BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 202
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          Date of Hearing:   June 30, 2009

                   ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS
                                 Mary Hayashi, Chair
                     SB 202 (Harman) - As Amended:  June 15, 2009

           SENATE VOTE  :   33-0
           
          SUBJECT  :   Private investigators:  continuing education. 

           SUMMARY  :   Requires private investigators (PIs), as a condition  
          of license renewal, to complete 12 hours of continuing education  
          (CE) in privacy rights, professional ethics, recent legal  
          developments, and other subjects related to the profession, and  
          makes other regulatory changes, as specified.  Specifically,  
           this bill  :   

          1)Requires licensed PIs, beginning January 1, 2013, as a  
            condition of license renewal, to complete 12 hours of CE as  
            follows:  two hours in the subject of privacy rights, two  
            hours in the subject of professional ethics, two hours on the  
            subject of recent legal developments relating to PIs, and six  
            hours on any subject relating to PIs.

          2)Requires licensed PIs whose license is subject to renewal  
            between January 1, 2012, and January 1, 2013, to complete six  
            hours of CE, as approved by DCA, in order to renew his or her  
            license, and of these, two hours shall be on the subject of  
            privacy rights, two hours shall be on the subject of  
            professional ethics, and two hours shall be on the subject of  
            recent legal developments relating to private investigators.

          3)Exempts a licensed PI who is a retired peace officer for less  
            than a year from CE requirements.

          4)Requires a licensed PI who is a retired peace officer for more  
            than a year to complete six hours of CE, as approved by DCA,  
            in order to renew his or her license, and of these, two hours  
            shall be on the subject of privacy rights, two hours shall be  
            on the subject of professional ethics, and two hours shall be  
            on the subject of recent legal developments relating to  
            private investigators.

          5)Requires a licensee to submit to the Department of Consumer  
            Affairs (DCA) a signed statement attesting that the licensee  








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            has completed the specified CE requirements with a license  
            renewal application. 

          6)Requires a licensee to maintain copies of certificates  
            demonstrating completion of the required CE courses for five  
            years. 

          7)Authorizes DCA to suspend (up to 60 days) or revoke the  
            license of a PI for his/her failure to comply with the CE  
            requirements.  The DCA shall have the right to audit the  
            records of any licensee to verify completion of the CE  
            requirement.

          8)Exempts from the mandatory CE requirements:

             a)   Licensed individuals at least 70 years old whose license  
               has been in good standing for a minimum of 25 consecutive  
               years; and, 

             b)   Inactive licensed investigators.

          9)Defines an "inactive licensed investigator" as an individual  
            who is licensed and has informed DCA that he/she will not be  
            performing activities that require licensure, and does not  
            perform such activities. 

          10)Allows an inactive licensed PI to become active upon  
            submitting to the DCA a signed statement that he/she has  
            completed the specified CE requirements and paying a renewal  
            fee.

          11)Requires DCA to develop a procedure for approving continuing  
            education providers (CEPs), convene a review panel to consult  
            with DCA in its consideration and approval of CEPs and course  
            content, and develop criteria for CEPs and CE courses.  The  
            review panel shall include representatives of CEPS and  
            professional associations of licensed PIs.

          12)Requires CEPs to obtain DCA approval to provide required CE  
            courses.

          13)CEPs shall:

             a)   Obtain approval from DCA prior to offering a CE course  
               to licensed PIs; 








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             b)   Submit to DCA a course description, certificate, and  
               curriculum vitae of course instructors for review and  
               approval;

             c)   Maintain a record of course sign-in forms, sign-out  
               forms, student enrollment, copies of certificates of  
               completion, and course outlines for a period of five years;  
               and, 

             d)   Agree to audits performed by DCA.

          14)Authorizes DCA to revoke or deny the right of a CEP to offer  
            the required PI CE courses for failure to comply with any of  
            these requirements.

          15)Authorizes CEPs approved by and in good standing with the  
            State Bar to provide mandatory continuing legal education, to  
            offer CE to licensed PIs without approval from DCA. 

          16)Authorizes CEPs approved by and in good standing with the  
            Commission on Peace Officer Standards and Training, to offer  
            CE to licensed PIs without approval from DCA. 

          17)Requires DCA to establish and charge CEPs a fee in an amount  
            not to exceed DCA's direct costs in implementing PI CE  
            requirements and developing criteria for CEPs and course  
            content. 

          18)Specifies that any applicant who knowingly signs a false  
            statement asserting completion of CE requirements is subject  
            to a civil action punishable by a fine up to $10,000.  In  
            addition, DCA may suspend the PI's license for up to a year,  
            and revoke the license if the CE requirements remain unmet.   
            Any public prosecutor may bring the civil action.  Requires  
            DCA to advise the applicants of this penalty in the  
            application documents.

