New California Law Outlaws Use of Credit Reports For Screening Most Job Applicants

         Governor Brown recently signed Assembly Bill 22, which will prohibit California employers from obtaining "consumer credit reports" for most employment purposes. Under this new law, effective January 1, 2012, an employer may only seek a credit report for an applicant or employee if one of the following applies:

• the position involves regular access during the workday to $10,000 or more of cash belonging to the employer, customers or client; 
• the position is a managerial position;
• the position involves access to confidential or proprietary information (such as valuable trade secrets); 
• the position is one where the person is a named signatory on the employer's bank or credit card account, or authorized to transfer money or enter into financial contracts on the employer's behalf; 
• the position involves regular access to specified personal information (bank or credit card account information; social security number; date of birth) - this does not include an employee in a retail setting who is merely swiping credit cards for purchases made by customer; 
• the position is in the state Department of Justice; 
• the position is for a sworn peace officer or other law enforcement officer; or 
• the position for which the information contained in the report is required by law to be disclosed or obtained.            

         NOTE: If a consumer credit report is sought for employment purposes for one of the acceptable positions listed above, the employer must provide the employee/applicant with a written notice informing that person of the specific reason for obtaining the report. 

           If the applicant or employee does not fit into one of the above categories, the employer may not conduct a credit check or other consumer credit report on the applicant or employee. However, because this law is limited to reports that include credit-related information such as credit history, credit score or credit record, employers are still permitted to seek reports that verify income, employment and/or criminal history.

        Call your contact at the Firm if you have any questions about this important development.

Sincerely,

Richard S. Rosenberg

Partner

BRG&S, LLP