In Connor v. First Student, Inc., the California Supreme Court resolved a conflict in Court of Appeal decisions relating to the constitutionality of California’s background check laws.

Employers frequently request background information from job applicants.  California has two primary laws regulating the collection and distribution of this background information:  the Investigative Consumer Reporting Agencies Act (“ICRAA”) and the Consumer Credit Reporting Agencies Act (“CCRAA”).  The ICRAA concerns investigative consumer reports, which are reports containing information on a consumer’s character, general reputation, personal characteristics, or mode of living.  Expressly excluded from the ICRAA are consumer reports limited to specific factual information relating to a consumer’s credit record.  On the other hand, the CCRAA concerns consumer credit reports, which are defined as reports bearing on a consumer’s credit worthiness, credit standing, or credit capacity.  These laws impose certain obligations on both the agencies providing the information and on the parties requesting the background information, with the ICRAA generally imposing greater obligations and stricter limitations.

Connor involved a lawsuit brought by an employee alleging her employer violated the ICRAA.  The defendant argued that the ICRAA was unconstitutionally vague because the background information at issue related to both plaintiff’s character and her credit worthiness and, as such, it was impossible for the employer to determine whether it was governed by the requirements of the ICRAA or the CCRAA.  The superior court accepted defendant’s argument and dismissed the claim based upon a 2007 decision issued by the California Court of Appeal for the Fourth District (Ortiz v. Lyon Management Group, Inc.) finding the ICRAA unconstitutionally vague under similar situations.

Plaintiff appealed this ruling, and the California Court of Appeal for the Second District reversed the superior court’s finding, determining that Ortiz was wrongfully decided and that any overlap between the two laws did not render the ICRAA unconstitutional.  The California Supreme Court accepted review to resolve this conflict.

The California Supreme Court affirmed the Court of Appeal’s decision in Connor and disapproved of the decision in Ortiz.  The Court found that there was no historical support for defendant’s contention that a consumer report must fall under either the ICRAA or the CCRAA, but not both.  To the extent an employer (or any party) requests background information from a consumer that falls under both statutes, the employer must comply with both sets of requirements.

Connor clarifies employers’ obligations under the ICRAA and the CCRAA.  Employers requesting background information, however, still have to keep in  mind their disclosure obligations under federal law pursuant to the Fair Credit Reporting Act.  As a consequence, California employers should immediately audit their job application procedures and forms to be sure that they are complying with these and other laws, as the failure to do so could lead to significant legal exposure.