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Final Reminder For California Employers Using Credit Reports For Employment Purposes

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California has officially become the seventh state to restrict California employers from requesting applicant or employee credit report information for employment purposes effective January 1, 2012. Additionally, Assembly Bill 22 specifies that California employers are also subject to very important new disclosure requirements. 

First, EBI understands that the new law stipulates that employers in California may only request credit reports as part of a pre-employment screening program if the applicant is being considered for one of the following: 

• A managerial position;
• A position in the state Department of Justice;
• A sworn peace officer or other law enforcement;
• 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 confidential information ( credit card account information, Social security number, or Date of birth);
• A position which the person can enter into financial transactions on behalf of the company;
• A position that involves access to confidential or proprietary information; or
• A position that involves regular access to employer, customer, or client cash totaling $10,000 or greater during the workday. 

Second, the law states that California employers must now disclose all of the following information to the applicant or employee applicant or employee before the credit report information is requested: 

• Written disclosure that a credit report will be requested;
• A check box allowing the applicant to request a copy of the credit report at no charge; and,
• The specific reason(s) for obtaining the report as provided in the statute (see list of position types above). 

To assist you in preparing to comply with this new legislation, EBI has created a SAMPLE AB22 California Credit Report Disclosure & Authorization Form for Employers who are affected by the new law. 

Please note that it is the potential employer’s responsibility to complete the section of the new disclosure form to indicate which permissible purpose applies to their request for the credit information before the credit report is requested. 

To assist you in preparing to comply with this new legislation, EBI has created a California AB22 - SAMPLE Credit Report Disclosure & Authorization Form for Employers who are affected by the new law. Please contact our Customer Care team @ customercare@ebiinc.com if you would like a copy of the sample form. 

PLEASE NOTE:
Employers subject to these new provisions should contact their legal counsel for guidance immediately and revise their policies accordingly.  All information contained herein is provided by Employment Background Investigations solely for the convenience of its clients. EBI is not providing legal advice or counsel and nothing provided on this document should be deemed as legal guidance or advice.  Readers should consult with their own legal counsel to determine their legal responsibilities or if they have questions on any information provided by EBI.

EBI is committed to providing employers with valuable education and resources on changing legislation and cutting-edge and compliant solutions to meet federal, state, local and international mandatory requirements. If you found this information useful, select the button listed below and access more industry news, resources and tips from EBI, an NAPBS Accredited screening firm and global leader in the background screening industry.

Urgent Reminder For California Employers - AB22 Effective Date Is January 1st

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California will soon officially become the seventh state to restrict California employers from requesting applicant or employee credit report information for employment purposes effective January 1, 2012. Additionally, Assembly Bill 22 specifies that California employers are also subject to very important new disclosure requirements. 

First, EBI understands that the new law stipulates that employers in California may only request credit reports as part of a pre-employment screening program if the applicant is being considered for one of the following: 

• A managerial position;
• A position in the state Department of Justice;
• A sworn peace officer or other law enforcement;
• 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 confidential information ( credit card account information, Social security number, or Date of birth);
• A position which the person can enter into financial transactions on behalf of the company;
• A position that involves access to confidential or proprietary information; or
• A position that involves regular access to employer, customer, or client cash totaling $10,000 or greater during the workday. 

Second, the law states that California employers must now disclose all of the following information to the applicant or employee applicant or employee before the credit report information is requested: 

• Written disclosure that a credit report will be requested;
• A check box allowing the applicant to request a copy of the credit report at no charge; and,
• The specific reason(s) for obtaining the report as provided in the statute (see list of position types above). 

To assist you in preparing to comply with this new legislation, EBI has created a SAMPLE AB22 California Credit Report Disclosure & Authorization Form for Employers who are affected by the new law. 

Please note that it is the potential employer’s responsibility to complete the section of the new disclosure form to indicate which permissible purpose applies to their request for the credit information before the credit report is requested. 

To assist you in preparing to comply with this new legislation, EBI has created a California AB22 - SAMPLE Credit Report Disclosure & Authorization Form for Employers who are affected by the new law. Please contact our Customer Care team @ customercare@ebiinc.com if you would like a copy of the sample form. 

