9/27/2010 Schwarzenegger Vetoes Credit Report Bill Again and Again


California Governor Arnold Schwarzenegger has vetoed a bill aimed to ban the use of credit reports when conducting employment background checks for a third time.  Come on people.  This is getting ridiculous already.  How many times does he have to do this for the state assembly to recognize that doing so would create great peril for employers and their clients/customers?

Schwarzenegger released the following statement concerning his decision to reject AB482:

“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.”

I recently posted a blog about the EEOC’s position on the use of credit checks and thought I’d list the high points below.

I understand that this [credit reports] is becoming a hot button issue, but I think our state and federal governments and agencies need to take a step back and analyze this information before abolishing the practice.  The states of Hawaii, Oregon, Washington and Illinois  have already passed legislation aimed at curbing the use of employment credit reports, with around 19 other states with proposed legislation.  There is a  federal effort to do the same and of course, the EEOC would be only so happy to see this measure pass.  It’s important to note that there are a number existing laws that provide protection for job candidates against those that would misuse employment credit reports.

Much of this is a populist response to our current economic climate.  After all, people are struggling.  However, another important finding from the SHRM study is that employers aren’t just reviewing the last couple of years worth of credit history but rather looking at the entire report as a “body of work”.  Most employers understand that finding someone with perfect credit is near impossible, even in good times.  Today, if companies waited around for candidates with perfect credit, they wouldn’t be able to hire anyone.  They also know that unless regulated, that bad credit alone will not disqualify someone from employment.  Further, when derogatory information is found, a great majority are asking for an explanation before taking action.

It is important to consider that most companies are using this tool to gauge personal responsibility.  If a person has a history of mishandling their own finances, are they fit to manage the finances of their employer?  Can they be trusted with personal information on a company’s customers?

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