California's Background Check Law

California Court Rules that Employers May Delay Giving Employees Public Records Obtained in an Investigation
February 2, 2005

Summary

In one of the first decisions interpreting California’s expanded background check law, a California Court of Appeal has confirmed that an employer who obtains public records regarding an employee must provide those records to the employee. However, the court also made it clear that if the records are obtained in connection with an investigation for suspicion of wrongdoing or misconduct, it may wait to provide the records until after the investigation is completed.

The Details

The plaintiff was hired by a law firm to work as a paralegal. After a discussion between the plaintiff and a firm associate, the associate conducted a computerized search of court decisions and found three appellate decisions involving the plaintiff, indicating that he had several felony convictions, including grand theft and second degree burglary. Six days later, two partners of the firm met with the plaintiff to discuss whether he had ever been convicted of a felony. When he answered affirmatively, they requested and received his immediate resignation. Ten days later, the plaintiff sent the firm a letter, citing California’s background check law, and requesting a copy of the public record information that the firm's action was based upon. The firm sent the plaintiff the information the next day.

The plaintiff sued the law firm for violating California’s background check law, the Investigative Consumer Reporting Agencies Act (“ICRAA”). The trial court dismissed his claim and the plaintiff appealed. One of the issues on appeal was whether the plaintiff could state a claim under the ICRAA based upon the firm’s failure to provide him with the public record information within seven days, which is the general requirement under the statute.

In one of the first rulings interpreting this law, the court confirmed that the law requires any employer who obtains public record information regarding an employee to generally disclose this information to the employee within seven days, even if no adverse employment action is taken based on the information. However, the court also ruled that where an employer obtains public record information in connection with an investigation for suspicion of wrongdoing or misconduct, it may wait to provide this information for a reasonable time after the investigation concludes, according to the circumstances of each case. Since the law firm complied with this standard, the appellate court upheld the dismissal of the case. (Moran v. Murtaugh, Miller, Meyer & Nelson LLP, 1/31/05).

Analysis

This decision is a helpful one for employers. First, it serves to remind employers of their general obligation under the IRCAA to provide an employee with a copy of any public records it gathers regarding the employee, even where the employer gathers this information itself, and even where no adverse action is taken based on this information. Under this general obligation, the records must typically be provided to the employee within seven days of the employer’s receipt of the information, regardless of whether the information is received in written or oral form.

Most importantly, the court clarified the rules regarding IRCAA’s exception for investigations involving a suspicion of wrongdoing or misconduct. Specifically:

To meet the exception, an “investigation” need not be elaborate. The court stated that “according to the circumstances, the employer may choose to interview fellow employees, conduct surveillance, contact prior employers, or make other inquiries.”
The misconduct or wrongdoing being investigated need not be contemporaneous, but may be conduct that occurred well before the employee was hired, as long as the conduct could affect the employee’s suitability for his or her position.
If the information is gathered in connection with such an investigation, the seven day requirement does not apply. The employer may choose to withhold the investigatory results temporarily in order to confront the employee with the information and measure character, veracity, and other factors according to his or her response, as long as the employer provides the employee with the information within a reasonable time after the investigation concludes, according to the circumstances of each case.

What this Means:

Employers must be familiar with the requirements of the IRCAA and its federal counterpart, the Fair Credit Reporting Act. In the internet age, it is easy for employers to collect public record information regarding their employees. As is made clear by this case, the general disclosure requirement imposed by the IRCAA is very broad. Unless the information is collected in connection with an investigation of wrongdoing, the seven day disclosure requirement applies. In cases involving an investigation for suspicion or wrongdoing or misconduct, the information must be provided soon after the investigation is completed.

This E-Update was authored by Fred Plevin. For more information, please contact Mr. Plevin or any Paul, Plevin attorney at 619-237-5200.

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