Background Check Disclosures: FCRA and ICRAA Rules in California

Background check lawsuits often target the form. Federal law and California’s Investigative Consumer Reporting Agencies Act (ICRAA) both require a written disclosure in a document that contains only the disclosure, and the Ninth Circuit held in Gilberg v. California Check Cashing Stores (2019) that adding other states’ notices breaks that rule. ICRAA lets an individual applicant recover actual damages or $10,000, whichever is greater, though that minimum doesn’t apply in class actions. The employer’s defenses start with the form and how it was used.

What does a background check disclosure have to say?

Less than most forms say. Under the federal Fair Credit Reporting Act, an employer can’t get a consumer report on an applicant or employee unless “a clear and conspicuous disclosure has been made in writing to the consumer at any time before the report is procured or caused to be procured, in a document that consists solely of the disclosure, that a consumer report may be obtained for employment purposes,” according to 15 U.S.C. § 1681b(b)(2)(A). The person also has to authorize the report in writing, and the statute lets that authorization appear on the same page.

California adds its own list. Civil Code section 1786.16(a)(2) applies when an investigative consumer report is sought “for employment purposes other than suspicion of wrongdoing or misconduct by the subject of the investigation,” which covers routine pre-hire screening. The employer must provide “a clear and conspicuous disclosure in writing to the consumer at any time before the report is procured or caused to be made in a document that consists solely of the disclosure,” and the statute lists what it has to cover. It must identify the permissible purpose, say the report may include information on the person’s character and reputation, name the reporting agency with its address and phone number, describe the nature and scope of the investigation, and point to the agency’s website for its privacy practices.

The employer also has to give the applicant a box to check to get a copy of the report. If the box is checked, the statute says the copy goes out “within three business days of the date that the report is provided to the recipient,” according to section 1786.16(b)(1). The checkbox is easy to get right and the copy easy to miss, unless someone owns the step of mailing it.

Why did the form in Gilberg fail?

It tried to do too much. The applicant in Gilberg v. California Check Cashing Stores, LLC (9th Cir. 2019) 913 F.3d 1169 signed a separate form titled “Disclosure Regarding Background Investigation,” which combined the federal disclosure with information about various states’ disclosure requirements, and the court observed that “The form appears to have been printed in Arial Narrow, size 8 font.”

The employer argued the extra state notices helped applicants and so shouldn’t count against it. The Ninth Circuit disagreed. It held, according to the opinion, that “a prospective employer violates FCRA’s standalone document requirement by including extraneous information relating to various state disclosure requirements in that disclosure.” It relied on its earlier Syed decision, which involved a liability waiver, and explained that “Syed’s holding and statutory analysis were not limited to liability waivers,” since Syed addressed any extra material in the form.

California’s version fell with it. Noting that the parties appeared to agree that “the standalone document requirements under FCRA and ICRAA are identical,” the court held the form violated both. It also found the form wasn’t clear, pointing to a sentence about the scope of the authorization that, in the court’s words, “lacks a subject and is incomplete,” according to Gilberg.

The lesson for a multistate employer is uncomfortable. One national form with every state’s notice on it is the version most likely to fail. A short federal disclosure, a separate California disclosure, and a separate authorization page are safer, even if the onboarding packet gets longer.

When does California’s ICRAA apply?

Whenever the report covers more than credit. ICRAA governs investigative consumer reports, and the Supreme Court of California explained in Connor v. First Student, Inc. (2018) 5 Cal.5th 1026 that the statute defines one as a report “in which information on a consumer’s character, general reputation, personal characteristics, or mode of living is obtained through any means.”

That definition reaches the ordinary pre-hire package. In Connor, school bus drivers sued over background checks that the employer admitted included “reports containing information regarding the subject’s criminal records, sex offender status, address history, driving records, and employment history,” according to the opinion. The employer argued ICRAA was unconstitutionally vague because it overlapped with California’s credit reporting statute.

The court rejected that defense. It held that “some overlap between the two statutes does not render ICRAA unconstitutionally vague when the statutes are otherwise unambiguous.” It added that “An employer seeking other information that is obtained by any means must comply with ICRAA,” and that where both statutes apply, “a regulated party is expected to know and follow the requirements of both statutes,” according to Connor. After Connor, an employer can’t count on arguing that it didn’t know which California statute governed its background checks.

ICRAA has one exception that matters in practice. Subdivisions (a) and (b) don’t apply “if the report is sought for employment purposes due to suspicion held by an employer of wrongdoing or misconduct by the subject of the investigation,” according to section 1786.16(c). That helps with a targeted investigation of a current employee. It doesn’t help with routine screening of new hires.

What can an applicant recover?

It depends on the statute and on whether the case is a class action. Under the federal statute, a person who “willfully fails to comply” is liable for actual damages or “damages of not less than $100 and not more than $1,000,” plus punitive damages the court allows and attorney fees, according to 15 U.S.C. § 1681n(a). Willfulness is often the main dispute in federal claims, because those statutory damages depend on it.

