California Employers No Longer Able to Review Credit Reports

California is the most recent state to make amendments to existing laws under the Fair Credit Reporting Act to further restrict the ways in which credit reports can be utilized by employers to make decisions about who to hire.

Nat Lippert, a research analyst for Unite Here, spoke on the topic of employers using credit reports in hiring decisions. He said that it put prospective employees in a bind, since they could neither pay their bills, due to a lack of work, and could not get work, since they were behind in their bills, according to sfgate.com.

Other states, including Illinois, Hawaii, Washington, Connecticut, Maryland, and Oregon have also enacted similar laws.

Now with the new laws in place, as reported by inside privacy.com, California employers are only permitted to use credit reports for employees who currently work or are applying to be hired for a job in the following positions:

• a managerial position;
• a position in the State Department of Justice;
• a sworn peace officer or law enforcement position;
• a position for which the employer is required by law to consider credit history information;
• a position that affords regular access to bank or credit card account information, Social Security numbers, or dates of birth, provided, however, that the access to this information does not merely involve routine solicitation and processing of credit card applications in a retail establishment;
• a position where the individual is or will be a named as a signatory for the bank or credit card account of the employer, and/or will be authorized to transfer money, or will be authorized to enter into financial contracts on the employer's behalf;
• a position that affords access to confidential or proprietary information; or
• a position that affords regular access during the work day to the employer's, a customer's, or a client's cash totaling at least $10,000.

There are several other states throughout the nation that are considering taking similar measures. They include Ohio, Pennsylvania, Florida and New York.

Opponents include business and manufacturing groups and credit reporting agencies. They make the argument that an employment candidate’s credit report has the potential to shed light on whether they have a tendency to behave in a responsible and reliable manner.

Doug Nicholas

Doug Nicholas, a financial consultant by profession with a Masters degree in International Business from Brown University, is also an ardent writer. Though he has a full time job at one of the companies listed on Wall Street, he does manage to squeeze in time to follow his passion. He puts his ideas to words in his articles related to finance and business.