On October 9, 2011, California Governor Brown signed Assembly Bill No. 22 (“AB 22”) into law. The new law, which takes effect on January 1, 2012, prohibits California employers and prospective employers, 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:
- a managerial position covered under the executive exemption,
- a position in the state Department of Justice,
- a sworn peace officer or other law enforcement position,
- a position for which information in the report is required by law to be obtained,
- a position that involves regular access to the following types of information about individuals for any purpose other than the routine solicitation and processing of credit card applications in a retail establishment: (a) bank or credit card account information, (b) social security number and (c) date of birth,
- a position in which the person is, or would be, any of the following: (a) a named signatory on the bank or credit card account of the employer, (b) authorized to transfer money on behalf of the employer or (3) authorized to enter into financial contracts on behalf of the employer,
- a position that involves access to confidential or proprietary information that (a) derives economic value from not being generally known and (b) is subject to an effort that is reasonable under the circumstances to maintain secrecy of the information,
- a position that involves regular access to cash totaling $10,000 or more of the employer, a customer or client during the workday.
AB 22 also requires employers to provide written notice informing the person that a credit report will be requested for employment purposes and the specific reason for obtaining the report. As a result of the scope of this new law, all employers with a California presence should review their current use of credit reports for employment purposes in order to determine if continued use would meet the very limited exceptions provide above. If not, the use of credit reports in California should be discontinued. Should you have any questions, please consult your relationship attorney.