California’s remedy doesn’t require willfulness. Under Civil Code section 1786.50(a), a user of information that fails to comply is liable for “Any actual damages sustained by the consumer as a result of the failure or, except in the case of class actions, ten thousand dollars ($10,000), whichever sum is greater,” plus costs and attorney fees. Punitive damages are available if the violation was “grossly negligent or willful,” under subdivision (b).

The two statutes are often pleaded together, and a single defective form can support both counts. A wage and hour claim or a wrongful termination claim sometimes carries a background check count along with it to add pressure. The firm’s post on employee demand letters covers how to respond before a lawsuit is filed.

How do employers defend these claims?

By reading the actual form first. Many complaints describe the disclosure in general terms, and the real document sometimes has fewer problems than the complaint suggests. The version in effect on the date the applicant signed is the one that matters, so the employer needs its version history, not the current template.

California’s statute has a defense of its own. Under section 1786.50(c), a user of information “shall not be liable to a consumer who is the subject of the report where the failure to comply results in a more favorable investigative consumer report than if there had not been a failure to comply.” That defense is narrow, but it fits some facts.

For federal claims, the question is willfulness. A form that tracks the statute, reviewed when it was adopted, is a better position than a vendor template nobody looked at. The employer’s certification to its reporting agency also matters. Under section 1681b(b)(1), the agency can furnish a report for employment purposes only if the employer certifies it has made the disclosure and will follow the adverse action rules, which require giving the person a copy of the report and a summary of rights before acting on it. A company that signed that certification without checking its forms has a harder willfulness defense.

For class claims, the forms are usually uniform, so the defense has to look elsewhere. The dates each person signed, and whether the class period reaches back before a revision, can split a proposed class. Criminal history rules raise separate issues, covered in the firm’s post on the Fair Chance Act. California employment defense lawyers at the firm review these forms as part of the overall defense.

When a background check claim arrives

1. Preserve every version of the disclosure and authorization forms, the onboarding system’s records of who signed which version, the vendor contract and certifications, the reports themselves, and the emails among HR staff about the forms.
2. Calendar the response deadline on the demand or complaint, and check for an arbitration agreement and an employment practices liability (EPLI) policy with notice terms.
3. Identify who chose and approved the forms and who handled report copies and adverse action notices, and stop any further action involving the applicant or employee that could look like retaliation.
4. Pull the signed disclosure for the person making the claim, the date it was signed, and any record of a checkbox request for a copy and when the copy went out.
5. Get legal advice before revising the forms in the middle of a claim, so the change doesn’t read as an admission and the old versions stay preserved.

Background check questions employers ask

Can we combine the federal and California disclosures into one form?

That’s the risk Gilberg identified. The Ninth Circuit held that adding state disclosure requirements to the federal disclosure violated the standalone rule under both statutes. Some employers use separate pages for the federal disclosure, the California disclosure, and the authorization. The safer course is to keep each disclosure limited to what its own statute requires, according to Gilberg.

Does ICRAA apply if our vendor only checks criminal records?

It can. In Connor, the reports included criminal records, sex offender status, address history, driving records, and employment history, and the court held ICRAA applied to reports covering a person’s character or personal characteristics obtained by any means. The court didn’t separately decide whether a check limited to criminal records is an investigative consumer report, so coverage depends on what the report contains. A vendor’s marketing materials don’t decide which statute applies.

Do we need a disclosure for an investigation into misconduct?

ICRAA’s disclosure and copy rules don’t apply when the report is sought because the employer suspects wrongdoing or misconduct by the person investigated. That exception is limited to the investigation itself. A report run on a new hire, or a periodic check of all employees, isn’t covered by it.

Is a mistake on the form enough for an applicant to win?

Not automatically. A federal claimant needs willfulness for statutory damages, and under section 1786.50(c) an employer isn’t liable under ICRAA when the error produced a more favorable report. Class certification, arbitration agreements, and the specific form version the person signed can also limit exposure.

If your company is facing a background check claim

If your company has received a demand or lawsuit over its background check forms, the version each applicant signed and how the company handled report copies usually decide how much of the claim is real. Rosenberger + Kawabata represents employers defending employment lawsuits and claims through its business litigation practice, including claims involving background check disclosures under federal and California law. Contact Rosenberger + Kawabata online for a confidential consultation, or call (310) 894-6921.

Sources

The statutes are 15 U.S.C. § 1681b, 15 U.S.C. § 1681n, Civil Code section 1786.16, and Civil Code section 1786.50. The cases are Gilberg v. California Check Cashing Stores, LLC (9th Cir. 2019) 913 F.3d 1169 and Connor v. First Student, Inc. (2018) 5 Cal.5th 1026.

This post is general information about California and federal employment law as of November 7, 2026. It is not legal advice, and reading it does not create an attorney-client relationship. Employment statutes, regulations, and court decisions change often, and the outcome of any claim depends on its facts. Past results do not guarantee future outcomes.