Welcome to the LSIS Investigative Journal

Welcome to the LSIS Investigative Journal

Monday, October 10, 2011

AB 22 - Credit Report Use for Pre-Employment Purposes (Mendoza)

AB 22 (Mendoza)
Employment: credit reports.
The federal Fair Credit Reporting Act (FCRA) and the state Consumer Credit Reporting Agencies Act define and regulate consumer credit reports and authorize the use of consumer credit reports for employment purposes, pursuant to specified requirements. The FCRA provides that it does not preempt state law, except as specifically provided or to the extent that state laws are inconsistent with its provisions.
Existing federal and state law specify the procedures that an employer is required to follow before requesting a report and if adverse action is taken based on the report. Existing federal law provides that, subject to certain exceptions, an employer may not procure a report or cause one to be procured for employment purposes, unless prior disclosure of the procurement is made to the consumer and the consumer authorizes the procurement, as specified. Existing federal law further requires, subject to certain exceptions, an employer, before taking any adverse action based on the report, to provide the consumer with a copy of the report and a written description of certain rights of the consumer.
Under existing state law, an employer may request a credit report for employment purposes so long as he or she provides prior written notice of the request to the person for whom the report is sought. Existing state law also requires that the written notice inform the person for whom the consumer credit report is sought that a report will be used and of the source of the report and contain space for the person to request a copy of the report. Existing state law further requires an employer, whenever he or she bases an adverse employment decision on information contained in a consumer credit report, to advise the person for whom the report was sought that an adverse action was taken based upon information contained in the report and provide the person with the name and address of the consumer credit agency making the report. A consumer who suffers damages resulting from a violation of these state law provisions may bring a court action to recover monetary damages, as specified, but no person is liable for the violation if he or she shows reasonable procedures were maintained to assure compliance with the provisions, as specified.
This bill would prohibit an employer or prospective employer, with the exception of certain financial institutions, from obtaining a consumer credit report, as defined, for employment purposes unless the position of the person for whom the report is sought is (1) a position in the state Department of Justice, (2) a managerial position, as defined, (3) that of a sworn peace officer or other law enforcement position, (4) a position for which the information contained in the report is required by law to be disclosed or obtained, (5) a position that involves regular access to specified personal information for any purpose other than the routine solicitation and processing of credit card applications in a retail establishment, (6) a position in which the person is or would be a named signatory on the employer’s bank or credit card account, or authorized to transfer money or enter into financial contracts on the employer’s behalf, (7) a position that involves access to confidential or proprietary information, as specified, or (8) a position that involves regular access to $10,000 or more of cash, as specified.
This bill would also require the written notice informing the person for whom a consumer credit report is sought for employment purposes to also inform the person of the specific reason for obtaining the report, as specified.

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