(June 17, 2010) California Chamber of Commerce-opposed legislation that could expose a business’ customers and employees to an increased risk of identity, financial and asset theft passed the Senate Labor and Industrial Relations Committee on June 9.

The “job killer” bill, AB 482 (Mendoza; D-Norwalk), increases potential liability exposure for hiring decisions by unduly restricting the ability of businesses to use consumer credit reports as part of the background check process.

Employers strive to recruit and retain the best employees who they trust and will help grow their businesses.

Consumer credit reports provide important insight into one aspect of a potential employee’s ability to handle responsibility for cash, other assets and personal information. An employee with high consumer debt who handles cash or assets may be more likely to steal, and this bill prohibits an employer from accessing this important information as a part of the hiring process.

This risk is compounded by the fact that, in most situations, employers are liable for the actions of employees in the performance of their job duties, so an employee may take actions that bring an unacceptable level of liability on his/her employer.

Although an individual’s credit history by itself is not predictive of potential theft, access to credit information can reveal patterns that may present an unreasonable risk to businesses resulting from an irresponsibility with regard to, or inability to, handle personal financial commitments.

Similar legislation was vetoed in 2008 and 2009 by Governor Arnold Schwarzenegger, who stated “California’s employers and businesses have inherent needs to obtain information about applicants for employment and existing law already provides protections for employees from improper use of credit reports.”

Action Needed

AB 482 is scheduled to be heard in the Senate Judiciary Committee on June 29. Contact your Senator and urge them to oppose AB 482.

Staff Contact: Marti Fisher

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