Metropolitan News-Enterprise


Tuesday, August 21, 2018


Page 3


State Supreme Court Upholds Validity of Background Check Law

Partial Overlapping With ‘Creditworthiness’ Law Found Not to Be a Detriment


By a MetNews Staff Writer


The state Supreme Court yesterday ended an employer’s bid to invalidate a law requiring notice and consent before conducting a personal character background check on an employee, stating that the law does not conflict with a similar creditworthiness background check law.

The opinion by Justice Ming W. Chin affirms the decision of this district’s Court of Appeal and disapproves a 2007 opinion by the Fourth District in Ortiz v. Lyon Management Group, Inc.

The plaintiffs in the underlying class action worked as bus drivers for First Student, Inc. and First Transit, Inc. (collectively “First”). They sued their employers for not complying with the notice and written consent requirements of the Investigative Consumer Reporting Agencies Act (Civil Code §1786 et seq., “ICRAA”).

Los Angeles Superior Court Judge John S. Wiley Jr. granted First’s motion for summary judgment, accepting the defendants’ argument—based on the holding in Ortiz—that the ICRAA is meant to apply exclusively to character background checks and the similar law, while the Consumer Credit Reporting Agencies Act (Civil Code §1785.1 et seq., “CCRAA”), is meant only for creditworthiness.

Similar Statutes

Both the ICRAA and the CCRAA have their origin in an earlier California law, the Consumer Credit Reporting Act. In 1975, that law was repealed and the two current background check laws were enacted in order to better work with the federal Fair Credit Reporting Act, which had been enacted the same year as the Consumer Credit Reporting Act.

Initially, the ICRAA applied only to background checks based on personal interviews to determine a subject’s character. It was expanded in 1998 to include such background checks based on any source.

The CCRAA, on the other hand, applies only to background checks based on credit records. It explicitly excludes background checks based on personal interviews, and has no requirement that the employee consent before the report is released.

The Ortiz court relied on the pre-1998 statutory scheme to support its holding that the two acts were meant to be mutually exclusive. It determined that the 1998 expansion of the ICRAA, without a corresponding change to the CCRAA, created a vagueness rendering the former law unconstitutional in situations where both apply.

Willhite’s Analysis Adopted

Chin’s opinion disapproves of Ortiz and adopts the reasoning of Acting Presiding Justice Thomas L. Willhite Jr. of this district’s Div. Four’ in reversing Wiley.

Willhite wrote:

“The Ortiz court and First are correct that under the CCRAA and the ICRAA as originally enacted, a consumer report could not be governed by both the CCRAA and the ICRAA. But the reason for that was not because information could not be classified as both creditworthiness information and character information. It was because the ICRAA governed only those consumer reports that included character information obtained through personal interviews, and the CCRAA expressly excluded such reports.”

He went on to explain that, under their current language, both acts are perfectly clear as to when each applies.

Like Willhite, Chin rejected the idea that it is impossible to comply with both statutes’ requirements, and that statutory construction rules require that both apply when applicable.

The high court justice said:

“In a related argument, First asserts that because ICRAA and CCRAA cover the same subject matter, it is unclear which statute applies in the context of employment background checks. However, Connor’s example of a report that would fall within the scope of both ICRAA and CCRAA is simply one that contains information bearing on both a consumer’s creditworthiness and on her character. It seems to us that such a duality does not make legal compliance particularly difficult, much less impossible.”

The case is Connor v. First Student, Inc., 2018 S.O.S. 4077.


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