California Restricts Employers’ Use of Consumer Credit Reports Effective January 1, 2012


by Sayema Hameed

Assembly Bill 22, signed into law by Governor Brown, restricts the use of consumer credit reports by employers.  Effective January 1, 2012, employers and prospective employers (excluding certain financial institutions) will be prohibited from obtaining or using consumer credit reports about employees or job applicants, with limited exceptions.  This law carves out exceptions for the use of consumer credit information by employers for persons in the following positions:

  • (1) a position in the California Department of Justice;
  • (2) a managerial position, as defined;
  • (3) 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 a person’s personal bank or credit card information for any purpose (other than the routine 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, defined as a “trade secret” under California Civil Code Section 3426.1(d);
  • (8) a position that involves regular access to $10,000 or more cash belonging to the employer, customer or client.

Before obtaining a credit report for an employee or applicant, an employer must provide a written notice to the employee or applicant specifying the specific reason(s) for seeking the report, informing the person of the source of the report, and providing a box to check to request a free copy of the report.


About Cabada & Hameed LLP

Cabada & Hameed LLP is a law firm serving the greater Southern California region. Formed by “big firm” veterans in 2009, the firm offers exceptional legal representation with experienced attorneys handling matters encompassing Labor & Employment and Business Law and Litigation. Cabada & Hameed LLP is certified as a Minority Owned Business (MBE) by the California Public Utilities Commission’s Supplier Clearinghouse and is a member of the California Minority Counsel Program. Partners and co-founders Francisco Cabada and Sayema Hameed bring over a decade of legal training and experience to every matter and ensure that clients receive individualized support and counsel, around-the-clock availability, the utmost discretion and maintenance of the highest professional and ethical standards. For more information, please visit the website www.cabadahameed.com.


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