PLEASE NOTE:
Employers subject to these new provisions should contact their legal counsel for guidance immediately and revise their policies accordingly.  All information contained herein is provided by Employment Background Investigations solely for the convenience of its clients. EBI is not providing legal advice or counsel and nothing provided on this document should be deemed as legal guidance or advice.  Readers should consult with their own legal counsel to determine their legal responsibilities or if they have questions on any information provided by EBI.

EBI is committed to providing employers with valuable education and resources on changing legislation and cutting-edge and compliant solutions to meet federal, state, local and international mandatory requirements. If you found this information useful, select the button listed below and access more industry news, resources and tips from EBI, an NAPBS Accredited screening firm and global leader in the background screening industry.

California Assembly Bill 22 Specifies Additional Disclosure Requirements for Applicable Employers

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California will soon officially become the seventh state to restrict California employers from requesting applicant or employee credit report information for employment purposes effective January 1, 2012. Additionally, Assembly Bill 22 specifies that California employers are also subject to very important new disclosure requirements. 

First, EBI understands that the new law stipulates that employers in California may only request credit reports as part of a pre-employment screening program if the applicant is being considered for one of the following: 

• A managerial position;
• A position in the state Department of Justice;
• A sworn peace officer or other law enforcement;
• 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 confidential information ( credit card account information, Social security number, or Date of birth);
• A position which the person can enter into financial transactions on behalf of the company;
• A position that involves access to confidential or proprietary information; or
• A position that involves regular access to employer, customer, or client cash totaling $10,000 or greater during the workday. 

Second, the law states that California employers must now disclose all of the following information to the applicant or employee applicant or employee before the credit report information is requested: 

• Written disclosure that a credit report will be requested;
• A check box allowing the applicant to request a copy of the credit report at no charge; and,
• The specific reason(s) for obtaining the report as provided in the statute (see list of position types above). 

To assist you in preparing to comply with this new legislation, EBI has created a SAMPLE AB22 California Credit Report Disclosure & Authorization Form for Employers who are affected by the new law. 

Please note that it is the potential employer’s responsibility to complete the section of the new disclosure form to indicate which permissible purpose applies to their request for the credit information before the credit report is requested. 

To assist you in preparing to comply with this new legislation, EBI has created a California AB22 - SAMPLE Credit Report Disclosure & Authorization Form for Employers who are affected by the new law. Please contact our Customer Care team @ customercare@ebiinc.com if you would like a copy of the sample form. 

PLEASE NOTE:
Employers subject to these new provisions should contact their legal counsel for guidance immediately and revise their policies accordingly.  All information contained herein is provided by Employment Background Investigations solely for the convenience of its clients. EBI is not providing legal advice or counsel and nothing provided on this document should be deemed as legal guidance or advice.  Readers should consult with their own legal counsel to determine their legal responsibilities or if they have questions on any information provided by EBI.

EBI is committed to providing employers with valuable education and resources on changing legislation and cutting-edge and compliant solutions to meet federal, state, local and international mandatory requirements. If you found this information useful, select the button listed below and access more industry news, resources and tips from EBI, an NAPBS Accredited screening firm and global leader in the background screening industry.

California Investigative Consumer Reporting Agencies Act (ICRAA) Amended

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Effective January 1, 2012, there is an important amendment to the California Investigative Consumer Reporting Agencies Act (ICRAA) that affects employers, applicants, and employees located in the state of California.

SENATE BILL 909
Senate Bill 909 (SB 909) pertains to personally identifiable information (PII) and amends the ICRAA to specify that the End-User must include the following information as part of the applicant/employee investigative consumer report disclosure effective January 1, 2012: 

• Under the ICRAA, any person who procures an investigative consumer report for employment purposes must provide certain disclosures to the individual, including the name, address, and phone number of the investigative consumer reporting agency; 
• Effective January 1, 2012, these disclosures also must include a web address for the investigative consumer reporting agency, where the consumer may find information about the agency's privacy practices, including whether the consumer's personal information will be sent outside of the U.S. or its territories. 

The bill includes additional requirements that may apply to End-Users who utilize the services of investigative consumer reporting agencies physically located in California and/or investigative consumer reporting agencies that “off-shore” the preparation or processing of investigative consumer reports. However, it is our understanding that these additional provisions do NOT apply to international (Non-U.S.) investigations. More importantly, it is EBI’s policy to NOT “offshore” any personally identifiable information (PII) unless required for the purposes of the investigation. For complete details about how EBI processes and protect personally identifiable information please view our Privacy Policy. 

