As a corporate recruiter and career blogger I am often asked about the legality of credit checks as part of the employment background check. For years my best answer was, it depends. Fortunatley for job seeker the answer to this question is becoming a bit less nebulus. On january 1st, employers in California will no longer be able to base hiring decisions on a persons credit history expect in speciali circumastances. Here is an except from the new California law
Credit reports: AB 22 prohibits employers from using employee or applicant credit reports for most purposes. Exceptions apply to certain jobs, generally limited to those which (1) are managers; (2) have access to the employer’s or clients’ money; (3) have access to personal information of others; or (4) have access to proprietary information. The law specifies that employers who request credit reports must tell the candidate or employee the specific reason the report was requested. Employers who rely on credit inquiries in hiring or promotion will need to revise their policies accordingly.
California joins a growing list of states who now prohibit this practice.
The other states are
It is my hope that this list will grow significantly over the next several years. The reality is there has never been proof that ones credit history is a predictor of future job success.
This is great news for millions of struggling Americans hoping to land a job. At least it is one less thing to worry about..