California employers who run background checks are working under more layers of law than almost any other state. Federal rules from the Fair Credit Reporting Act set the floor, and California adds its own investigative consumer reporting statute, a statewide fair chance law tied to conviction history, limits on credit checks, and city ordinances in places like Los Angeles and San Francisco that go further still. Getting the sequence and the paperwork right matters, because a mistake at any layer can turn a routine hire into a claim.
This guide walks through each layer in the order an employer actually encounters it: federal disclosure and authorization, the California Investigative Consumer Reporting Agencies Act (ICRAA) and its seven year window, the Fair Chance Act’s conditional offer and individualized assessment process, the state limit on using credit reports, and the additional steps required in Los Angeles and San Francisco.
The federal floor: FCRA disclosure and adverse action
Before an employer can order a background check on an applicant or employee, the federal Fair Credit Reporting Act requires a clear, standalone written disclosure that a consumer report may be obtained, separate from the job application, and the applicant’s written authorization. If the employer is considering an adverse decision based on the report, it must send a pre-adverse action notice with a copy of the report and the Summary of Consumer Rights, give the person a reasonable opportunity to respond, and only then send a final adverse action notice if it proceeds. California layers additional notice and timing requirements on top of this federal sequence, described below.
ICRAA: California’s investigative consumer reporting law
Many background checks used for employment in California, particularly those that include public record searches performed through an outside agency, fall under the state’s Investigative Consumer Reporting Agencies Act (California Civil Code Section 1786 and following). ICRAA requires its own disclosure and authorization language, separate from the FCRA disclosure, and it restricts how far back certain items can be reported.
Under Civil Code Section 1786.18, an investigative consumer reporting agency generally may not report, among other things: bankruptcies more than ten years old measured from the order of relief, lawsuits, satisfied judgments, unsatisfied judgments, paid tax liens, and collection accounts more than seven years old, and records of arrest, indictment, or conviction where the disposition, release, or parole date is more than seven years in the past. The statute also bars reporting an arrest or complaint once it is known that a conviction did not result, except while the matter is still pending. There are limited exceptions, including certain high value life insurance underwriting and situations where a government regulator explicitly requires the older information to be checked. Employers should not assume the seven year window is absolute in every case; it varies by information type and by exception, so the primary statute is the source to check, not a general rule of thumb.
The Fair Chance Act: conditional offers and individualized assessment
California’s statewide Fair Chance Act, codified at Government Code Section 12952, applies to employers with five or more employees. It makes it an unlawful employment practice to ask about an applicant’s conviction history on a job application, or to inquire into or consider conviction history in any way, before a conditional offer of employment has been made. Only after extending a conditional offer may an employer run a criminal history background check or ask about convictions.
If a criminal history background check surfaces a conviction the employer is considering as a basis to withdraw the offer, the law requires an individualized assessment. The employer generally should weigh factors such as the nature and seriousness of the offense, the time that has passed, and the nature of the job before making a final decision, and existing federal guidance from the Equal Employment Opportunity Commission on arrest and conviction records outlines a similar individualized approach under Title VII. If the employer intends to rescind the offer, it must provide written notice identifying the disqualifying conviction, a copy of any background check report, and an explanation of the applicant’s right to respond within a set period before a final decision is made. Employers should treat this as a process to follow closely rather than a box to check, and should not assume a conviction automatically disqualifies a candidate; state and federal law both call for individualized review, and legal counsel should be consulted on close calls.
Credit reports: Labor Code Section 1024.5
California also restricts when an employer may pull a credit report for employment purposes. Under Labor Code Section 1024.5, an employer generally may not use a consumer credit report unless the position falls into specific categories, such as a managerial role, a position with the Department of Justice, a sworn peace officer or other law enforcement position, a role where the law affirmatively requires use of credit information, or certain positions involving regular access to significant cash, bank or credit card account information, or other sensitive financial or proprietary data as defined in the statute. Even where credit checks are allowed, the FCRA’s disclosure, authorization, and adverse action rules still apply on top of the state restriction.
Local ordinances: Los Angeles and San Francisco add more
Beyond state law, some California cities layer on their own fair chance ordinances with additional notice periods, required assessment factors, or broader coverage of business types than the state law reaches. San Francisco’s Fair Chance Ordinance, for example, restricts when and how criminal history can be considered by employers operating in the city and requires its own notice steps before an adverse decision, on top of the state Fair Chance Act. Los Angeles has a similar municipal fair chance ordinance covering employers operating within city limits. Because these ordinances change and can differ in scope from the state law, employers operating in those cities should confirm current requirements with the city agency rather than relying on the state process alone.
