Last year, Gov. Davis signed into law some controversial state consumer report rules. And now the governor has signed two new laws, A.B. 1068 and A.B. 2868, that revise the complicated consumer reporting process. The changes have taken effect immediately—and impact how you conduct workplace investigations, background checks and reference checks. Internal Background Check Rules RepealedUnder a criticized provision of last year’s law, A.B. 655, if you conducted background or reference checks on applicants and employees—and you didn’t use the services of a consumer reporting agency—you had to report the information you obtained to the applicant or employee.
Effective immediately, you’re no longer required to give applicants and employees reports on your internal background or reference checks, according to Barry Nadell, president of InfoLink Screening Services Inc. in Chatsworth. The only exception is when you collect information that’s a matter of public record, such as documentation of an arrest, indictment, conviction, civil judicial action, tax lien or outstanding judgment. Then, says Nadell, you must provide a copy of the public record to the applicant or employee within seven days of your receiving the information. However, you can ask individuals to waive their right to receive copies of the public records by checking a box on an employment application or another written form.
If you decide to take adverse action—such as denying employment—based on a public record, you have seven days to give the person a copy of the record, even if they waived their right to receive a copy. You’re required to provide the record before you take the adverse action, unless you obtained the public record as part of a misconduct investigation—in which case you can withhold the information until your investigation is complete.
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New Reference Check Protections For Employers
The new law also reaffirms an existing Labor Code provision that permits you to keep internal reference check information in a file separate from someone’s personnel file so the employee can’t access this sensitive information.
Plus, the new law specifies that you can’t be held liable for defamation if you told a prospective em- ployer whether you would rehire a former employee, as long as you did so without malice. Because of this provision, former employers may be more likely to give you a truthful response to this question when you’re checking references.
Background Check Requirements
The new laws make changes to your obligations when you use a consumer reporting agency to prepare an investigative consumer report—which under state law is virtually any background report other than a credit check. Here’s what’s now required under all California and federal laws:
- Provide certification to reporting agency. Before requesting a report, you must provide the agency with a signed certification form stating the intended permissible purpose of the report and that you’ll comply with notice and disclosure requirements.
- Comply with disclosure and authorization rules. Before requesting a report, you must provide a disclosure notice to the applicant or employee stating that a report may be obtained and get the person’s authorization on the disclosure. The disclosure must be in a stand-alone document, not simply part of an application or other form.The disclosure must also: 1) identify the purpose for obtaining the report; 2) state that the report may include information on the individual’s character, general reputation, personal characteristics and mode of living; 3) identify the name, address and phone number of the consumer reporting agency that will investigate; 4) state the nature and scope of the investigation; and 5) summarize the individual’s right to view the information the agency compiles.
- Provide copy of report if requested. Include the following in your disclosure notice: 1) a box the individual can check to request a free copy of a credit report; and 2) a box the individual can check to request a free copy of an investigative consumer report. Note that while the user of the report is responsible for sending a requested copy to the individual, you can have the reporting agency do it.
- Fulfill adverse action responsibilities. If you are considering an adverse action based in whole or in part on an investigative consumer report, you have some added disclosure responsibilities.
Misconduct Exception
State law no longer requires you to comply with the above disclosure requirements before hiring an outside company to investigate employee misconduct. You also don’t need to send a copy of the report. But according to InfoLink’s Nadell, federal law currently doesn’t contain the same exception.