A California Court of Appeal recently ruled that job applicants and employees can recover a statutory sum when an employer violates California’s background check rules without needing to show that the violation caused any harm, highlighting the importance of complying with all technical and procedural rules under the law (Parsonage v. Wal-Mart Associates, Inc., D083831 (February 4, 2026)).
California employers know that running background checks on job applicants can be complex. Depending on the type of information employers are looking for, background checks can involve several different laws, including California’s Fair Chance Act rules on criminal background checks and federal and state restrictions on obtaining consumer reports. This case involved the latter, specifically California’s Investigative Consumer Reporting Agencies Act (ICRAA).
The ICRAA requires employers obtaining an applicant’s investigative consumer report to comply with several procedural requirements, including disclosure and consent requirements. Employers must provide a clear and conspicuous written disclosure in a separate, stand-alone document that consists only of the disclosure, which must inform the applicant of certain things, including the name, address and telephone number of the investigative consumer reporting agency conducting the investigation.
The disclosure must also include a checkbox the consumer may select if they want to receive a copy of the report, and employers must provide a certificate of compliance to the agency generating the report.
The ICRAA allows consumers to sue for violations. An employer that doesn’t comply with the requirements is liable for “any actual damages sustained by the consumer as a result of the failure, or, except in the case of class actions, ten thousand dollars ($10,000), whichever sum is greater” (Civil Code section 1786.50(a)(1)).
In this case, Tina Parsonage applied for a job as a sales associate. A few days later, she accepted an offer of employment conditioned on passing a background check. She electronically viewed and acknowledged receipt of a background report disclosure and electronically signed the related authorization. The disclosure was 14 pages long. The “California Disclosure” began on page 9 and listed six consumer reporting agencies with a number to call to find out which agency was used for her report. The employer mailed a copy of the report to Parsonage, and she began employment on June 15, 2018.
In September 2021, Parsonage sued the employer for a violation of ICRAA. She alleged that her employer failed to identify the agency conducting the investigation by including six agencies in the disclosure. Further, by including six agencies, the employer failed to make the disclosures in a clear and conspicuous manner in a standalone document. She also alleged that the employer did not include the required checkbox to request a copy of her report and that the employer failed to provide a required certificate of compliance to the investigative consumer reporting agency.
The employer argued that Parsonage lacked standing to sue under ICRAA because she didn’t suffer any harm from the violations as she ultimately received the job she applied for and didn’t experience any adverse employment actions. Agreeing with the employer, the trial court granted the employer’s motion for summary judgement on the basis that Parsonage lacked standing under ICRAA. The Court of Appeal disagreed and reversed the trial court’s decision.
The Court of Appeal analyzed ICRAA’s provisions and legislative history and concluded that the law doesn’t require a plaintiff to show actual damages or injury — a statutory violation alone is enough to have standing to bring a lawsuit. The court noted that ICRAA’s remedy provision doesn’t add additional standing requirements such as showing actual harm, an adverse employment action or other damages. The law allows for recovery of actual damages, or $10,000, “whichever is greater.” According to the court, the California Legislature, through this provision, “made clear the agency or user should be held liable regardless of whether the consumer suffers any actual damages.”
Employers should review their background check disclosures and consult with the legal counsel to ensure compliance with the law.
James W. Ward, J.D., Employment Law Subject Matter Expert/Legal Writer and Editor, CalChamber
CalChamber members can read more about Obtaining Investigative Consumer Reports in the HR Library. Not a member? Learn how to power your business with a CalChamber membership.
