Are you job hunting in California? You don’t have to worry about a credit check for most jobs, but it’s good to know the applicable rules and laws and requirements an employer must meet should they wish to request your credit report.

California is one of the states strictly limiting how employers may use credit reports for employment decisions.

Under California law, employers must provide notice if they intend to check credit reports and if they intend to use the information in the report to make an unfavorable employment decision. Additionally, there are federal laws in place with similar requirements.

A California law signed into effect by California Gov. Jerry Brown in 2011 prevents most employers from using credit scores and credit histories to make hiring decisions.

Exceptions to the Applicable Laws

Whether the credit check is necessary for the position will determine its legality. For instance, when applying to work for businesses that deals mainly with money, crime, or large transactions, a credit check may be necessary. Other examples include applying for any managerial positions, working at a bank or financial institution, a job in a field in or closely related to law enforcement, and positions for which credit report information must be legally disclosed.

The law also provides for exemptions for positions in a retail business that require access to a customer’s date of birth, social security number, credit, or bank account information for purposes other than routine solicitation of a credit card application. Positions with access to a company’s trade secrets, confidential or proprietary information, and jobs in which the employee regularly accesses at least $10,000 per day also are permitted to credit checks. In these scenarios, a business may assert a legal necessity to check the credit of its employees to prevent or detect the possibility of any fraud or abuse.

Notice Requirements

In accordance with the federal Fair Credit Reporting Act (FCRA), employers must obtain consent before pulling a credit report on an applicant or employee. In cases in which an employer intends to make a hiring decision based on the information from a report, the employer must notify the employee or the applicant in advance of the decision and again upon finalizing the decision. Before an employer requests a credit report, they must inform the individual and get written consent. 

California’s Credit Request Requirements

The state of California imposes similar requirements. If an employer wants to obtain a copy of an employee or applicant’s credit report, they must notify the person in writing. Notices must indicate which exceptions to the general ban on evaluating credit information may apply (see examples mentioned above). 

In addition, the report must include a box where the person can indicate whether they would like a copy of the credit report. 

Lastly, employers who intend to deny employment based on the contents of a report must provide another notice following receipt of the information (credit report). 

What parts of my history are excluded from credit reports?

California law prohibits the following items from appearing on a credit report:

• Medical information (unless you give your written consent);
• Bankruptcies that are more than ten years old;
• Any lawsuits or judgments that are more than seven years old
• Unfavorable eviction actions;
• Tax liens older than seven years;  
• Arrest records, indictments, misdemeanor complaints, or convictions dating back at least seven years

Note: Criminal convictions may remain on a credit report for an indefinite amount of time under federal law.

What to do if your employer has requested a credit check?

It may be illegal for your employer to request or attempt to obtain your credit report in making hiring decisions for many positions or without your consent. If you believe your employer has violated these statutes and federal laws, you have options, including legal action.

Suppose your employer has followed the laws in place and every requirement (see the steps listed above) in the State of California and under applicable federal law, but this resulted in a position denial. In that case, you may wish to do the following.

Start using online educational resources on debt repair, personal finances, and money management. Additionally, it would help if you started cleaning up and repairing the damage to your credit report. 

You may also request all of your credit reports ahead of time or afterward to review any possible errors or learn more about your credit history. All three nationwide credit bureaus (TransUnion, Equifax, and Experian) must provide you with a free copy of your credit report every 12 months. The information in these reports is detailed and includes your payment history, how much credit you have, corresponding dates and amounts of debt, and other inquiries. You can learn more about obtaining your credit reports and more by visiting the federal trade commissions online webpage.

If you believe an employer is attempting to use or has requested your credit report (in an unwarranted scenario) or is using the information to make hiring decisions without your authorization, you may wish to bring forward a legal claim. 

If you believe the employer or potential employer may have violated the law, a wise next step is to consult with a trusted and experienced California employment attorney. The employment attorneys at SANFORD A. KASSEL, A Professional Law Corporation can help assess your case if you feel your rights as an employee or potential employee have been violated.