News & Resources

California passes law prohibiting use of credit reports in employment consideration

Oct 17, 2011 Philip Burgess

This week, California Governor Jerry Brown signed a law that prohibits employers from obtaining consumer credit reports for use in assessing job candidates, with the exception of certain financial institutions. The Golden State has joined Connecticut, Hawaii, Illinois, Maryland, Oregon and Washington in enacting legislation that restricts the use of consumer credit reports for hiring considerations. The bill is the third attempt at such legislation, after having failed during the Schwarzenegger administration. "Generally speaking, employers should not use credit checks unless there is a clear business justification related to the job in question since some credit reports contain errors," said Les Rosen, founder and CEO of Employment Screening Resources. "Employers should use extreme caution with credit reports and be aware of both federal and states laws such as AB 22." Such measures have gathered increasing support as consumer debt continues to mount and pose challenges to Americans. Some analysts, including Salon's Alex Pareene, have even called for regulators to enforce mass debt refleif in order to stimulate consumer spending.