Q. I am applying for a position at a big company and they will be performing a background check on me. They asked for my social security number and I had to sign waivers about consumer investigative reports, etc. I thought that a new law was passed in California this year that made it so employers could not pull credit reports or use this against a candidate as a hiring decision. I won't be dealing with money and, while I will have access to the company's email database, I will not be handling money or have access to social security numbers. Is this illegal?

A. The economic recession of the last few years, and the resulting damage to credit scores, has led many lawmakers to consider whether it's really appropriate for employers to use credit reports in making job decisions. Seven states, including California, have passed laws prohibiting or limiting how employers may use credit reports to make hiring decisions. More than 20 other states are currently considering similar legislation, according to the National Conference of State Legislatures (NCSL).

California’s law, which became effective January 1, 2012 and added §1024.5 to the Labor Code, prohibits an employer or prospective employer, with the exception of certain financial institutions, from obtaining a consumer credit report for employment purposes unless the position of the person for whom the report is sought is:

(1) in the state Department of Justice,
(2) a managerial position,
(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) 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) involves access to confidential or proprietary information, or
(8) involves regular access to $10,000 or more of cash.

The law also amended Civil Code §1785.20.5 to require a written notice informing the person for whom a consumer credit report is sought for employment purposes the specific reason for obtaining the report.

California Labor Code Statutes are enforced by the Department of Industrial Relations, Division of Labor Enforcement. If you’ve been the victim of a violation of the new law, I would try contacting them first.

In a state where there is no state law governing the use of credit reports in hiring decisions, federal law would apply. That federal law is the Fair Credit Reporting Act (FCRA) (15 U.S.C. § 1681 et seq.). The FCRA requires employers to:

• get the applicant's consent before pulling the report,
• give the applicant a warning (along with a copy of the report received) if the employer plans to reject the applicant on the basis of the report, and
• give the applicant an official adverse action notice if the employer does not hire him or her because of the contents of the report.

For more info on the FCRA, see Nolo.com’s informative article, “Running Credit Checks on Job Applicants,” at http://www.nolo.com/legal-encyclopedia/running-credit-checks-applicants-35457.html

Do you have a question for the County Law Librarian? Just email sacpress@saclaw.org. If your question is selected your answer will appear in next Thursday's column. Even if your question isn't selected, though, I will still respond within two weeks.

Coral Henning, Director
@coralh & @saclawlibrarian
www.saclaw.org