EMPLOYMENT LAW BULLETIN

Vol. 02, No. 03

Courtesy of Eskridge Law, Attorneys at Law

Just when you start thinking you really need to do more to investigate applicants before hiring them, there is a new law which makes that quite a bit more difficult. That law is California Assembly Bill 655, and it took effect on January 1, 2002.

There are actually several provisions of A.B. 655 which make checking out applicants and employees more difficult. The most controversial of these provides that when an employer collects, reports or communicates information concerning someone's character, general reputation, personal characteristics or mode of living, the employer must report the information to the applicant or employee either when the employer meets with the applicant or employee or within seven days, whichever occurs first. This applies even when the employer is doing the investigating itself. This provision is worded quite broadly and may arguably apply to any background or reference check. It also seems to apply whether the applicant is hired or not. Worse yet, the new law does not state how the report must be made. It does not even say whether it has to be in writing, but the safest course of action would definitely be to provide a written report to the applicant or employee.

Employers who retain outside agencies to investigate applicants and employees must comply with a whole panoply of state and federal laws relating to "consumer reports." The laws in this area were already complex, but are now further complicated by A.B. 655. A report is considered a "consumer report" if it is about an applicant's or employee's credit standing, credit capacity, character, general reputation, personal characteristics or mode of living. Under federal law, a report is also a "consumer report" if it includes background checks of criminal, education and driving records, as well as any public record investigation, if the information is provided by an agency that charges for this service.

An "investigative consumer report" is a consumer report which is obtained from an agency, which involves interviews with friends and associates, and which contains information about a person's character, general reputation, personal characteristics or mode of living. Even a basic reference check would be considered an "investigative consumer report" if it is conducted by an agency. Some of the basic rules relating to "consumer reports" and "investigative consumer reports" are as follows:

1. Employers can access consumer reports only for purposes of hiring an applicant, promoting, retaining or re-assigning an employee. All other uses are illegal.
   
   
2. Various pre-investigation disclosures must be made, and they cannot be buried in fine print in an application form - they must be in a stand-alone document. If the report is an "investigative report," there are even more disclosures which must be stated in yet another document. Also, if the report is an "investigative report," the applicant or employee must be given a copy of the report, either at the meeting or within seven days, whichever comes first.
   
   
3. If the employer makes an adverse decision based in whole or in part on a consumer report or investigative report, written notice must be provided to the applicant or employee which must include certain specific information and a copy of the report must be provided.

Eskridge Law, Attorneys at Law, may be contacted by phone (310/792-7021), by fax (310/792-7022) or by e-mail (geskridge@ealaw.net). Please visit our web site at ealaw.net or employmentattorneys.net.

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