Just this week, Governor Jerry Brown followed the lead of other states by signing a bill that limits how consumer credit reports are utilized by California employers.  In a time in which the recession continues to keep unemployment at an all time high, it has been recognized that the use of credit reports in employment screening may be unfairly disqualifying candidates.

One of the things employers look for on a credit report is to see the amount of debt an applicant has, and whether or not this indebtedness will be a distraction for them in their job duties.  Another concern is that an applicant that is in debt may look for ways to secure assets through their workplace as a way to pay off their personal debt.

During the recession, some people’s credit scores have taken a big hit as a result of layoffs.  House payments have been late or not made at all and credit card debt has increased as people work to make ends meet while they look for a job.  In the state of California, these reasons are being identified, and the bill being signed by Governor Brown will no longer allow companies to utilize credit history as a determining factor in a background check, except in special circumstance or specific jobs.

The jobs that have been identified in the bill as ones in which credit checks can be utilized in employment screening are:

  • State Department of Justice
  • Law enforcement officials
  • Managers
  • A signatory on an employers bank account or credit card
  • A person authorized to transfer funds, or enter into financial contracts
  • Anyone with access to $10,000 or more in cash during a business day
  • Anyone that works with information that can be used in identity theft

This is just one more reason that it is important to know your local and state laws when it comes to background checks, as well as certain FCRA requirements.  Failure to follow these laws when conducting employment screenings can result in fines and/or lawsuits against the company.

PeopleG2 is a background check company that helps its clients know and understand all applicable laws in your state.  We provide our employment screening services nationwide, as well as internationally, and can help you determine what is allowable for your company.  Please contact us at 800-630-3880, or customerservice@pg2prod.wpengine.com, and we will be happy to help you with all of your employment screening needs.

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