          19)Increases the maximum amounts charged for an initial PI  
            license from $175 to $195 and for a PI renewal license from  
            $125 to $145.

           EXISTING LAW  :

          1)Provides for the licensure and regulation of PIs by the Bureau  








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            of Security and Investigative Services (Bureau) within DCA.

          2)Requires an applicant for licensure as a PI to:              

             a)   Be 18 or older; 

             b)   Undergo a criminal history background check through the  
               Department of Justice and the Federal Bureau of  
               Investigation; 

             c)   Have three years (2,000 hours each year, totaling 6,000  
               hours) of compensated experience in investigative work, or  
               a law or police science degree plus two years (4,000 hours)  
               of experience, or an AA degree in police science, criminal  
               law, or criminal justice and two and one-half years (5,000  
               hours) of experience.  The experience must be certified by  
               the employer and have been received while the applicant was  
               employed as a sworn law enforcement officer, military  
               police officer, insurance adjuster, employee of a licensed  
               PI or repossess, or arson investigator for a public fire  
               suppression agency; 

             d)   Pass a two-hour multiple choice examination covering  
               laws and regulations, terminology, civil and criminal  
               liability, evidence handling, undercover investigations and  
               surveillance; and, 

             e)   Pay an application and examination fee not to exceed  
               $50, and a license fee not to exceed $175. 

          1)Provides that a PI license is valid for two years and requires  
            the licensee to pay a renewal fee of not more than $125.

          2)Establishes the Private Investigator Fund (Fund) as a separate  
            "special fund" for the receipt of all revenue generated under  
            the PI licensing law.  Requires that all money in the Fund be  
            expended by the Bureau for the purpose of carrying out the  
            provisions of the PI licensing law. 

          3)Requires the Bureau to consider:

             a)   When creating or updating the PI licensing exam,  
               including privacy and professional ethics questions,  
               including a separate professional ethics exam, and  
               requiring current licensees to take the separate exam if it  








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               is appropriate; and, 

             b)   Requiring initial license applicants to submit proof of  
               satisfactory completion of a course in professional ethics,  
               as specified. 

           FISCAL EFFECT  :   Unknown

           COMMENTS  :   

           Purpose of the bill  .  According to the author's office, "SB 202  
          would require licensed investigators to obtain 12 hours of CE  
          every two years.  SB 202 would also increase the biennial  
          licensure fee by $20, an amount necessary to generate $220,000  
          annually to completely cover the costs of administering the new  
          requirements.  Even though California PIs are licensed and  
          regulated by the state DCA Bureau, there is no current  
          requirement providing the opportunity for investigators to learn  
          of newly-enacted laws, nor is there a compendium of applicable  
          laws for investigators to educate themselves.  Consequently,  
          many of the almost 10,000 licensed investigators may not be  
          aware of the latest developments and legal requirements  
          applicable to the industry."

           Background  .  Currently, PIs are not required to take any CE as a  
          condition for license renewal, but can elect to take voluntary  
          CE courses offered by associations, businesses, and  
          institutions.  Requiring mandatory CE as a condition for license  
          renewal is justified when it is considered necessary in order to  
          maintain a licensee's minimal satisfactory level of competence  
          in his or her occupation.

          According to the sponsor, the Bureau has the regulatory and  
          enforcement authority provided to it by the Private  
          Investigators Act (Act) in the California Business and  
          Professions Code (BPC).  While many enacted laws relating to  
          privacy protection are contained in other codes, including the  
          Civil Code, the Bureau's authority does not extend to those  
          laws.  The passage of recent legislation to protect personal  
          information, such as restrictions on false impersonation,  
          disclosure of medical records, and disclosure of financial  
          information, are located in codes outside the Act and BPC.  The  
          sponsors claim that the personal privacy laws described are  
          general laws, making it difficult for PIs to track and keep up  
          with new regulations because they are found outside of the Act  








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          and BPC.  Therefore, consumer complaints concerning an alleged  
          violation of those laws is neither monitored nor enforced by the  
          Bureau.  Instead, such concerns would be referred to the  
          appropriate regulatory authority, such as the California Office  
          of Information Security and Privacy Protection.   

          The sponsors contend that CE on privacy rights, professional  
          ethics, and recent legal developments are necessary because "PIs  
          are entrusted with the personal information of consumers on all  
          sides of an issue, in identify theft, in sexual harassment,  
          workplace discrimination and other workplace investigations, in  
          criminal defense, in workers' compensation fraud and other types  
          of fraud, in investigating civil torts and surveillance for all  
          purposes.  The misuse of the personal information can cause  
          bodily harm, loss of employment, incarceration, monetary losses  
          and privacy intrusions."  The sponsors further add that privacy  
          and surveillance laws have changed with time and that they also  
          change when law enforcement and military officers transition  
          into the role of a private citizen working as a PI.  

