California’s Investigative Consumer Reporting Act (ICRAA) sets strict background check rules, detailing employer duties and broader protections for job applicants. Covers common violations, penalties, and consent disclosure requirements to avoid liability and keep hiring practices compliant with California law.
By Brad Nakase, Attorney
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During the recruitment screening process, employees are protected by two main statutes.
The FCRA (Fair Credit Reporting Act) is the first federal law. It is codified as 1681. California has a more stringent law known as the ICRAA (Investigative Consumer Reporting Agency Act), which is codified in sections 1786.10 through 1786.40 of the California Civil Code.
The relationship between the FCRA (federal) and the California ICRAA.
The Consumer Credit Reporting Agencies Act (Section 1785 of the Civil Code) and the Investigative Consumer Reporting Agencies Act (Section 1786 of the Civil Code) are their respective versions of the FCRA. The California Civil Code contains these acts. The ICRAA is the primary topic of our interest in this document.
The ICRAA takes precedence over the FCRA in every clause that is more stringent than the FCRA because it was passed prior to 30th September 1996. Consumer safeguards under the ICRAA are more extensive than those under the FCRA, and they must be adhered to.
Furthermore, the concept of an “investigative consumer report” (in contrast to merely a consumer report) is broadened to encompass information acquired via “any means” according to Civil Code Section 1786.2 (c). Accordingly, a public records search that would qualify as a “consumer report” according to the FCRA is regarded as an “investigative consumer report” by the ICRAA.
According to Civil Code Section 1786.16, applicants must receive written notice “about the scope and nature of the investigation sought” as well as “a description of the terms of (their privileges) section 1786.22.” There are further provisions in California law that further limit and/or mandate a pre-employment examination.
During the purchase and compilation of the majority of investigative consumer reports, the most frequent mistakes and ICRAA breaches are listed in this section.
1. A breach of Section 1786.16
A worker must receive what is known as a consent disclosure from their employer or report user prior to receiving an investigative consumer report.
The ICRAA’s Section 1786.16 stipulates in pertinent part that the name, physical address, and contact number of the business preparing the ICR must be included in the consent declaration. The ICRAA prohibits the employer from obtaining the report if the consent declaration lacks any of the already listed details.
Employers can only obtain an ICR if they have a valid consent disclosure. To get the ICR before first obtaining a compliance disclosure approved by the employee is an infraction of the ICRAA, even if the worker executed the non-compliant consent declaration.
2. 1786.16 (2) (B) (iv)
Unless the subsequent relevant circumstances are satisfied, no one listed in subsection (d) of Section 1786.12 may obtain or cause to be created an investigative consumer report:
(2) In the event that an investigative consumer report is requested for employment-related reasons other than that the subject matter of the investigation is suspected of wrongdoing or misconduct, the person requesting the report can only get it or have it prepared if all of the following conditions are met:
(B) Before the assessment is obtained or caused to be created, the person who is doing so makes a clear and noticeable written disclosure to the consumer in a document that only contains the disclosure, which:
(iv) Provides the full name, address, and contact information of the agency conducting the assessment.
Example 1
The consent declaration that was obtained from LYFT is fully compliant with the first example that we shall discuss. In addition to providing the necessary check box selection enabling the consumer to seek a duplicate of the report, the consent disclosure includes the necessary name, address, and contact number of the CRA (consumer reporting agency) that will be compiling the report.
It is also necessary for the consent disclosure to include a check box that permits the employee to seek a duplicate of the report. According to the relevant section of the ICRAA, Section 1786.16(5)(b)(1), a check box must be checked, and the recipient must produce a duplicate of the Investigative Consumer Report within 3 business days of receiving it upon request from the employee or customer.
Sometimes the consent disclosure does not include the check box, and other times the report is not given to the worker within the statutory three business days of the applicant receiving it.
Whenever the check option is offered, it is advised that you ALWAYS get a duplicate of the report in order to safeguard yourself as a customer. Checking the report for its completion time and compliance with the three-business-day criteria as soon as you get it is also advised. The order and completion dates are often listed on the report’s front page. The employer or person who requested the report can easily ascertain if they met the three-business-day delivery requirement according to this section by examining the date of mailing on the package.
3. 1786.16(5) (b) (1)
Subsection (d) of Section 1786.12 prohibits anybody from obtaining or causing to be created an investigative consumer report except when the following specific conditions are satisfied:
(5) The individual who obtains the report or arranges for its preparation consents to give a duplicate of the document to the investigation’s subject in accordance with paragraph (b).
