BILL ANALYSIS
AB 671
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|Hearing Date:June 14, 1999 | Bill No:AB 671|
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SENATE COMMITTEE ON BUSINESS AND PROFESSIONS
Senator Liz Figueroa
Bill No: AB 671Author:Campbell
As Amended:April 5, 1999 Fiscal: No
SUBJECT: Private Investigator Act: exemption from
licensure
SUMMARY: Exempts "mystery shoppers" from state private
investigator licensure requirements.
Existing law:
1)Requires licensure of private investigators by the Bureau
of Security and Investigative Services (BSIS) of the
Department of Consumer Affairs (DCA).
2)Establishes experience and related qualifying criteria
for licensure as a private investigator.
3)Defines the business activities of a private investigator
for which licensure is required.
4)Specifies persons who are exempt from these licensure
requirements.
This bill:
1)Exempts a person or business that provides objective
observations of consumer purchased products or services
only in public environments of business establishments by
use of a pre-established questionnaire, which may include
objective comments.
2)Specifies that the exemption from licensure as a private
investigator does not apply if the pre-established
questionnaire is used as the sole basis for evaluating an
employee's work performance.
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FISCAL EFFECT: None
COMMENTS:
1.Purpose. This bill is intended to differentiate between
the activities of private investigators for which
extensive experience is required, and the activities of
mystery shoppers for which such extensive experience is
unnecessary, and to exempt the latter from the licensure
requirements. This bill is sponsored by its author who
states that it would allow mystery shoppers to be hired
to evaluate a store's performance on customer service and
cleanliness. Further, the author states the bill would
permit the use of objective observations by a mystery
shopper only with the use of a pre-established
questionnaire that cannot be used as the sole basis for
evaluating an employee.
2.Background. Supporters of the bill draw the distinction
between "integrity shops" and "non-integrity shops" based
upon the intention for the shop. The "integrity" shop is
intended to observe the performance of an employee for
honesty, etc., and form the basis for evaluating the
employee's performance and taking punitive action. The
"non-integrity" shop is intended to evaluate the
company's level of customer service and appeal, and not
for employee discipline. The bill would only exempt the
latter, specifying that they cannot be used as the sole
basis for evaluating an employee's work performance.
3.Licensure: definition of private investigator,
exemptions, and experience requirements. The current
definition of private investigator is very broad and
general. It includes those who make an investigation for
the purpose of obtaining information with reference to:
the identity, habits, conduct, business occupation,
honesty, integrity, credibility, knowledge,
trustworthiness, efficiency, loyalty, activity, movement,
whereabouts, affiliations, associations, transactions,
acts, reputation, or character of any person. The
current law also contains a broad list of exemptions from
the licensing requirement, including persons who work
regularly and exclusively for one employer, government
employees, attorneys, insurance adjusters and others in
the insurance business, banks and savings & loan
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associations, persons who obtain information solely from
public records and others.
An applicant for a private investigator license must
demonstrate at least three years of qualifying experience
(calculated at 2,000 hours = a year) in fields such as
law enforcement, military police, employment by a
licensed insurance adjuster, repossessor, or private
investigator - or 6,000 hours of experience altogether.
4.Arguments in Support. The bill is supported by the
Mystery Shopping Providers Association (MSPA) which is
stated to be a national organization representing market
research firms doing mystery shopping and market research
in the United States and Canada and internationally. The
MSPA states that the process of gathering customer
service information using mystery shoppers is a widely
accepted marketing practice. As such, mystery shoppers
are not instructed to find fault or find people who
should be penalized or fined. Instead, they are
instructed to describe what it was like to be a customer
in a business on a particular day, using a form that fits
the particular client business' environment. The MSPA
states that while the bill would exempt mystery shopping
activities, any "security activities would still be the
responsibility of a licensed private investigator."
The form letters from individual supporters of the bill
(many of whom are business members of the MSPA) make the
same arguments.
5.Arguments in Opposition. The California Association of
Licensed Investigators (CALI) has an "Oppose Unless
Amended" position on the bill. CALI has been concerned
that the bill would permit unlicensed persons without the
necessary expertise and experience to perform personnel
investigative activities that should be done by a
licensed private investigator.
CALI has requested four amendments from the author to
"refine the exception to the Private Investigator Act"
that would be established by the bill. The amendments
are: (a) clarify that businesses or persons who are
engaged in activities in addition to mystery shopping for
which licensure is required are not exempted from
licensure by the bill when doing those activities, (b)
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exclude the identity of a specific employee from the
questionnaire - to assure that it can't be used for
employee evaluations, (c) delete the proposed
authorization for a mystery shopper to add comments (the
bill refers to "objective comments") to the
pre-established questionnaire - since comments are
inherently subjective rather than objective, and (d)
require that the mystery shopper be an employee of the
mystery shopping company that hires him or her, and not
an independent contractor - to assure that there would be
some regulatory oversight and that taxes and benefits
would be paid.
The form letters from individual opponents (many of whom
are licensed private investigators) assert that there
would be no training of the individuals who conduct these
investigations, and no oversight of their activities by
the
DCA.
Both CALI and the individual opponents say that the bill
would exempt mystery shopping companies which are
generally out-of-state businesses, many of whom operate
over the Internet to obtain the services of an in-state
mystery shopper (i.e., they advertise for shoppers over
the Internet from out-of-state.) The MSPA states that
some of its members are California-based businesses while
others are from out-of-state.
6.Labor Code issue - Employee protection amendment needed.
Labor Code Section 2930 requires any employer who
disciplines or discharges an employee on the basis of a
shopping investigator's report of the employee's conduct,
performance or honesty that is performed by a
non-employee, licensed private investigator to provide
the employee with a copy of the investigation report
prior to disciplining or discharging the employee. This
law also requires the report to be given to the employee
prior to the conclusion of an interview that is based
upon the report and that might result in the termination
of the employee for dishonesty.
"Shopping investigator" is defined as a person who shops in
commercial, retail, and service establishments to test
the integrity of sales, warehouse, stockroom, and service
personnel, and evaluates sales techniques and services
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rendered customers; (among other specified activities).
There is a strong similarity of functions of a "shopping
investigator" vs. a "mystery shopper, " and the bill's
allowance for the latter's questionnaires to be used,
though not exclusively, to evaluate an employee's work
performance. Should mystery shopper reports similarly be
required to be given to an employee pursuant to this
provision of the Labor Code? Should the bill be
referred to the Senate Industrial Relations Committee?
SUPPORT AND OPPOSITION:
Support: Mystery Shopping Providers Association (MSPA)
California Grocers Association
California Restaurant Association
California Retailers Association
California Apartment Association
California Association of Licensed Security
Agencies, Guards, &
Associates
Numerous letters from individuals (many who are
business members
of MSPA)
Opposition:California Association of Licensed
Investigators (CALI - Oppose Unless Amended)
Numerous letters from individuals (many who are
private investigators)
Consultant:Jay J. DeFuria