BILL NUMBER: AB 22 AMENDED
BILL TEXT
AMENDED IN SENATE SEPTEMBER 1, 2011
AMENDED IN ASSEMBLY MAY 12, 2011
AMENDED IN ASSEMBLY MARCH 8, 2011
INTRODUCED BY Assembly Member Mendoza
(Coauthors: Assembly Members Allen, Davis, and Huffman)
DECEMBER 6, 2010
An act to amend Section 1785.20.5 of the Civil Code, and to
add Chapter 3.6 (commencing with Section 1024.5) to Part 2 of
Division 2 of the Labor Code, relating to employment.
LEGISLATIVE COUNSEL'S DIGEST
AB 22, as amended, Mendoza. Employment: credit reports.
The federal Fair Credit Reporting Act (FCRA) and the state
Consumer Credit Reporting Agencies Act define and regulate consumer
credit reports and authorize the use of consumer credit reports for
employment purposes, pursuant to specified requirements. The FCRA
provides that it does not preempt state law, except as specifically
provided or to the extent that state laws are inconsistent with its
provisions.
Existing federal and state law specify the procedures that an
employer is required to follow before requesting a report and if
adverse action is taken based on the report. Under
Existing federal law provides that, subject to certain
exceptions, an employer may not procure a report or cause one to be
procured for employment purposes, unless prior disclosure
of the procurement is made to the consumer and the consumer
authorizes the procurement , as specified. Existing
federal law further requires, subject to certain exceptions, an
employer, before taking any adverse action based on the report, to
provide the consumer with a copy of the report and a written
description of certain rights of the consumer.
Under existing state law, an employer may
request a credit report for employment purposes so long as he or she
provides prior written notice of the request to the person
for whom the report is sought. Existing state law
also requires that the written notice inform the person for whom
the consumer credit report was is
sought that a report will be used and of the source of the
report and contain space for the person to request a copy of the
report. Existing state law further requires an employer,
whenever he or she bases an adverse employment decision on
information contained in a consumer credit report, to advise the
person for whom the report was sought that an adverse action was
taken based upon information contained in the report and provide the
person with the name and address of the consumer credit agency making
the report. A consumer who suffers damages resulting from a
violation of these state law provisions may bring a court
action to recover monetary damages, as specified, but no person is
liable for the violation if he or she shows reasonable procedures
were maintained to assure compliance with the provisions, as
specified.
This bill would prohibit an employer or prospective employer
, with the exception of certain financial institutions, from
obtaining a consumer credit report, as defined, for employment
purposes unless the information is (1) substantially
job-related, meaning that the position of the person for whom the
report is sought has access to money, other assets, or confidential
information, and (2) the position of the person for whom
the report is sought is (1) a position in the state
Department of Justice, (2) a managerial position, as
defined, (3) that of a sworn peace officer or other law
enforcement position, or (4) a position
for which the information contained in the report is required
by law to be disclosed by law or to be
or obtained , by the employer
(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, as specified .
This bill would also require the written notice informing the
person for whom a consumer credit report is sought for employment
purposes to also inform the person of the specific reason for
obtaining the report, as specified.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1785.20.5 of the
Civil Code is amended to read:
1785.20.5. (a) Prior to requesting a consumer credit report for
employment purposes, the user of the report shall provide written
notice to the person involved. The notice shall inform the person
that a report will be used , and shall identify the
specific basis under subdivision (a) of Section 1024.5 of the Labor
Code for use of the report. The notice shall also inform the person
of the source of the report, and shall contain a box that the
person may check off to receive a copy of the credit report. If the
consumer indicates that he or she wishes to receive a copy of the
report, the user shall request that a copy be provided to the person
when the user requests its copy from the credit reporting agency. The
report to the user and to the subject person shall be provided
contemporaneously and at no charge to the subject person.
(b) Whenever employment involving a consumer is denied either
wholly or partly because of information contained in a consumer
credit report from a consumer credit reporting agency, the user of
the consumer credit report shall so advise the consumer against whom
the adverse action has been taken and supply the name and address or
addresses of the consumer credit reporting agency making the report.
No person shall be held liable for any violation of this section if
he or she shows by a preponderance of the evidence that, at the time
of the alleged violation, he or she maintained reasonable procedures
to assure compliance with this section.
SECTION 1. SEC. 2. Chapter 3.6
(commencing with Section 1024.5) is added to Part 2 of Division 2 of
the Labor Code, to read:
CHAPTER 3.6. EMPLOYER USE OF CONSUMER CREDIT REPORTS
1024.5. (a) An employer or prospective employer shall
not use a consumer credit report , as defined in subdivision
(c) of Section 1785.3 of the Civil Code, for employment
purposes unless the following criteria are satisfied:
(1) The information contained in the report is substantially
job-related, meaning that the position of the person for whom the
report is sought has access to money, other assets, or confidential
information.
(2) The
the position of the person for whom the report is sought
is any of the following:
(A)
(1) A managerial position.
(B)
(2) A position in the state Department of Justice.
(C)
(3) That of a sworn peace officer or other law
enforcement position.
(D)
(4) A position for which the information contained in
the report is required by law to be disclosed by
law or to be obtained by the employer or obtained
.
(5) A position that involves regular access, for any purpose other
than the routine solicitation and processing of credit card
applications in a retail establishment, to all of the following types
of information of any one person:
(A) Bank or credit card account information.
(B) Social security number.
(C) Date of birth.
(6) A position in which the person is, or would be, any of the
following:
(A) A named signatory on the bank or credit card account of the
employer.
(B) Authorized to transfer money on behalf of the employer.
(C) Authorized to enter into financial contracts on behalf of the
employer.
(7) A position that involves access to confidential or proprietary
information, including a formula, pattern, compilation, program,
device, method, technique, process or trade secret that (i) derives
independent economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by proper
means by, other persons who may obtain economic value from the
disclosure or use of the information, and (ii) is the subject of an
effort that is reasonable under the circumstances to maintain secrecy
of the information.
(8) A position that involves regular access to cash totaling ten
thousand dollars ($10,000) or more of the employer, a customer, or
client, during the workday.
(b) This section does not apply to a person or business subject to
Sections 6801 to 6809, inclusive, of Title 15 of the United States
Code and state and federal statutes or regulations implementing those
sections if the person or business is subject to compliance
oversight by a state or federal regulatory agency with respect to
those laws.
(c) For purposes of this section, "managerial position" means a
position held by a person who has authority, in the interest of the
employer, to hire, transfer, suspend, lay off, recall, promote,
discharge, assign, reward, or discipline other employees, or
responsibly to direct them, or to adjust their grievances, or
effectively to recommend such action, if in connection with the
foregoing the exercise of this authority is not of a merely routine
or clerical nature, but requires the use of independent judgment.
(c) The following definitions apply to this section:
(1) "Consumer credit report" has the same meaning as defined in
subdivision (c) of Section 1785.3 of the Civil Code, but does not
include a report that (A) verifies income or employment, and (B) does
not include credit-related information, such as credit history,
credit score, or credit record.
(2) "Managerial position" means an employee covered by the
executive exemption set forth in subparagraph (1) of paragraph (A) of
Section 1 of Wage Order 4 of the Industrial Welfare Commission (8
Cal. Code Regs. 11040).