New California Law Bans Use of Credit Reports for Most Employment Purposes

Responding to complaints that employers were unfairly using credit reports to screen out applicants for all sorts of jobs, the California Legislature enacted a new law effective January 1, 2012, prohibiting employers or prospective employers from using consumer credit reports for employment purposes unless the persons are applying for managerial or law enforcement positions or for jobs that involve handling money or having access to more than $10,000 in cash. The bill is AB 22.

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New California Law Restricts Use of Credit Reports in Hiring

Gov Jerry Brown has signed a bill (AB 22) that prohibits employers from pulling credit reports on prospective employees, with exceptions. The exceptions include positions in management and in law enforcement, positions that require handling over $10,000 cash, and positions in which the employee will sign checks or transfer money for the employer. According to the California Labor Federation 60% of employers routinely order credit reports on job applicants. The proponents of the bill argued that a person’s credit score says nothing about his or her character or ability to do a job effectively and responsibly. Secondly, credit reports contain...

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