PDQ Legal

California Bill Restricting the Use of Credit Reports for Employment Purposes on Governor’s Brown’s Desk

California Assembly Bill No. 22 (AB 22), which limits credit checks of job applicants by most employers, is on Governor Jerry Brown’s desk for his signature. If passed, California would join Connecticut, Hawaii, Illinois, Maryland, Oregon, and Washington in restricting the use of credit checks by most employers for employment decisions.

Though previous attempts at similar legislation were vetoed by former Governor Arnold Schwarzenegger, many believe this legislation will pass.

If signed by Governor Brown, this bill would prohibit an employer or prospective employer, 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:

*1. position in the state Department of Justice;

*2. a managerial position;

*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 to be disclosed or obtained;

*5. 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;

*6. 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;

*7. a position that involves access to confidential or proprietary information, as specified; or

*8. a position that involves regular access to $10,000 or more of cash.

Not only does AB 22 require written notice informing the person for whom a consumer credit report is sought for employment purposes, but it also requires the person be informed of the specific reason for obtaining the report.

SHRM Study: Drug Testing by Employers

The Society for Human Resource Management (SHRM), in a study commissioned by the Drug and Alcohol Testing Association (DATIA), found that 57% of employers conduct drug tests on all job candidates.

The poll, which was released in September 2011, surveyed 1,058 randomly selected Human Resource professionals. It reported that 69% of employers who currently drug test job applicants have done so for seven years or more while 12% have used drug tests for five to six years.

Other key findings include:

• 39% of small businesses with fewer than 100 employees had a drug-testing policy for job candidates; • 56% of businesses with 100 to 499 employees required pre-employment drug testing; • 62% of medium-sized businesses with 500 to 2,499 employees reported that they required drug testing; and • 71% of large organizations with 2,500 or more employees required all job applicants to take a pre-employment drug test..

The Texas Auditor’s Office recently reported

“Data in the DPS’s (Department of Public Safety) Computerized Criminal History System is not complete, and users may not receive a reliable result from criminal history background checks that are conducted based on the data in that system.” The Audit also provided, “A significant number of prosecutor and court records are not reported to DPS, which impairs the quality of information that DPS uses to conduct criminal history background checks,”

Although Texas law requires prosecutors and courts to send that data to DPS within weeks, DPS has no authority to penalize these agencies for failing to do same.

Therefore, a more accurate criminal record history check in the State of Texas would include conducting county criminal checks in the counties in which the subject has resided over the last seven years, rather than simply relying on the Texas statewide DPS database.