Credit Reports in California

The California legislature has once again passed a bill restricting the use of credit reports, even though a substantially similar measure was vetoed by the Governor in 2008. See; http://www.esrcheck.com/newsletter/archives/September_2008.php 

The bill, AB943, seeks to severely limit the use of credit reports in California for employment purposes.  For private employers, a credit report could not be utilized unless “the information is (1) substantially job-related, meaning that the position of the person for whom the report is sought has access to money, other assets, or confidential information, and (2) the position of the person for which the person is sought is a managerial position…”  There is an exceptin where the “ position for which the information contained in the report is required to be disclosed by law or to be obtained by the employer.”

The problem for employers is that individuals working in accounting departments or other areas of a business that have access to cash but are not managers could not be the subject of credit reports.  A credit report is a tool that can help employers avoid embezzlers and identity thieves.  On the other hand, there are a number of reasons that employers should approach credit reports with caution, and only use them where there is a clear business justification in a manner that is fair and resonable. It should be noted that employment credit reports do NOT contain a credit score. 

ESR has written a long article about the current use of credit reports. See: http://www.recruitingtrends.com/article/ART637372?C=96gBTrVyd3KtvBhw

As soon as the Governor makes a decision on this bill, ESR clients will be notified immediately.