California Private Investigator Licenses & Computer Forensics

Over the years there has been a lot of conflicting information about the need to have a Private Investigator license in California and perform computer forensics. This issue has been argued vigorously by different practitioners over the years. In 2017 I started researching the issue with the California Department of Consumer Affairs Bureau of Security and Investigative Services (“The Bureau”). The main argument stems from the California Business and Professions Code Section 7521.  The Business and Professions Code section is outlined below.

A private investigator within the meaning of this chapter is a person, other than an insurance adjuster subject to the provisions of Chapter 1 (commencing with Section 14000) of Division 5 of the Insurance Code, who, for any consideration whatsoever engages in business or accepts employment to furnish or agrees to furnish any person to protect persons pursuant to Section 7521.5, or engages in business or accepts employment to furnish, or agrees to make, or makes, any investigation for the purpose of obtaining, information with reference to:

(a) Crime or wrongs done or threatened against the United States of America or any state or territory of the United States of America.

(b) 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.

(c) The location, disposition, or recovery of lost or stolen property.

(d) The cause or responsibility for fires, libels, losses, accidents, or damage or injury to persons or to property.

(e) Securing evidence to be used before any court, board, officer, or investigating committee.

For the purposes of this section, a private investigator is any person, as defined in Section 7512.3, acting for the purpose of investigating, obtaining, and reporting to any employer, or an agent designated by the employer, information concerning the employer’s employees involving questions of integrity, honesty, breach of rules, or other standards of performance of job duties.

This section shall not apply to a public utility regulated by the State Public Utilities Commission, or its employees.

In 2006, two Southern California computer forensics practitioners were involved in a dispute over unlicensed activities. One of the practitioners was a retired Police Officer and licensed California Private Investigator, the other practitioner did not possess a California Private Investigator license. The Bureau of Security and Investigative Services ultimately rendered an opinion on the matter.

In the letter from the Department of Consumer Affairs, Bureau of Security and Investigative Services, the Enforcement Manager, George H. Paddeck wrote:

“The Bureau requested and has received the following response from the Department of Consumer Affairs Legal Office.”

“The relatively limited activities in which computer forensics examiners engage fall short of the breadth of activities that may be viewed as comprising a competent investigations that could be commissioned from a licensed private investigator.”

A copy of that letter can be viewed here.

I believe that at least part of this decision may have been influenced by California case law involving the Kennard v. Rosenberg, 127 Cal. App. 2d 340 (1954) civil case. In Kennard v. Rosenberg, two licensed chemical engineers and a retired city fire inspector sued Nate Rosenberg to collect their professional fees. Rosenberg had been indicted for arson of his nightclub. His lawyer retained the fire inspector after the inspector had stated that he was not licensed and “acted only in the capacity of consultant or an expert.” The lawyer also retained the engineers who conducted tests, examined photographs, prepared court exhibits, and–along with the inspector–attended the preliminary hearing and consulted with the lawyer. Rosenberg’s defense for not paying the three was that the PIA required them to be licensed as private investigators. The trial court rejected this defense, and the court of appeal affirmed. The appellate court, announced that “none of the [three experts/consultants] were engaged in the private detective business,” and reasoned that the engineers were licensed engineers and thus “were authorized to make investigations in connection with that profession….” Moreover, the court continued:

“It seems quite clear that the private detective license law was not intended by the Legislature to place a limitation on the right of professional engineers to make chemical tests, conduct experiments and to testify in court as to the results thereof. A physician, geologist, accountant, engineer, surveyor or a handwriting expert, undoubtedly, may lawfully testify in court in connection with his findings without first procuring a license as a private detective, and, as in the instant case, a photographer may be employed to take photographs of damaged [127 Cal. App. 2d 345] premises for use in court without procuring such a license. Likewise, plaintiff Wolfe, who was hired as a consultant and expert and not as a private detective and investigator was not required to have a license as such before being permitted to testify in court as an expert.”

In 2017, I contacted the Bureau and asked if computer forensics was an activity which was regulated under the California Private Investigator Act. The Bureau responded with the following information:  “In regards to the scenario you presented in your email regarding “computer forensics related activities,” I can only opine that the Private Investigator Act (Act) does not specifically reference these types of activities.”

Another issue that licensed practitioners should be aware of when employing investigators is that unlicensed individuals must be W-2 employees and not 1099 subcontractors as defined in BPC Section 7512.11. Only duly licensed private investigators can work as 1099 subcontractors. Additionally, BPC Section 7523(d) specifically prohibits anyone from falsely representing themselves as a licensee or an employee of a licensee. You are either the licensee, an employee of the licensee, or possess a valid California Private Investigator’s license; the Act does not recognize an unlicensed 1099 subcontractor, in fact, it is illegal.

In summary, independent consultants who perform computer forensics activities in California do not need to possess a California Private Investigator license. If a consultant performs crossover activities outlined in the California PI PI Act (7521 & 7522 B&P) then they may be in violation of performing unlicensed activities. To make a determination on whether an individual is performing activities which are regulated under the California PI Act, the Bureau gave this response: “The Bureau makes these determinations on a case-by-case basis, based on the totality of the facts involved. It is easy to get caught up on one particular section when making an analysis, but we have to review the Private Investigator Act (Act) in its entirety.”