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California Latest State to Ban Credit Reports in Employment Checks

Backgroundchecks

It’s official. The state of California becomes the seventh state to prohibit employers from using credit reports to make employment decisions.

California Gov. Jerry Brown signed AB 22 which will take effect on January 1, 2012. Like it’s counterparts in the states of Maryland, Oregon, Hawaii, Illinois, Washington and Connecticut, there are some exceptions.

Employers may consider a credit report under the following circumstances only if the candidate is informed that a report will be sought and they have obtained written permission:

  • A managerial position;
  • A position in the state Department of Justice;
  • A sworn peace officer or other law enforcement;
  • A position for which the information contained in the report is required by law to be disclosed or obtained;
  • A position that involves regular access to confidential information such as credit card account information, Social security number, or Date of birth;
  • A position which the person can enter into financial transactions on behalf of the company;
  • A position that involves access to confidential or proprietary information; and,
  • A position that involves regular access to cash totaling $10,000 or more of the employer, a customer, or client, during the workday

A rising tide of similar legislation

On a personal level, everyone saw this coming. Former Gov. Arnold Schwarzenegger vetoed similar measures during his tenure on two occasions. And the rising tide of similar legislation in other states only bolstered the state Legislature’s efforts to make this happen.

While I was once opposed to this type of legislation, I have slowly warmed to the concept. The truth is that employers that do not use credit reports for the exempted purposes probably shouldn’t have been using them to make hiring decisions in the first place.

Any employer that operates in the state of California and utilizes credit reports or might do so in the future should consider evaluating their employment screening policies.

Nick Fishman co-founded EmployeeScreenIQ in 1999 and serves as the company's Chief Marketing Officer and Executive Vice President. He oversees all of EmployeeScreenIQ's sales and marketing activities, including business development and brand building initiatives. Contact him at nfishman@employeescreen.com .
  • Creditcards Producer

    I’m not sure if I agree with not be able
    to check employees credit history. Would I trust someone with my business if
    they can’t manage their credit
    cards
    ?
     

  • arney carranza

    Yes, i do agree that employers should not use security credit report to check see of an employee they hire is trust worthy or not….  Not everyone who has good credit is trust worthy either.  Infact, these people are lazy, they use computer for pornographic at work? Always absent and late going to work.  People who has bad credit does not mean that they will embezzle from the employer.  This people will even work harder and do a better job because they need to be good employees so they can pay their bills…  I know what I am talking about because I know many of my co-workers are doing what I have just mentioned above.

  • arney carranza

    Why, are the people who embezzled money from the Church, Banks etc…  Did they have good credit report when they were hired?  I am sure they did.  And look what happened.