          In addition, the sponsor claims that SB 202 is a preventative  
          measure and may have prevented the publicized accounts of PI  
          misconduct, including:  the 2005 Hewlett-Packard spying scandal  
          in which PIs illegally obtained confidential phone records, the  
          2007 federal grand jury indictment of 10 PIs for identity theft  
          and false impersonation, and the 2007 incident where a PI  
          impersonated a mental health worker and claimed to be the  
          victim's confidante.  In the last case, the California Supreme  
          Court ruled that prima facie evidence for a tort case existed. 
          
          The sponsors provided the following examples of CEPs that PIs  
          can use to take CE in this bill:  distance learning,  
          individuals, firms, associations, company training,  
          institutions, mandatory CE credit providers, and Peace Officer  
          Standard and Training programs.   
          
          The Bureau licenses approximately 10,000 PIs.  The largest state  
          PI association is the California Association of Licensed  
          Investigators, Inc. (CALI), which has approximately 1870 members  
          and is sponsoring this bill.  Another state PI association,  
          Professional Investigators of California Association (PICA), has  
          approximately 300 members, and opposes this bill.  
          
          Neither DCA nor the Bureau has taken a formal position on this  
          bill.  In addition, it has not been demonstrated how much  








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          consumer harm has resulted and the necessity for this bill.  The  
          argument that many of the PIs are not affiliated with an  
          association, where much of the training currently emanates from,  
          may not justify mandatory CE.  Based on the three examples  
          provided by the sponsors, there have been 12 PIs that have acted  
          unscrupulously, amounting to 1.2% of the industry.  The sponsors  
          claim that the figure for PI misconduct is underreported because  
          consumer complaints about privacy and ethics are not tracked by  
          the Bureau.  The Bureau may wish to consider tracking such  
          complaints. 

          Supporters contend that recent legislation on privacy rights,  
          professional ethics, and legal developments, coupled with a few  
          highly publicized accounts of PI misconduct, demonstrates a need  
          for CE for PIs.  Supporters also argue that this is a preventive  
          measure that would avoid the significant costs if there was a  
          misuse of personal information resulting in bodily harm, loss of  
          employment, incarceration, financial loss, or privacy  
          intrusions. 

          Opponents contend that this legislation is unnecessary and that  
          there is a lack of evidence demonstrating the need for CE for  
          PIs.  Opponents claim that if CE were truly necessary, then such  
          legislation should be Bureau-sponsored.  In addition, opponents  
          state that mandatory CE is a financial burden.  Lastly,  
          opponents contend that with recent DCA leadership changes and  
          the recent arrival of the Bureau's Acting Director, that this  
          may not be the appropriate time for this legislation. 

           Arguments in support  .  According to the sponsor, this bill would  
          "benefit consumers by ensuring that when they hire a  
          California-licensed PI, the person they hire will be  
          knowledgeable in the areas of privacy rights, ethics, and  
          updates in legal and technological developments.  It is  
          important that consumers who hire licensed PIs have some measure  
          of assurance that the person they engage knows the privacy laws  
          that apply to the investigation.  There are many important  
          privacy-related laws that have been enacted since the vast  
          majority of PIs received their licenses.  The privacy laws  
          address the protection of sensitive personal information,  
          prohibitions against false impersonation, and measures to  
          prevent identity theft.  Neither the preparation for a state  
          license, nor the testing that is conducted for a license,  
          address any of these laws.  The Act set forth in the BPC  
          addresses many aspects of an investigation, but it does not  








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          address the many other laws including the Civil Code.  

          "Even though California PIs are licensed and regulated by the  
          state DCA Bureau, there is no current requirement providing the  
          opportunity for PIs to learn of newly enacted laws, not is there  
          a compendium of applicable laws for PIs to educate themselves.   
          Consequently, many of the almost 10,000 licensed investigators  
          may not be aware of the latest developments and legal  
          requirements.  In addition, a large portion of licensed PIs  
          qualify for the requisite 6,000 hours of experience through  
          their law enforcement experience and training that allows them  
          to take a test.  Unfortunately, the law enforcement background  
          does not prepare an individual to conduct business in the  
          private sector and the required test does not require the same  
          education as the CE program would provide." 

           Arguments in oppose  .  According to Capitol City Investigations,  
          "The Bureau presently has authority to require and test in two  
          of the three mandated subjects contained in SB 202, yet it  
          hasn't? Data published by the Bureau reflects that for the  
          four-year period between 2005 and 2008, only one disciplinary  
          citation was issued to a PI which was in 2005.  Four licensed  
          PIs have been placed on disciplinary probation during this same  
          four-year period; two in 2005, one in 2006, one in 2007 and none  
          in 2008.  If there's any trend to extrapolate from these  
          numbers, there has been significant improvement among the  
          state's 9,993 licensed and professional PIs."

