Mendoza’s AB 22 Bill Heads to Senate Rules Committee.
California assemblymember Tony Mendoza’s third attempt at legislation targeting pre-employment credit checks, AB 22, is on its way to the Senate Rules Committee in an attempt to ban the use of consumer credit reports in the hiring process, in certain instances. The bill was passed off the Assembly floor on May 20, 2011 with a vote of 45 to 29. Mendoza attempted similar legislation in 2009 and 2010 but both were vetoed by Governor Schwarzenegger.
Interestingly, Mendoza rationalizes the need for this bill by saying, “A credit report is an unfair lens through which to view job applicants. Preventing someone from becoming gainfully employed due to a poor credit history is shameful.”
And yet, while AB 22 would ban the use of pre-employment credit checks for many employers, there are certain notable exemptions. Specifically, exempt are any position with the State Department of Justice; a sworn peace officer or other law enforcement position; any position for which the information contained in the report is required to be disclosed by law or to be obtained by the employer. Also exempt from the bill are managerial positions where a credit report would be substantially job-related, which includes managers who would have access to money, assets, or confidential information.
Mendoza further remarks, “This bill will simply remove an unnecessary barrier to employment for those seeking everyday work opportunities.”
Is Pre-Employment Credit Check Legislation Really Necessary?
Is it really necessary to have rules limiting the use of employment credit reports to instances where it makes clear job-related sense to check credit? Of course it is. And guess what? We already have such rules in place. Employers already have an obligation under EEOC guidelines to ensure the employment screening methods they use are clearly linked to the risk and responsibilities of the position and that the factors used to judge the results show a clear link to role-related risk. And if you look at the research you’ll see that there are very few companies abusing this practice. (Refer to our recent blog post, The Background Credit Check Under Fire: Fair or Not?)
Credit checks are just one of many tools used by employers to check the backgrounds of their employees. Rarely have we seen an employer rely solely on a credit check to make a hiring decision. And certainly, if we had ever come across an employer with this practice, it would be strongly discouraged and not at all supported.
So yes – we agree with the intent of the legislation. But no – we don’t feel it’s necessary. How about you? What are your thoughts on the topic? Do you have positions in your company where the use of employment credit checks is warranted? How would you be affected by this legislation?