BILL ANALYSIS
SB 909
Page 1
Date of Hearing: June 29, 2010
ASSEMBLY COMMITTEE ON JUDICIARY
Mike Feuer, Chair
SB 909 (Wright) - As Amended: June 14, 2010
As Proposed to be Amended
SENATE VOTE : 22-7
SUBJECT : Investigative Consumer Reporting Agencies: Disclosures
KEY ISSUE : Should job applicants be informed if any portion of
an employer-requested background report will be prepared outside
of the united states or its territories, where privacy
protections may not be as robust as they are in California or
within the united states?
FISCAL EFFECT : As currently in print this bill is keyed
non-fiscal.
SYNOPSIS
When a person applies for a job, the prospective employer often
provides the applicant's personal information to an
investigative consumer reporting agency that then prepares a
background report pertaining to certain aspects of the
applicant's history and general fitness for the job. According
to the author, the preparation of these reports is increasingly
contracted out to businesses that operate outside of the United
States. Because these other countries might not have the same
privacy protections that are available under California and
federal law, the author believes that job applicants should know
if their personal information will be sent offshore for report
preparation and, in the event that the personal information is
compromised as a result, then the applicant should have an
appropriate remedy. Existing law already provides for the
regulation of investigative consumer reporting agencies and
imposes liability on both agencies and requesting employers if
and when a violation of the regulations causes harm to an
applicant. However, the author contends that existing law does
not adequately address the situations in which the reports are
prepared overseas and, therefore, potentially beyond the reach
of U.S. and California laws. This bill would require the person
procuring the report for employment purposes to provide the job
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applicant with the Internet Web site address of the
investigative reporting agency where the applicant can find
additional information about the agency's privacy practices,
including whether the report will be prepared or processed
outside of the United States or one of its territories. The
bill would also require an investigative reporting agency to
conspicuously post on its primary Internet Web site its privacy
policy, including information about how reports are processed
and prepared and whether any part of the preparation is done
overseas. Finally, the bill would specify that an investigative
consumer reporting agency is liable to a consumer for harms that
result from the preparation of the report outside of the United
States. This measure is supported by "Concerned CRAs," an
industry group made up of screening and reporting agencies that
oppose sending work outside of the United States. The June 14
amendments to this bill have apparently removed all opposition.
SUMMARY : Requires a person (i.e. a prospective employer) who
procures an investigative consumer report for employment
purposes to disclose to the consumer (i.e. an applicant) the
Internet Web site of the investigative consumer reporting
agency. Requires the agency to conspicuously post on its
Internet Web site its privacy policy, including information on
whether reports are prepared or processed outside of the United
States or its territories. Specifically, this bill :
1)Requires, as of January 1, 2012, a person who procures or
causes to be prepared an investigative consumer report for
employment purposes to notify the consumer of the Internet Web
site address of the investigative reporting agency's privacy
practices, including whether the consumer's personal
information will be sent outside of the United States or its
territories for preparation.
2)Requires an investigative consumer reporting agency doing
business in this state to conspicuously post on its primary
Internet Web site a description of its privacy practices with
respect to the preparation and processing of investigative
consumer reports. Specifies that the privacy statement shall
include, but not be limited to, both of the following:
a) A statement entitled "Personal Information Disclosure:
United States or Overseas," that indicates whether the
personal information will be transferred to third parties
outside of the United States or its territories.
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b) A separate section that includes the name, mailing
address, e-mail address, and telephone number of the
consumer reporting agency representatives who can assist
the consumer with additional information about privacy
practices and policies in the event of a compromise of the
consumer's information.
3)Provides that an investigative consumer reporting agency shall
be liable if a consumer is harmed by an unauthorized access of
the consumer's personally identifiable information, or act or
omission that occurs as a result of the agency negligently
preparing or processing a report, or portion thereof, outside
of the United States or one of its territories.
EXISTING LAW :
1)Defines "investigative consumer report," under the
Investigative Consumer Reporting Agencies Act (Civil Code
Section 1786 et seq.), to mean a report in which information
on a consumer's character, general reputation, personal
characteristics, or mode of living is obtained by any means.
Specifies that such reports do not include consumer credit
reports pertaining to a consumer's credit worthiness. (Civil
Code Section 1786.2)
2)Prescribes the circumstances under which, and the persons to
whom, an investigative consumer reporting agency (agency) may
furnish a report, including to a person who intends to use the
information for employment purposes. (Civil Code Section
1786.12.)
3)Sets forth the conditions under which a person may seek an
investigative consumer report. Provides, generally, that a
person may procure a report for employment purposes only if
the person provides a clear and conspicuous written disclosure
that contains the following information: the scope and nature
of the report; the contact information of the agency that will
prepare the report; and information on the consumer's right to
inspect a copy of the report. Specifies that the consumer
must authorize procurement of the report in writing before the
report can be sought by the person seeking the report. (Civil
Code Section 1786.16 (a).)
4)Requires a person who procures an investigative consumer
report to provide the consumer a means to indicate his or her
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wish to obtain a copy of the report and, if the consumer
wishes to receive a copy of the report, the recipient of the
report shall send a copy of the report to the consumer within
three business days of the date that the report is provided to
the recipient. (Civil Code Section 1786.16 (b).)
5)Specifies the items of information that may not be included in
a report, including information pertaining to bankruptcies,
completed lawsuits, unlawful detainer actions, tax liens, and
records of arrest or convictions that predate the report by
more than seven to ten years, as specified. (Civil Code
1786.18.)
6)Requires an investigative consumer reporting agency to
maintain reasonable procedures to ensure that reports contain
accurate and permissible information and that reports are only
provided to persons who are authorized to receive them for a
permissible purpose. (Civil Code Section 1786.20).
