The final version of California Assembly Bill No. 22 (AB 22) that limits credit checks of job applicants by most employers is headed to Governor Jerry Brown’s office for his signature. The bill – which many believe will be signed into law by the Governor – would prohibit most employers or prospective employers, with the exception of certain financial institutions, from obtaining consumer credit reports for employment purposes. If passed, California would join Connecticut, Hawaii, Illinois, Maryland, Oregon, and Washington as the U.S. states that currently restrict the use of credit checks by most employers for employment decisions (Update: Governor Brown Signs Two Bills Impacting Use of Credit Reports and E-Verify by Employers in California).
Effective October 1, 2011, a new law in Connecticut – Senate Bill No. 361 (S.B. 361) – signed by Governor Dannel Malloy will prohibit certain employers from using credit reports in making hiring and employment decisions regarding existing employees or job applicants. The law applies to all employers in Connecticut with at least one employee. Connecticut is one of six U.S. states – joining Hawaii, Illinois, Maryland, Oregon, and Washington – that currently prohibit the use of credit history in employment decisions.
What are the practical and legal considerations for employers that use criminal records and credit reports for applicant selection? This is the fifth and final installment of the Employment Screening Resources (ESR) Background Check Trends of 2011 Review features the number two trend, using criminal records, and the number one top ranked background check trend of the year, the use of job applicant credit reports. To view previous installments of the 2011 ESR Background Check Trends Review, visit Part 1, Part 2, Part 3, and Part 4.
- Number 2 ESR Background Check Trend for 2011: Questions about Criminal Records of Job Applicants Become More Difficult for Employers to Ask.
- Number 1 ESR Background Check Trend for 2011: Controversy over Whether Employers Using Credit Reports for Employment Screening is Discriminatory Increases.
A bill in California – AB 22 – sponsored by Assemblymember Tony Mendoza (D-56th District) that would ban the use of credit report background checks by employers during the hiring process has passed in the State Assembly with a vote of 45 to 29 and now heads to the Senate Labor and Industrial Relations Committee. Mendoza’s earlier attempts at similar legislation in the past – AB 482 (2010) and AB 943 (2009) – were both vetoed by former Governor Arnold Schwarzenegger. Continue reading
Since a 2010 survey released by the Society for Human Resource Management (SHRM) – ‘Background Checking: Conducting Credit Background Checks’ – found that 13 percent of the companies surveyed checked the credit reports of all job candidates while 47 percent checked the credit reports of some job candidates, many job seekers looking for work are wondering if their bad credit will affect the outcome of their job search. These jobs seekers need to know that there are limits to what employers can see in employment-related credit checks and how they can use that credit information, according to the article ‘Can Bad Credit Ruin Your Job Search?’ by Susan Johnston on Bankrate.com. Continue reading
Joining four other U.S. states – Hawaii, Illinois, Oregon, and Washington – prohibiting the use of credit information by employers, Maryland has enacted new legislation placing restrictions on so-called credit checks by employers that use the credit report or credit history of job applicants or employees for employment decisions. The law, known as the ‘Job Applicant Fairness Act,’ was signed by Maryland Governor Martin O’Malley in April of 2011 and will take effect on October 1, 2011. Continue reading
While only four U.S. states – Hawaii, Oregon, Washington, and most recently Illinois – currently have laws limiting or prohibiting credit checks by employers on job applicants and employees, lawmakers in many U.S. states are currently proposing legislation restricting the use of credit reports for employment screening background checks.
In all, lawmakers in 18 U.S. states are considering bills that limit the use of credit report data for employment screening. These states include: California, Connecticut, Florida, Georgia, Indiana, Kentucky, Maryland, Michigan, Missouri, Montana, Nebraska, New Jersey, New Mexico, New York, Ohio, Pennsylvania, Texas, and Vermont. Continue reading
State lawmakers in Maryland have proposed legislation that would limit the ability of employers to run credit checks using credit reports and credit histories of employees and job applicants for employment purposes in response to complaints from job seekers in the state who said they were denied jobs after their would-be employers learned about their low credit scores, according to an article in The Baltimore Sun. Continue reading
More than half of consumers approve of the idea of banning the use of job applicant credit reports by employers for employment screening, according to a recent survey.
A telephone poll survey conducted for Credit.com by GfK Custom Research North America from January 14, 2011 to January 16, 2011 interviewed 1,004 consumers about:
Employers have the right, with your permission, to check your credit report as part of background screening for employment. A number of lawmakers are interested in banning this practice – do you… Continue reading
A proposed Colorado law would restrict the use of credit reports of job applicants by employers to certain situations, and make employers that use the information adversely indicate what information they relied upon in the credit report to make their decision. Continue reading