Employment Credit Checks Prohibited in California

workforceverification February 8, 2012 0

California recently became the seventh state to prohibit credit checks in making employment decisions. Effective January 1, 2012, the law outlaws most employee credit checks. It states that employers may only use consumer credit reports when hiring for:

  • Managerial positions
  • Prospective law enforcement officers
  • Jobs that provide access to consumer credit card applications
  • Positions in the state Justice Department
  • Jobs in which the employee would have access to confidential information
  • Positions where the employee would be a signatory on a bank or credit card account
  • Jobs in which the employee would have access to cash totaling $10,000 or more

The U.S. Equal Employment Opportunity Commission held hearings in October around the issue of employee credit checks, which some employers see as a signal that additional legislation could be coming.

One concern is that more people have experienced damaged credit ratings in the wake of the economic crisis. However, employers’ groups said that it is wrong for the government to infringe on the ability to screen out applicants who have the potential to damage or bankrupt a company.

In addition, the patchwork of statutes being enacted by various states makes it more difficult for national companies to stay in compliance, say employer representatives.

Experts say that it’s important for employers to be extremely consistent in how they apply employee credit screening policies. It’s also a good idea to talk to prospective employees about any problems revealed in credit reports.

Source: employeescreening

Enter Your Mail Address

Leave A Response »