7)Provides that if an agency that prepares a report or a user
who procures a report fails to comply with any of the above
provisions is liable to the consumer who is the subject of the
report for damages, as specified. (Civil Code Sections
1786.50 and 1786.52.)
COMMENTS : Under existing law, an "investigative consumer
reporting agency" is defined as any entity that, for a fee,
collects information about a person and prepares an
"investigative consumer report" relating to a person's general
reputation and personal characteristics. (Civil Code Section
1786 et seq.) For example, such reports may include information
on whether the person has recently (usually within the past 7-10
years) filed for bankruptcy, committed a crime, or been subject
to an unlawful detainer. Such reports are typically obtained by
employers seeking background on a job applicant, landlords
seeking information on prospective tenants, or insurance
companies attempting to determine eligibility or calculate
appropriate rates for prospective subscribers. Because of the
sensitive nature of the information contained in such reports -
and the profound impact that it can have on a person's ability
to obtain employment, housing, or insurance - the state has
regulated such agencies since 1975. In general, existing law
prescribes the kinds of information that may be contained in
such a report, limits the purposes of which such a report can be
procured, and subjects both the reporting agency and the person
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procuring the report to prescribed penalties and liabilities for
violations. ("Investigative consumer reports" should not be
confused with "consumer credit reports," which generally pertain
to a person's credit worthiness and which are regulated under a
separate statute.)
This bill would amend existing law only as it relates to reports
relating to employment . According to the author, investigative
consumer reporting agencies are increasingly subcontracting the
actual assembling and preparation of such reports to "offshore"
companies - that is, companies located outside of the United
States or its territories. Because these other countries might
not have the same privacy protections that are available under
California and federal law, the author believes that job
applicants should know if their personal information will be
sent offshore for report preparation and, in the event that the
personal information is compromised as a result, then the
applicant should have an appropriate remedy. Specifically, this
bill would require the person procuring the employment report to
provide the consumer with the reporting agency's Internet Web
site address so that the consumer can obtain information on the
agency's privacy policies, including whether personal
information will be sent outside of the United States for
processing or preparation. In addition, the reporting agency
will be required to conspicuously post on its primary Internet
Web site its privacy policy, including information on whether
reports are prepared outside of the United States and its
policies in the event that personal information is compromised.
Finally, the bill would specify that an investigative consumer
reporting agency - which is already generally liable to
consumers for harms caused by the acts or omissions of the
agency that are in violation of existing regulations -- is also
liable to a consumer for harms that result from unauthorized
access to the consumer's personal data or other acts or
omissions that result from the preparation or processing of the
report outside of the United States or its territories.
Proposed Technical Amendments : As originally in print, the bill
required disclosures concerning reports prepared or processed
"outside of the United States or its territories ." The most
recent amended version refers to reports prepared "outside of
the United States" in some parts of the bill and "outside of the
United States or its territories" in other parts. In order to
ensure consistency throughout, the author has agreed to take the
following amendments in this Committee:
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- On page 4 line 32 after "States" insert: or its
territories
- On page 8 line 29 after "States" insert: or its
territories
ARGUMENTS IN SUPPORT : According to the author, current law "is
silent on the issue of background checks being sent offshore for
processing and preparation." The author contends that this is
so even though there have been "high profile data thefts
reported from workers in off-shore facilities," where California
and federal privacy laws do not apply. This is especially
dangerous, the author contends, as the four-billion dollar
background screening industry seeks to cut costs by having much
of the work done in foreign nations, citing India and the
Philippines in particular. According to the author, this bill
will simply ensure that job applicants know if their personal
information will be shipped off-shore and, because existing law
already requires an applicant to consent before a report is
procured, the consumer will have more power over where his or
her personal information is sent.
"Concerned CRAs" - an industry group made up of several
investigating screening and reporting agencies - support this
bill. Several individual member companies of Concerned CRAs
write that most members of the industry take seriously their
responsibility to protect the confidential nature of the
personal information that is entrusted to them. Most of these
companies have already adopted a policy against "off-shoring"
because the risk that it poses to an applicant's personal
information far outweighs any cost benefits. Several of the
member companies indicate that they believe that this bill will
"educate others in our industry to do the same."
Related Pending Federal Legislation : H.R. 427: "Notify
Americans Before Outsourcing Personal Information Act." This
measure would prohibit businesses from transferring personal
information of a U.S. citizen to any foreign affiliate or
subcontractor in another country without providing notice that
the information may be transferred to such affiliate or
subcontractor. This bill also would authorize a private cause
of action in a state court to enforce compliance with this Act.
This bill is currently in the Subcommittee on House Financial
Services.
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REGISTERED SUPPORT / OPPOSITION :
Support
Concerned CRAs (sponsor)
AccuCheck Investigations
ACUTRAQ
All Background and People Checks
Alliance 2020
AmericanChecked, Inc.
Applicant Insight
APSCREEN
Ascertain Screening and Investigations
Background Profiles
Baxter Research, Inc.
C3 Intelligence
Data Access, Inc.
DDS Employee Screening Services
easyBackgrounds, Inc.
Edge Information Management, Inc.
Employee Screen IQ
Employment Screening Services, Inc.
Frasco Profiles
KnowMyHire.com
Los Angeles District Attorney's Office
National Application Processing & Screening, Inc.
PreCheck, Inc.
Pre-Employment, Inc.
Privacy Rights Clearinghouse
Proforma Screening Solutions
Verifications, Inc.
Opposition
None on file
Analysis Prepared by : Thomas Clark / JUD. / (916) 319-2334