Pre-Employment & Hiring Procedures in California

Instructor: Bonny Logsdon

Bonny has a Masters in Education and has taught on a College, High, Middle, and Elementary School levels. Bonny has also been involved in Upper Management Training as well as curriculum writing in HR field

In this lesson, you will learn about the legal requirements regarding pre-employment & hiring procedures in California. Areas that will be discussed are consumer credit reports, background checks, drug testing, and labor law postings in the workplace.

Hiring Procedures in the State of California

Imagine that you are an owner of a California pizza delivery business named Crusty's Pizza Shoppe and you need to hire three new employees. You have decided to let an outside screening agency handle the pre-employment process. While working with this screening agency you begin to find that the hiring laws can be sticky and therefore it is necessary for you to learn exactly what it takes to hire someone in the State of California.


Key Laws

Before you can hire any new employees, you must become familiar with the laws that have been established to protect you and the potential employee. Here are just a few of the federal and state laws that apply in this lesson:

  • The Fair Credit Reporting Act (FCRA) - The hiring employer must give a job applicant or employee information which states their rights under the FCRA, before the employer can take any negative action based on information obtained from a consumer credit report. In addition, the employer must provide this information to all individuals involved within 3 days after requesting the report from the consumer reporting agency.
  • Investigative Consumer Reporting Agencies Act (ICRAA) - ICRAA was put into place in 1996. The FCRA and the ICRAA are identical in content except that the ICRAA has nothing to do with the actual credit report. ICRAA states that if an employer uses anyone to gain a consumer report for employment purposes, that employer must inform any future employee of the name, address, phone number and web address of the investigative consumer reporting agency.
  • Consumer Credit Reporting Agencies Act (CCRAA) - This act limits the use of the consumer credit report by an employer. In other words, an employer cannot gain information from the report and use it when making hiring decisions for current or future employees, unless it is for an individual seeking employment or advancement in the justice system, financial institutions, and/or retail.

Pre-Employment & Hiring Procedures in California

The laws above put a few requirements on pre-employment and hiring procedures for California Businesses. Let's look at how these laws affect each of these requirements.

Credit Checks

You need to remember that in California the laws state that an employer cannot get information from a consumer credit report and use it against any employee or job applicants in the hiring process. However, if the job position falls within the federal guidelines for employment and requires a certain job position to have access to other people's personal information, then it is OK for you, as the employer, to use the information obtained from a consumer credit report to make your hiring decisions.

Background Checks

All in Employers throughout the United States must follow the federal regulations set by The Fair Credit Report Act (FCRA) for employee background checks. The FCRA is a federal government law which was put into place to protect the consumer through the accuracy, fairness and privacy when obtaining credit history on any consumer. However, the State of California has implemented its own set of laws that give additional benefits to employees and potential employees.

The FCRA balances the law for employment background checks for the sole purpose of hiring, job advancements, relocation, and job retention. This applies only when an employment background check is prepared by a screening agencies and not by you, the hiring supervisor.

Just like with credit checks, current or future employees must be notified in advance by the screening agency before a background check can be conducted. An employee or potential employee must receive from the screening agency a notification that:

  • Gives the reason of the report.
  • Gives the name, address, and telephone number of the screening agency.
  • Give a summary to the employee or potential employee of his or her rights to request a copy of the report, and
  • Gives a box for the employee or potential employee to check if they would like a copy of the report.

As the employer of Crusty's Pizza Shoppe, you have three business days from the date you receive the report to give a copy to your employee or potential employee. The report can come from you or from the screening agency.

However, note if you decide to do your own background checks without using a third party screening agency, then you must abide by the FCRA, ICRAA and CCRAA guidelines. The one exception is that the ICRAA does require employers who conduct their own background checks to provide potential employees with a copy of the report within 7 days.

It is always a good idea when dealing with the FCRA, ICRAA, and the CCRAA to have legal representation because of the complexity of each law.

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