(b) In line with subdivision (a), any individual listed in Section 1786.12 subsection (d) who seeks an investigation consumer report about the consumer must take the following actions:
(1) Make it possible for the customer to specify on a written request that they would like a duplicate of any created report by checking a box. If the customer wants a duplicate of the assessment, the recipient must supply it to them within three working days of the report’s delivery. Alternatively, the recipient may arrange for a copy to be sent to them from another business. As mandated by subsection (a), the notification for requesting the report may be included on an additional consent form or on the disclosure form. The name, contact information, and mobile number of the individual who provided the report must be included in the copy.
Every necessary element is present in the consent disclosure in Example 1.
Example 2
The second scenario below, which was taken from Comerica Bank, has a wrong consent disclosure. If the company had used this form to request a background check, it would have violated section 1786.16 of the California Civil Code. Despite having the CRA’s name, address, and phone number so that the report can be completed, the example below lacks the requisite checkbox. Because it does not enable the employee to seek a duplicate of the report, the check box is inadequate.
Example 3
Because it lacks the necessary contact information, address, and name of the CRA that would be utilized to get the ICR, the third example below—a consent disclosure received from Price Simms Automotive Group—is non-compliant. This permission disclosure, like example #2, is partially compliant since it includes the necessary check box that enables the customer to seek a duplicate of the background check.
Both examples #2 and #3 only partially comply with the ICRAA, and this is never admissible. Employers would be held accountable to the employee or customer for $10,000 or real losses, whichever is more, if they obtained a background check with the improper consent disclosure.
1. A breach of Section 1786.29
The writers of this website have observed that section § 1786.29 is the second most frequently occurring infraction of the ICRAA. This is the exact wording of section 1786.29, which clearly mandates that the person preparing the report include a notification on the first section of the ICR in a typeface of no less than twelve-point boldface. A minimum font size of 12 points is required, although the choice of font is irrelevant.
The most common reason for this infringement is that the text is too small, or else the information is on the final page of the document or not there at all.
2. 1786.29
The opening page of any investigative consumer report must include the following notices from an investigative consumer filing agency:
(a) A statement in a minimum 12-point boldface type stating that the report cannot ensure the truthfulness or accuracy of the information regarding the subject of the inquiry, but only that it is precisely copied from public records. It also states that information produced as a consequence of identity fraud, including proof of criminal conduct, may be incorrectly linked to the individual who is the focus of the report.
Compliant Disclosure Example
Only California Workers/Applicants: Information produced as a consequence of identity fraud, including proof of criminal conduct, may be incorrectly associated with the individual about whom the report is focused. The report cannot ensure the truthfulness or accuracy of the information regarding the investigation’s topic, only that it is precisely copied from open sources.
In accordance with Section 1786.26, the investigative consumer reporting firm must give written notification in simple English & Spanish outlining the conditions and terms of a consumer’s right to obtain all disclosures to a consumer who requests a duplicate of a report or requests to examine a file.
1. If I reside in a state other than California, am I still protected under the ICRAA?
In general, any applicant seeking work in California is subject to the ICRAA. Because California workers are protected by the ICRAA, a candidate who lives in another state but plans to work there is protected.
The ICRAA (Investigative Consumer Reporting Agency Act) is comparable to the FCRA (Federal Fair Credit and Reporting Act); however, it exclusively covers background checks used for jobs in California.
2. Is it possible for an employer to get a background check on me?
The ICRAA & FCRA both permit employers to request a background check on job candidates only if the individual in question of the report has complied with the condition of signing a consent disclosure.
3. How much information must be included in a consent disclosure?
According to California Civil Code section 1786.16, the consumer reporting agency’s (CRA) contact information, address, and name must be included in the consent disclosure. Additionally, a check box enabling the report’s subject to seek a duplicate of the report, if one is obtained, must be included in the consent disclosure.
A compliance consent disclosure will include the necessary check box option along with the contact information of the CRA that is being used to prepare the report.
4. What is the punishment for ICRAA violations?
The answer is that every infraction of the ICRAA carries a $10,000 fine or actual harm, whichever is higher.
5. If I file a lawsuit for ICRAA infractions, do I need to provide proof of damages?
The ICRAA is special and doesn’t call for damages to occur, hence the answer is no. If the ICRAA was broken, the offending party (who could be an employer or a consumer information agency) is responsible for paying the customer the $10,000 legal penalty or actual losses, whichever is higher.
Section 1786.50 of the California Civil Code contains the wording and consequent liability for ICRAA infractions.
6. When a background check is utilized for purposes associated with a job, can a company charge me for it?
No. Section 1785.20.5 of the CCRAA (Consumer Credit Reporting Agencies Act) has the solution to this query, not the ICRAA. Though it mostly deals with credit reports, the CCRAA and the ICRAA are similar in many ways. The ICRAA defines and protects investigative consumer reports, which are background reports, as well as credit reports. The report that is provided to the individual using it and to the individual who is the focus of the investigation shall be supplied immediately and at no cost to the subject individual,” according to this clause.
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