California Employers Beware – Mere Technical Violation Sufficient for Lawsuits

California employers buckle up! A recent decision from the Court of Appeal, Fourth Appellate District in California is raising serious alarm bells. In an opinion filed February 4, 2026, the Court determined that under California state law, a mere technical violation of the Investigative Consumer Reporting Agencies Act (ICRAA) is sufficient for a lawsuit to proceed against an employer – no actual harm needed.

What’s ICRAA?

Before we dive into the case opinion, let’s start with a refresher on just what is the Investigative Consumer Reporting Agencies Act, or ICRAA. ICRAA is a long-standing law in California that largely mirrors the Fair Credit Reporting Act (FCRA) in many instances.

ICRAA requires employers provide a clear and conspicuous disclosure in writing to a consumer before obtaining a consumer report in a document that consists solely of the disclosure. The disclosure must include:

• That an investigative consumer report[1] may be obtained

• Why the report is being obtained (i.e., what’s the permissible purpose)

• That this may include information on the consumer’s character, general reputation, personal characteristics and mode of living

• The name, address and telephone number of the investigative consumer reporting agency conducting the background check

  • Spoiler alert: This is the important item as it relates to the case we’re discussing here!

• The nature and scope of the investigation requested, including a summary of the consumer’s rights under Section 1786.22

• The website of the investigative consumer reporting agency where the privacy policy may be located (or the telephone number if the agency has no website).

The consumer must also authorize the background report. As a helpful aside, when we mention an “investigative consumer reporting agency” that’s really just California’s formal name for a background screening company.

ICRAA also includes adverse action requirements, among other obligations. Violating ICRAA can lead to recovery of statutory damages of $10,000 for each violation or actual damages (whichever is greater).

What’s this case all about?

This case was filed by an individual who was hired to work at the retailer. In June 2018, she was hired to work, received an offer contingent on passing a background check, and electronically signed a “Background Report Disclosure” and “Background Report Authorization” for the background check.

The disclosure form was 14 pages long and included a “California Disclosure” which listed six different consumer reporting agencies, including each company’s address, website and telephone number. This disclosure informed consumers they could call a specific telephone number to figure out which background check company was going to be used.

The plaintiff received the report and began working. Fast forward almost three years – she sues alleging the employer violated ICRAA by failing to identify the name, address and telephone number of the agency performing the background check. She claimed that the employer failed to make the disclosure in a clear and conspicuous manner in a standalone document by including the six separate background screening companies.

What did the court decide?

The employer tried to argue that the plaintiff lacked standing to pursue her ICRAA claim. After all, she ended up receiving the job and a copy of the report. According to the employer, she had not suffered any harm or damage from any technical violation of ICRAA. The trial court agreed with the employer and granted its motion for summary judgment.

However, the appellate court unfortunately took a different stance. The court reviewed California’s law on standing contrasting that with the federal standard for standing (note: standing means the person has the right to sue).

As a result of this analysis, the court determined that, under California law, you don’t need proof of harm to pursue a claim. Rather, demonstrating a technical violation of the law is good enough to pursue a claim. The court reversed the trial court’s summary judgment ruling.

Yikes! What should I do now?

If you hire in California, take a close look at your disclosure forms used for background checks. This is especially important if you use multiple background screening providers (rather common in some industries like staffing and transportation) and list those providers on your California specific disclosure form. As an aside, if you don’t have a separate California disclosure form, that’s worth discussing with an expert as well – especially if you’re trying to tackle California information (along with other state-specific information) all on your FCRA disclosure form.

Want to chat further? Feel free to reach out to us by calling 763-220-7950 or email at info@backgroundlegal.com.

[1] Note: ICRAA uses the term “investigative consumer report” which is synonymous with the FCRA’s term “consumer report”. Under the FCRA an “investigative consumer report” means a report that includes information on a “consumer’s character, general reputation, personal characteristics, or mode of living” that is obtained through interviews with people associated with the consumer. Essentially this means checks like personal or professional references, but may also include employment verifications in some instances.