At EBI, we have modified our Sample Disclosure and Authorization Form to include the information required by Senate Bill 909.  If you would like to have a copy of this Sample Disclosure and Authorization Form, please contact our Customer Care team @ 800-324-7700 or customercare@ebiinc.com.

PLEASE NOTE:
Employers subject to these new provisions should contact their legal counsel for guidance immediately and revise their policies accordingly.  All information contained herein is provided by Employment Background Investigations solely for the convenience of its clients. EBI is not providing legal advice or counsel and nothing provided on this document should be deemed as legal guidance or advice.  Readers should consult with their own legal counsel to determine their legal responsibilities or if they have questions on any information provided by EBI.

EBI is committed to providing employers with valuable education and resources on changing legislation and cutting-edge and compliant solutions to meet federal, state, local and international mandatory requirements. If you found this information useful, select the button listed below and access more industry news, resources and tips from EBI, an NAPBS Accredited screening firm and global leader in the background screening industry.

California Restricts The Use Of Employment Credit Reports To Certain Positions

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California has become the seventh state to restrict the use of credit report information for employment purposes as Governor Jerry Brown signed Assembly Bill 22 on October 10, 2011. The new guidelines go into effect January 1, 2012, and employers in California may only use a consumer credit reports for employment purposes if the report is sought for one of the following: 

• A managerial position;
• A position in the state Department of Justice;
• A sworn peace officer or other law enforcement;
• 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 confidential information ( credit card account information, Social security number, or Date of birth);
• A position which the person can enter into financial transactions on behalf of the company;
• A position that involves access to confidential or proprietary information; or
• A position that involves regular access to employer, customer, or client cash totaling $10,000 or greater during the workday. 

EBI understands that when these new guidelines go into effect January 1, 2011, employers in California who obtain a consumer report for one of the limited exceptions outlined in the statute must provide the person for whom the credit report is sought with: 

• Written disclosure that a report will be requested;
• A check box allowing the applicant to request a copy of the credit report at no charge; and;
• The specific reasons for obtaining the report as provided in the statute. 

Employers subject to these new requirements should contact their legal counsel for guidance immediately and revise their policies accordingly.

Employment Credit Reports From EBI
At EBI, we understand the critical role credit reports play in assessing a candidate or even a current employee.  EBI offers access to FCRA compliant employment credit reports in a secure and confidential manner.  EBI can provide a complete picture of your candidate, confirming the candidate’s true identity, address history, and credit worthiness with our “one stop” background screening solutions.  If you would like to know more about what other states restrict the use of credit reports please read the following article titled “Credit Reports For Employment Purposes – State Law Compliance”.

EBI is committed to providing employers with valuable education and resources on changing legislation and cutting-edge and compliant solutions to meet federal, state, local and international mandatory requirements. If you found this information useful, select the button listed below and access more industry news, resources and tips from EBI, an NAPBS Accredited screening firm and global leader in the background screening industry!

Credit Reports For Employment Purposes – State Law Compliance

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Credit Reports Can Be An Important Element Of Background Screening
Credit reports are a critical element of the background screening process for many employers. Banking, finance, security, public safety and pharmaceuticals are just a few industries that rely heavily on credit reports for making a hiring decision as an indication of integrity and stability. Consider a candidate for a government position who has defaulted on a government backed student loan or possesses tax liens against them.  What about an employee that has fiduciary responsibility over company funds, check writing authority, or access to large amounts of cash?  Consider an employee that is granted a company credit card and struggles to manage their own personal credit within acceptable limits.  What about an employee that has access to customer credit card information or confidential consumer information which could lead to potential identity theft?  A credit report may give insight into a candidate’s stability and trustworthiness for a specific position, although there is no proven correlation to a candidate’s credit score and their ability to perform a job.  For that reason, a credit score is not part of an employment credit report. 

Proper use of a credit report within the hiring decision process is imperative to avoid discrimination and legal liability.  Each should be reviewed on an individual basis and employers should provide a candidate/employee with an opportunity to respond to derogatory information found within their credit history, since many times there are unavoidable circumstances which lead to poor credit.  Create a policy that is consistent when using credit reports as part of the screening process and be aware of restrictions within your state.

