Monday, October 24, 2011

California Sharply Restricts Employers' Use of Credit Checks

California is the latest state to ban the use of credit checks to screen employees and job applicants.  The new law will take effect January 1, 2012.

Until now, California employers, like those in most other states, simply had to provide written notice to an employee or job applicant in order to request a credit history report.  Under the new law, however, credit reports may not be used in making employment decisions unless the job in question falls within certain exceptions, including managerial positions, law enforcement positions, jobs requiring regular access to confidential information or cash totaling $10,000 or more, and jobs in which the employee will enter into financial transactions on the company’s behalf.  The new statute also excludes financial institutions and employers required by law to conduct credit checks.

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