New California Law Limits Use of Credit Reports in Employment Background Checks

records of financial catastrophe from americredit

Clients often ask me if filing for bankruptcy could prevent them from getting a job.  There is a new law in California that address that issue for many of my clients.  Subject to several exceptions listed below, most California employers cannot review your credit report beginning January 1, 2012

Jobs that allow a credit check include:

  • A position in the state Department of Justice
  • A managerial position
  • A position as a sworn peace officer or other law enforcement job
  • A position for which the information is required by law
  • A position that involves access to specified personal information such as social security numbers
  • A position in which the person is a named signatory on the employer’s bank or credit card account
  • A position that involves access to confidential or proprietary information such as trade secrets
  • A position that involves regular access to $10,000 or more of cash like a bank teller or financial adviser

Any employer who orders the credit report of an employee or job applicant must give you notice that a credit report will be ordered along with an explanation of what exemption allows this access.

Section 525 of the Bankruptcy Code prohibits an employer from firing an employee “solely” because they filed for bankruptcy, but the Code is silent with respect to pre-employment discrimination due to bankruptcy.  California joins Maryland, Oregon, Hawaii, Illinois, Washington and Connecticut in limiting the use of pre-employment credit reports, thus providing some protection to job applicants that files for bankruptcy and do not wish to reveal that fact to a prospective employer.

Image credit:  stevendamron

Carl Starrett

Carl Starrett is a consumer bankruptcy attorney in San Diego, California helping debtors file for protection under Chapter 13 and Chapter 7 of the Bankruptcy Code.

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