Individual States That Restrict Credit Report Use
A few states have considered, or passed, legislation that provides specific language around the use of credit reports for employment purposes. Employers need to be sure that their hiring, retention, and promotion practices fall within these guidelines. Below is a sampling of state by state considerations as of September 1, 2011. It is important that you stay current on new developments through your HR legal counsel as state and federal legislation is constantly changing.  Please also be aware that legislation in Maryland and Connecticut will take effect on October 1, 2011. 

• Colorado Active Legislation - The Colorado “Employment Opportunity Act”, Colo. Rev. St 8-2-126, will drastically limit consumer credit information from being used for employment purposes. The law, which was signed on April 19, 2013, and which will go in effect on July 01, 2013, will be the ninth state law to significantly limit how employers may use consumer credit information to make employment decisions. The law defines “employment purposes” to encompass evaluation of a person for “employment, hiring, promotion, demotion, reassignment, adjustment in compensation level, or retention.” Effective July 01, 2013, Colorado employers may only use consumer credit information for employment purposes if:  “The employer is a bank or financial institution; the report is required by law; or the report is substantially related to the employee’s current or potential job and the employer has a bona fide purpose for requesting or using information in the credit report that is substantially related to the employee’s current or potential job and is disclosed in writing to the employee.”
   
• California Active Legislation - Governor Jerry Brown signed Assembly Bill 22 on October 10, 2011. The new guidelines go into effect January 1, 2012, and employers in California may only use a consumer credit reports for employment purposes if the report is sought for one of the following:  (1) A managerial position;  (2)  A position in the state Department of Justice;  (3)  A sworn peace officer or other law enforcement;  (4)  A position for which the information contained in the report is required by law to be disclosed or obtained; (5)  A position that involves regular access to confidential information ( credit card account information, Social security number, or Date of birth); (6) A position which the person can enter into financial transactions on behalf of the company; (7) A position that involves access to confidential or proprietary information; or (8) A position that involves regular access to employer, customer, or client cash totaling $10,000 or greater during the workday.  Please be aware that there are additional provisions regarding written disclosure, a check box available for the applicant to request a copy of their report at no additional charge, and disclosure of reasons for obtaining such information on the applicant.
  
  
• Connecticut Active Legislation – Senate Bill 361 will prohibit most employers from utilizing applicant and employee credit reports for employment decisions effective October 1, 2011. The law specifies employers may not require an employee or prospective employee to consent to a request for a credit report unless: (1) such employer is a financial institution, (2) such report is required by law, (3) the employer reasonably believes that the employee has engaged in specific activity that constitutes a violation of the law related to the employee's employment, or (4) such report is substantially related to the employee's current or potential job or the employer has a bona fide purpose for requesting or using information in the credit report that is substantially job-related and is disclosed in writing to the employee or applicant.  The law defines credit report information as “substantially related” and provides scenarios for various positions.
  
  
• Hawaii Active Legislation - House bill 31(HB31 CD1) became law on July 15, 2009, overriding Governor Lingle’s veto. This law establishes employer's use of an individual's credit history in hiring and termination decisions as an unlawful discriminatory practice, provided that the individual's credit information directly relates to a bona fide occupational qualification, and that employers are expressly permitted to inquire into credit history for employment purposes pursuant to any federal or state law.  The bill also provides notable exemptions to the legislation.
  
  
• Illinois Active Legislation -    Illinois State Governor Pat Quinn has signed the Employee Credit Privacy Act (HB4658) into law.  Effective January 1, 2011, Illinois employers and agents of employers may not “discriminate against an individual with respect to employment, compensation, or a term, condition, or privilege of employment because of the individual's credit history or credit report”  or “order or obtain an applicant's or employee's credit report from a consumer reporting agency.”  The law applies to all Illinois-based employers of any size; however, provides exceptions for use within specific industry and for certain positions.
  
  
• Maryland Active Legislation - the Maryland Job Applicant Fairness Act was signed into law on April 12, 2011, and the new law restricts employers from using an applicant/employee's credit report or credit history in determining whether to deny employment; discharge an employee; or determine compensation, terms, conditions or privileges of employment. This law goes into effect on October 1, 2011, and specifies that the employer may request or use the applicant/employee’s credit information after the applicant has received an offer of employment and if the employer has a substantially job-related bona fide purpose for requesting or using information in a credit report or credit history.  Under the act, a position for which an employer has a substantially job-related bona fide purpose for requesting or using information in a credit report or credit history includes a position that is qualified for credit report use.
  
