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Pre-Employment Credit Checks: Guidelines for a Safer Screen

November 1, 2011
Pre-employment credit checks continue to be a murky and controversial topic as opponents seek to ban the practice and advocates argue for its necessity. California Governor Jerry Brown sought to restrict credit checks during the pre-employment process by signing Assembly Bill 22 (AB 22) into law. As of January 1st 2012, when this law takes effect, this bill will restrict California employers to check an employee’s credit only in certain circumstances.

The key words here are certain circumstances. It should be noted that this bill helps define what IS legal for an employer in the state of California in regards to credit checks, giving structure to a formerly ambiguous practice. While these guidelines are specific to California, HR folks everywhere can take note that these are reasonable guidelines for pre-employment checks in any state.

AB 22 Overview

    • The candidate must be informed, in writing, that the credit report is being requested and the candidate must provide written consent.

    • The candidate must be applying for a position that meets at least one of these qualifications:

- The position involves access to confidential or proprietary information.

- The position involves regular access to confidential information such as: Credit Card Account information, Social Security number, or Date of Birth.

- It is a managerial position.

- It is a position in the state Department of Justice, a sworn peace officer or other law enforcement.

- The information contained in the report is required by law to be disclosed or obtained for the position.

- It is a position which the person can enter into financial transactions on behalf of the company.

- It is a position that involves regular access to the employer, customer or client cash totaling $10,000 or more during the workday.

Not every situation calls for a pre-employment credit check, and is heartening to know that responsible lawmakers are providing more protection for employers and candidates alike.

Amber Thomas Amber Thomas is a Consultant at PSI. In her role, Amber provides custom solutions to a variety of industries. Her contributions include project oversight, day-to-day client support, and on-going consultation.