Effective January 1, 2012, an employer will only be permitted to obtain a consumer credit report regarding an employee or prospective employee for "employment purposes" if the employee or applicant holds or seeks one of the following:
- a position in the state Department of Justice,
- a managerial position, as defined in the statute,
- that of a sworn peace officer or other law enforcement position,
- a position for which the information contained in the report is required by law to be disclosed or obtained,
- 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,
- 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,
- a position that involves access to confidential or proprietary information, as specified, or
- a position that involves regular access to $10,000 or more of cash, as specified.
In addition to complying with the existing notice requirements under California's Consumer Credit Reporting Agencies Act, the new law requires employers to identify which of the specific purposes listed above provides the basis for running the credit report.
As a related reminder, also effective January 1, 2012, an employer using an investigative consumer reporting agency to obtain an investigative consumer report regarding an applicant or employee must include in its disclosure to the "consumer" applicant or employee the website address of the investigative consumer reporting agency, or, if the agency has no website address, the telephone number of the agency, where the consumer may find information about the investigative reporting agency's privacy practices, including whether the consumer's personal information will be sent outside the United States or its territories.
Accordingly, employers who run credit reports on applicants and employees should update their policies and forms by year end to ensure they are seeking credit reports only in connection with the positions enumerated by this law and that they are providing the appropriate notices.