Business Law Employment Law Legal Topics

Added Restrictions on Employer Use of Credit Reports Vetoed by Governor, Again

 Governor Schwarzenegger has again vetoed a bill that would have limited employers’ use of credit information on potential employees. As reported in the Morrison & Foerster Client Alert, Assembly Bill 482 “would have dramatically restricted the circumstances under which an employer could use a credit report for pre-employment screening or other employment purposes.” Employees and potential employees can nonetheless take heart in existing protections under the Consumer Credit Reporting Agencies Act (CCRAA) (CC §§1785.1-1785.36).

Under the CCRAA, before requesting a consumer credit report for employment purposes, the employer must give the applicant or employee written notice that

  • Informs the applicant or employee that a consumer credit report will be used;
  • Informs the applicant or employee which credit reporting agency is the source of the report; and
  • Contains a box that the applicant or employee may check to receive a copy of the credit report.

If the applicant or employee wants to receive a copy of the report, the employer must request one and the reporting agency must provide a copy free of charge at the same time it gives the report to the employer. 

For more on the CCRAA and workplace privacy issues generally, go to Privacy Compliance and Litigation in California, chap 8 (Cal CEB 2008).

© The Regents of the University of California, 2010. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited.

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