Earlier this week, California became the latest state to restrict the use of consumer credit reports in the employment context, as Gov. Jerry Brown signed into law A.B. 22.  As we previously have blogged, a growing number of states–including Connecticut, Hawaii, Illinois, Oregon, Washington, and Maryland–have augmented the protections provided by the federal Fair Credit Reporting Act (“FCRA”) with laws that further limit the ways in which credit reports may be used in making employment decisions. 

Under A.B. 22, employers are permitted to use credit reports only for employees who work or are applying to work in the following positions:

  • a managerial position;
  • a position in the State Department of Justice;
  • a sworn peace officer or law enforcement position;
  • a position for which the employer is required by law to consider credit history information;
  • a position that affords regular access to bank or credit card account information, Social Security numbers, or dates of birth, provided, however, that the access to this information does not merely involve routine solicitation and processing of credit card applications in a retail establishment;
  • a position where the individual is or will be a named signatory on the bank or credit card account of the employer and/or authorized to transfer money or authorized to enter into financial contracts on the employer’s behalf;
  • a position that affords access to confidential or proprietary information; or
  • a position that affords regular access during the workday to the employer’s, a customer’s or a client’s cash totaling at least $10,000.

The law also imposes an additional notice obligation on employers seeking to obtain credit reports. While existing law requires notice to employee of the intended use of the credit report (and consent to that use), A.B. 22 would also require that the employer notify the employee or prospective employee of the legal basis for this use (e.g., by noting that the law allows use of such reports in connection with the types of jobs enumerated above).

Several other states–including New York, Pennsylvania, Ohio, and Florida–are considering measures similar to A.B. 22.