6/9/2011 California Rep. Moves to Ban Credit Reports for Third Time

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California Assemblyman Tony Mendoza hopes that the third time is a charm for his efforts to ban the use of employment credit reports in the state.  Both of his previous efforts were actually passed into law before being vetoed by former governor Arnold Schwarzenegger. According to Mendoza, “”A credit report is an unfair lens through which to view job applicants. Preventing someone from becoming gainfully employed due to a poor credit history is shameful,” says Mendoza. “This bill will simply remove an unnecessary barrier to employment for those seeking everyday work opportunities.”

At the time of the second veto, the governor was said, “This bill is similar to legislation I have vetoed for the last two years on the basis that California’s employers and businesses have inherent needs to obtain information about applicants for employment and existing law already provides protections for employees from improper use of credit reports. As with the last two bills, this measure would also significantly increase the exposure for potential litigation over the use of credit checks.  For these reasons, I am unable to sign this bill.”

The current bill, AB 22 makes the use of a credit report or credit history as a qualification of employment unless the following criteria is met:

(1) The information contained in the report is substantially job-related, meaning that the position of the person for whom the report is sought has access to money, other assets, or confidential information.

(2) The position of the person for whom the report is sought is any of the following: (A) A managerial position. (B) A position in the state Department of Justice. (C) That of a sworn peace officer or other law enforcement position. (D) A position for which the information contained in the report is required to be disclosed by law or to be obtained by the employer.

They define a managerial position as “a position held by a person who has authority, in the interest of the employer, to hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward, or discipline other employees, or responsibly to direct them, or to adjust their grievances, or effectively to recommend such action, if in connection with the foregoing the exercise of this authority is not of a merely routine or clerical nature, but requires the use of independent judgment.”

So, at least there are exemptions here.  If passed, California would join Washington, Hawaii, Maryland, Illinois and Oregon as the only states with limitations on the use of credit reports as part of the background screening process.

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