The California Supreme Court will decide if the California Investigative Consumer Reporting Agencies Act (ICRAA) is unconstitutionally vague. In Connor v. First Student Inc., the Court of Appeal rejected an employer’s argument that the ICRAA was unconstitutional because the employer could not ascertain whether it was required to comply with it or the California Consumer Credit Reporting Agencies Act. The former governs background checks obtained from third party agencies concerning information pertaining to a consumer’s character, personal characteristics, general reputation or mode of living.  The second applies to reports containing information regarding a consumer’s credit worthiness, credit capacity or credit standing. Both Acts, however, refer to identical categories of information (for example, criminal histories, civil judgments and bankruptcies) when imposing limits on information that can be disclosed. The state Supreme Court voted at the end of November to take up the issue. A decision would seem to be at least a year away.

Employers are cautioned to ensure that their background check disclosure and consent forms comply with both the federal Fair Credit Reporting Act and the two California Acts since we are seeing an uptick in class action lawsuits alleging FCRA and state law claims. Employers should also understand that uncertainty about state law compliance requirements will continue to exist until the California Supreme Court decides the issue or the Legislature clarifies the law.