California Law Prohibits Credit Checks for Certain Employees

Earlier this week, California Gov. Jerry Brown signed a bill that would prohibit employers to request credit reports from job candidates for certain positions. The bill, AB22, which will be effective as of January 1, 2012, restricts the use of consumer credit reports in the hiring process to individuals who will work in law enforcement, a financial institution or the California Justice Department, among others.



If you do not currently do business in the state of California, the news is still pertinent to the rest of the country, as California is the seventh state to enact such a law, and at least 20 other states have considered similar action. A Congressional bill that would limit the use of consumer credit reports for employment purposes is also under consideration, but the House has yet to approve it.


For states that do not have a law to limit address to consumer credit reports, employers are allowed to obtain credit reports for both current and prospective employees. The employer simply must request permission from the employee or future employee, and notify the person if he or she was not promoted or hired because of negative findings.