Quick comparison: state and federal layers
| Layer | What it covers | Key requirement |
|---|---|---|
| Federal FCRA | Any employer using a third party consumer report | Standalone disclosure, authorization, pre-adverse and adverse action notices with Summary of Rights |
| California ICRAA | Investigative consumer reports, often used for public record checks | Separate state disclosure and authorization; reporting limits under Civil Code 1786.18 |
| Fair Chance Act | Employers with five or more employees, statewide | No conviction history inquiry before a conditional offer; individualized assessment and notice before rescinding |
| Labor Code 1024.5 | Use of consumer credit reports for employment | Credit reports limited to specific job categories |
| Local ordinances (e.g. Los Angeles, San Francisco) | Employers operating in those cities | Additional notice periods and assessment steps beyond state law |
What this means for an employer’s process
In practice, a compliant California hiring flow generally looks like this: post the job and interview without asking about conviction history, extend a conditional offer, then obtain both the FCRA and ICRAA disclosures and authorizations before ordering any background check, run the credit check only if the role qualifies under Labor Code 1024.5, and if a conviction or credit issue could affect the decision, complete an individualized assessment and send the required pre-adverse and adverse action notices with time built in for the applicant to respond. A background check does not automatically surface every past record in every state; what appears depends on the sources searched, the seven year and other reporting limits described above, and how each jurisdiction’s own record rules work. No background check provider can promise that a check will or will not reveal a particular record, and no report should be treated as the final word without the individualized review these laws require.
Because state and local rules change and interact with federal law in ways that depend on the specific facts of a role and a candidate’s history, employers should build their process with input from employment counsel, especially for edge cases involving marijuana related convictions, expunged records, or overlapping city ordinances.
Frequently asked questions
Does California’s seven year rule apply to every criminal record?
No. Civil Code Section 1786.18 sets a seven year limit for investigative consumer reports measured from the date of disposition, release, or parole for most convictions, but it also lists specific exceptions, such as certain high value insurance underwriting and roles where a regulator requires checking older records. The rule varies by information type, so employers should review the statute for the specific record at issue rather than applying a blanket seven year assumption.
Can a California employer ask about conviction history on a job application?
Generally no, if the employer has five or more employees. Government Code Section 12952 makes it unlawful to ask about conviction history on an application or to inquire into it before a conditional offer of employment has been made.
When can a California employer run a credit check on an applicant?
Only for positions that fall into the categories listed in Labor Code Section 1024.5, such as managerial roles, certain law enforcement positions, or roles with defined access to significant cash or financial account information. Outside those categories, credit reports generally may not be used for employment decisions.
Do Los Angeles and San Francisco have their own background check rules?
Yes. Both cities have local fair chance ordinances that add requirements on top of the statewide Fair Chance Act for employers operating within city limits, including additional notice steps. Employers should check the current city ordinance directly since local requirements can be updated.
What happens if an employer wants to withdraw a job offer because of a conviction?
The employer generally must complete an individualized assessment and provide the applicant written notice identifying the specific conviction at issue, a copy of the background check report, and an opportunity to respond before making the decision final. This is required under the state Fair Chance Act and parallels the individualized approach described in EEOC guidance under federal law.
Is a background check report the same thing under FCRA and ICRAA?
Not always. ICRAA specifically covers investigative consumer reports, which often include information gathered through public records or interviews. Many employment background checks in California trigger both the federal FCRA disclosure and authorization requirements and the separate California ICRAA disclosure and authorization, and employers should provide both where applicable.
Sources
- California Civil Code Section 1786.18 (ICRAA reporting limits)
- California Government Code Section 12952 (Fair Chance Act)
- California Labor Code Section 1024.5 (credit report limits)
- California Civil Rights Department, Fair Chance Act
- U.S. EEOC Enforcement Guidance on Arrest and Conviction Records
- Federal Trade Commission, Using Consumer Reports: What Employers Need to Know
- City and County of San Francisco, Fair Chance Ordinance
For background on how individualized assessment works after a criminal history hit, see Individualized Assessment After a Criminal Hit. For more on credit report rules outside California, see Credit Checks for Employment: State Laws, FCRA Rules, and When They Apply. Learn more about compliant screening at Reveal Background.
This article is general information, not legal advice. Background check laws change and vary by jurisdiction; consult employment counsel for guidance specific to your business.