          According to the Association of California Investigative  
          Professionals (A.C.I.P.), they "believe that this bill is a  
          means to create a financial windfall to CALI, the organization  
          that drafted this legislation" by increasing CALI's memberships  
          and by encouraging PIs to attend their conferences and seminars  
          for CE credits. 

          According to the owner of the Bermudez Group, Inc, he has "yet  
          to see a professional/academic study demonstrating that 'PI CE'  
          is a public policy matter."

           Prior Legislation  .  SB 1282 (Margett) of 2008 was an identical  
          bill that the Governor vetoed.  The Governor vetoed a  
          substantial number of bills that year with the same message  
          that, due to the delay in passing the 2008-09 State Budget, he  
          would only sign bills that were "the highest priority for  
          California."  AB 1282 was vetoed for this reason. 








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          AB 761 (Maddox), Chapter 309, Statutes of 2001, contained  
          provisions similar to SB 202 that would have required 14 hours  
          of mandatory CE for renewal of a PI license.  This bill was  
          amended in the Senate to delete those requirements and instead  
          enact the current statutory requirements that the Bureau  
          consider, including privacy and PI licensing exam questions,  
          requiring a separate professional ethics exam, and requiring  
          applicants for new licenses to complete a professional ethics  
          course.  To date, the Bureau has not utilized these provisions.

           Suggested technical amendments  . The following amendments are  
          technical in nature and would clarify the following:  CE  
          requirements for retired peace officers licensed as PIs, the  
          inclusion of licensed PIs in the review panel that approves CEPs  
          and CE course content, and fee cap amount that DCA can charge  
          CEPS. 

          On page 3, line 26, after "year" insert "and not more than two  
          years"

          On page 5, line 1, after "Notwithstanding" insert "paragraph"

          On page 5, line 16, after "include" insert "licensed private  
          investigators,"

          On page 5, line 17, after "CEPS" insert a comma

          On page 5, line 24, after "costs" insert "not to exceed twenty  
          dollars ($20) per course," 

          On page 5, line 25, strike out ", in an amount not to exceed"  
          and insert "to cover"

          On page 5, line 27, after "and" insert "course content," 

           REGISTERED SUPPORT / OPPOSITION  :

           Support 
           
          California Association of Licensed Investigators, Inc. (sponsor)
          Adelanto Committee of Watts
          California League of United Latin American Citizens
          City of West Hollywood
          Chris Reynolds Investigation 








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          DCW & Associates
          Employment Check
          F.W. Huntington & Associates, Investigations 
          Gold River Investigations 
          Graham McGruer & Associates
          Houston Investigative Services
          Intelle Quest Investigations 
          Jean Kyles & Associates
          Krout and Schneider, Inc. 
          League of United Latin American Citizens (LULAC) Councils 3122,  
          3036 and 3150
          Legal Support Investigative Service (LSIS)
          Mexican American Political Association, San Fernando Valley  
          Chapter
          National Organization for Women, San Fernando Valley/Northeast  
          L.A. Chapter
          Perrin Investigative Service
          Pettinato & Associates 
          Privacy Rights Clearinghouse 
          Special Circumstances
          Stonewall Democratic Club of Los Angeles
          The Titan Group Professional Investigations 
          Thin Blue Line Investigations
          Numerous Individuals 
           
            Opposition 
           
          1st Investigative Group 
          Able Trace Investigative Group, Inc. 
          American Fraud Institute
          Apollo Investigative Services
          Association of California Investigative Professionals (A.C.I.P.)
          AZ Global Investigations
          Backtrack Unlimited
          Beagle Detectives 
          Bermudez Group, Inc.
          Capital City Investigations 
          Clarke & Co. 
          Conaway Investigations 
          Connors Consulting and Investigation 
          David L. Warkentine Private Investigations
          Douglas W. Dixon & Associates 
          Drakonx
          DRI Private Investigators 
          Gach & Associates








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          Gary L. Ermoian, Investigations
          I.S.E. Investigative Services
          Janson & Associates 
          JHRI, Inc. 
          Moore Research
          NFrusteenCompany 
          Nationwide Investigative Services
          P.L. Dalton Company, Inc. 
          Parkin Security Consultants 
          Professional Investigators of California Association (PICA)
          Rodarte Investigations 
          San Diego County Investigators Association
          SDChilds
          Smeaton & Associates
          Sterling Investigative Services, Inc. 
          The Trust
          Timothy Friend & Associates
          Numerous Individuals 

           Analysis Prepared by  :    Joanna Gin / B. & P. / (916) 319-3301