  
• Oregon Active Legislation – As of March 29, 2010, Oregon Senate Bill 1045 was signed by Governor Kulongoski and went into effect July 1, 2010. This bill places additional restrictions on the use of credit reports, and prevents employers from utilizing credit reports for employment, including hiring, discharge, promotion, and compensation unless the credit report use is "substantially job-related".  There are also exceptions under this new law for certain industries or positions.
  
  
• Vermont Active Legislation - Vermont Governor Peter Shumlin has signed Senate Bill 95 into law, generally restricting an employer’s right to inquire, obtain, and utilize credit history information for employment decisions effective July 1, 2012. Importantly, the new law does exempt Vermont employers from the new provisions if one or more conditions are applicable:  A complete list of provisions are listed within the Bill.
  
  
• Washington Active Legislation - The state of Washington amended existing legislation with RCW 19.182.020. An immediate effect of this legislation revolves around the use of amended forms and the ability for WA employers to communicate the reasons that a credit report is substantially related to a particular job. Under this amended Washington Law, employers cannot obtain a credit report as part of a background check unless the information is substantially “job related” and must include the employer’s reason for use and be disclosed in writing.  The use is also acceptable if required by law.

Even with only a few states weighing in on the use of credit reports, all current, pending and even vetoed legislation address the critical need for proper use, and the valuable resource it brings to employers. EBI provides this information as awareness to current trends and issues within the background screening industry; however, this information should not be taken as legal advice as it relates to the proper use of credit reports.

Employer Resources For Consumers
The following are additional resources that provide consumers guidance with Federal law and guidelines around credit reports and their rights.

Federal Trade Commission (FTC)
FTC – Consumer Credit Information 
Yearly Credit Report Review 

Employment Credit Reports From EBI
At EBI, we understand the critical role that credit reports play for assessing a candidate or even a current employee. EBI offers access to FCRA compliant employment credit reports in a secure and confidential manner.  EBI can provide a complete picture of your candidate, confirming the candidate’s true identity, address history, and credit worthiness with our “one stop” background screening solutions.

EBI is committed to providing employers with valuable education and resources on changing legislation and cutting-edge and compliant solutions to meet federal, state, local and international mandatory requirements. If you found this information useful, select the button listed below and access more industry news, resources and tips from EBI, an NAPBS Accredited screening firm and global leader in the background screening industry!

EBI Alert - California Upholds the Use of Employment Credit Reports

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California Governor Continues To Support The Use Of Credit Reports By Employers

Governor Schwarzenegger continues to support the use of employment credit reports by California Employers by stating, “I am returning Assembly Bill 482 without my signature.  This bill would prohibit an employer from using a consumer credit report for employment purposes with certain exceptions. 

This bill is similar to legislation I have vetoed for the last two years on the basis that California’s employers and business have inherent needs to obtain information about applicants for employment and existing law already provides protections for employees from improper use of credit reports.  As with the last two bills, this measure would also significantly increase the exposure for potential litigation over the use of credit checks.  For these reasons, I am unable to sign this bill.”

Prohibitions to Employers

This bill would have prohibited an employer, with the exception of certain financial institutions, from obtaining a consumer credit report for employment purposes unless the information meets the following guidelines:

1. Substantially job-related meaning that the position of the person for whom the report is sought has access to money, other assets, or trade secrets or other confidential information, and;
2. The position of the person for whom the report is sought is a position in the state Department of Justice, a managerial position, that of a sworn peace officer or other law enforcement position, or a position for which the information contained in the report is required to be disclosed by law or to be obtained by the employer.

EBI Continues To Be Involved In Legislative Issues On Your Behalf

Employment Background Investigations, Inc. (EBI) and the National Association of Professional Background Screeners (NAPBS) will continue its efforts to help defeat any legislation that makes the process of background screening more restrictive for Employers.  Hundreds of NAPBS members outlined their concerns of AB482 and urged the Governor not to sign the bill.  Governor Schwarzenegger agreed with our position and returned the legislation without his signature giving employers in California the opportunity to use this valuable information in their hiring decision process.