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Italicized text includes proposed additions to law or the previous version of the bill.
Struck text includes proposed deletions to law or the previous version of the bill.

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PASSED THE SENATE SEPTEMBER 8, 2011
PASSED THE ASSEMBLY SEPTEMBER 8, 2011
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, 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. 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 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 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, (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 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.


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.
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 for employment purposes unless the position of
the person for whom the report is sought is any of the following:
(1) A managerial position.
(2) A position in the state Department of Justice.
(3) That of 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, 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) 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).