background checks - California Employment Law Report

New Law Effective 2012 Restricts Employers Ability To Conduct Employee Credit Checks

Anthony Zaller — Wed, 08 Feb 2012 18:08:58 -0800

California’s new labor code provision severely restricts an employer’s ability to conduct credit checks on employees. Labor Code 1024.5, which took effect on January 1, 2012, only allows employers to conduct credit checks for employees who meet one of the following categories:

A managerial position.

A position in the state Department of Justice.

That of a sworn peace officer or other law enforcement position.

A position for which the information contained in the report is required by law to be disclosed or obtained.

A position that involves regular access, for any purpose other than the routine solicitation and processing of credit card applications in a retail establishment, to all of the following types of information of any one person: (A) Bank or credit card account information. (B) Social security number. (C) Date of birth.

A position in which the person is, or would be, any of the following: (A) A named signatory on the bank or credit card account of the employer. (B) Authorized to transfer money on behalf of the employer. (C) Authorized to enter into financial contracts on behalf of the employer.

A position that involves access to confidential or proprietary information, including a formula, pattern, compilation, program, device, method, technique, process or trade secret that (i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who may obtain economic value from the disclosure or use of the information, and (ii) is the subject of an effort that is reasonable under the circumstances to maintain secrecy of the information.

A position that involves regular access to cash totaling ten thousand dollars ($10,000) or more of the employer, a customer, or client, during the workday.

A “managerial position” is defined as an employee who qualifies for the executive exemption set forth in the Industrial Welfare Commission’s Wage Orders. The test of who qualifies as an exempt executive is very detailed, and it is determined by the amount of pay and actual duties the employee performs. So employers need to approach this prong with caution and obtain guidance to ensure the employee actually qualifies as an exempt executive.

The new law also added the requirement under California Civil Code section 1785.20.5 that employers must notify the employee in writing of the basis in Labor Code section 1024.5 as set forth above that applies to permit the employer to perform the credit check. The new law does not change the other obligations already in effect that employers had to comply with prior to conduct a credit check. These obligations include informing the employee in writing that a credit check would be performed, the source of the credit check, and that the employee may receive a free copy of the credit check. Finally, if an adverse employment action is taken by the employer based on the report, the employee must be notified of the name and address of the reporting agency making the report.

Is The Jury Still Out On Social Media Background Checks?

Anthony Zaller — Fri, 08 Jul 2011 11:13:37 -0800

Mat Honan at Gizmodo wrote recently about a new company that helps employers search applicant’s “internet background” to assist in the hiring process. As Mat rightly points out, much of the concern over this “new technology” is overblown, and as he puts it, "[e]mployers would have to be stupid not to Google job candidates." As I have pointed out before, much of the unduly concern is that lawyers don’t understand the technology, and therefore if they don’t understand it, their client’s use of the technology can only lead to bad things.

I think Guy Kawasaki had a great perspective on this issue when I recently interviewed him. He said he would be worried about a job applicant who did not have a Facebook page: what is wrong with this person? Is he anti-social? Is he not with the times or just simply does not understand simple technology? As Mat points out as well, with some common sense a job applicant can easily manage the results of an online search by being careful about which information he or she provides to the employer. For example, an internet search for the job applicant’s private email address might turn up more personal information than if the applicant has a separate email they only use for work purposes and lists on their c.v.

From the employer’s perspective I don’t think the analysis changes much for searching employees background on the Internet:

If using an outside company, make sure the background check complies with the Federal Fair Credit Reporting Act and any state equivalent
Do not create fake identities in order to gain access to individual’s social networks
Rely on common sense and make the determination about hiring or firing based on the same criteria that employers already use and not on any illegal criteria.

Generally, under Federal law, employers may utilize social networking sites to conduct background checks on employees if:

The employer and/or its agents conduct the background check themselves;
The site is readily accessible to the public;
The employer does not need to create a false alias to access the site;
The employer does not have to provide any false information to gain access to the site; and
The employer does not use the information learned from the site in a discriminatory manner or otherwise prohibited by law.

Spokeo.com makes on-line social networking searches for job applicants easier and faster

Anthony Zaller — Wed, 26 Aug 2009 15:21:08 -0800

Human resource professionals and hiring managers have developed a better way to gain insight into new hire’s backgrounds: information posted in social networking sites. About two years ago, I was often asked whether it was legal to google a job applicant, or to review his or her information posted on the Internet. While some lawyers took the conservative approach to this “new technology”, it has become common practice to search applicant’s backgrounds on the Internet (see this post about Court's ruling that MySpace postings are not private). I’ve even made the case before that failure to do a simple Internet check could create liability for a company if the result could have easily informed the company that the applicant had a bad history.

However, there are two basic problems now: (1) there are too many sites to search, and (2) if someone has a common name it is impossible to narrow the search to that particular person.

Spokeo.com is a new company that basically makes these on-line background checks easier. Guy Kawasaki points out that this service can be very beneficial to an HR manager who is tasked with checking out applicants’ backgrounds by searching social networking sites. The key break through for the website is that it searches for an individual’s email address. This makes it very helpful to find particular information about an applicant that has a common name.

What is the cost?

It is $2.95 per month for one year, or $4.95 per month for three months. This seems well worth the cost to save hours searching social networking sites.

To try the service, click here.

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