Legal Updates

Urgent Notice

Connecticut Law: Employers restricted use on Credit Reports effective October 1, 2011.

Effective October 1, 2011, a new law in Connecticut – Senate Bill No. 361 (S.B. 361) – signed by Governor Dannel Malloy will prohibit certain employers from using credit reports in making hiring and employment decisions regarding existing employees or job applicants. The law applies to all employers in Connecticut with at least one employee. Connecticut is one of six U.S. states – joining Hawaii, Illinois, Maryland, Oregon, and Washington – that currently prohibit the use of credit history in employment decisions.

Alert California signs into law restricting Credit Reports for Employers.

The final version of California Assembly Bill No. 22 (AB 22) that limits credit checks of job applicants by most employers was signed into law by Governor Jerry Brown on October 8, 2011. Effective January 1, 2012, the bill will prohibit most employers or prospective employers, with the exception of certain financial institutions, from obtaining consumer credit reports for employment purposes. California now joins Connecticut, Hawaii, Illinois, Maryland, Oregon, and Washington as the U.S. states that currently restrict the use of credit checks by most employers for employment decisions.

Chapter 3.6. Employer Use of Consumer Credit Reports California
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).