough to keep California employers from having to abide by all three acts during a background check conducted by a third-party, should they ever overlap.
Even though this ruling applies to California employers, you should still be aware of the difference between these three acts and how this ruling affects background checks.
Fair Credit Reporting Act
This act seeks to make sure potential employees’ consumer information is fairly collected, used, and protected when obtained by you for background check purposes.
You must notify and receive an applicant’s written permission BEFORE pulling their credit and criminal history when running a background check.
Investigative Consumer Reporting Agencies Act
In California, the ICRAA provides employees and employers information regarding what rights employees have and what obligations employers have when conducting investigative consumer reports.
According to the Equal Employment Opportunity Commission (EEOC), investigative consumer reporting is “A report based on personal interviews concerning a person’s character, general reputation, personal characteristics, and lifestyle.”
This aspect of a background check basically involves “investigating” who the prospective employee is outside of work.
If this type of reporting is used in your background check, “You must also tell the applicant or employee of his or her right to a description of the nature and scope of the investigation,” according to the EEOC.
Along with these federal rules, California employers would also have to follow the rules laid out by the ICRAA when conducting their investigative consumer reports.
Consumer Credit Reporting Agencies Act
This is another California based act that is similar to the FCRA.
Just like the FCRA, the CCRAA monitors how consumers’ credit is being used in background checks and other reports. Please know that the rules for the FCRA applies to all states across the country.
This means that California employers must make sure they are not only compliant with the FCRA but also the ICRAA and the CCRAA if the rules of all three laws and acts should ever overlap during a background check conducted by a third party.
Even if you aren’t hiring in California, be sure to keep this ruling in mind as an example of how similar issues could affect your background checks if the states you operate in decided to make employers follow the same guidelines.
