backgroundchecks.com Legislation and Compliance Update - California Senate Passes AB 22

The California Senate has passed, and the governor is expected to sign, AB 22 limiting the use of consumer credit reports for applicant screening and other employment purposes.

Like most bills restricting the use of credit reports in employment decisions, AB 22 includes categorical exemptions, allowing employers to obtain credit reports in situations including the following:

1.     A managerial position.

2.     A position in the state Department of Justice.

3.     That of a sworn peace officer or other law enforcement position.

4.     A position for which the information contained in the report is required  by law

5.     A position that involves regular access, for any purpose other than the routine solicitation and processing of credit card applications in a retail establishment, to all of the following types of information of any one person:

A.    Bank or credit card account information.  

B.    Social security number.  

C.    Date of birth.  

6.     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.

C.    Authorized to enter into financial contracts on behalf of the employer.  

7.     A position that involves access to confidential or proprietary information, including a formula, pattern, compilation, program, device, method, technique, process or trade secret that (i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who may obtain economic value from the disclosure or use of the information, and (ii) is the subject of an effort that is reasonable under the circumstances to maintain secrecy of the information.

8.     A position that involves regular access to cash totaling ten thousand dollars ($10,000) or more of the employer, a customer, or client, during the workday.

Before requesting a credit report in any of these situations, the employer must provide the applicant or employee a notice that:

a.     says that the employer will use the report;

b.     identifies the source of the report;

c.     identifies the specific basis listed above that allows the credit report; and

d.     allows the applicant or employee to request a free copy of the report from the employer by checking a box.

If the employee checks the box, the employer must request a copy for the applicant or employee at the same time as the employer requests the report. The employer may not charge the applicant or employee for the copy.

The law does not apply to any position with a financial institution subject to the Gramm-Leach-Bliley Act.

Assuming that the governor signs the bill into law, it will go into effect on January 1.

Clients should immediately plan on how to change their background screening notices to applicants and employees.

The bill is currently being proof read and edited, however for the most current version, please visit http://www.leginfo.ca.gov/pub/11-12/bill/asm/ab_0001-0050/ab_22_bill_20110901_amended_sen_v96.html.