Checking Credit Before Hire? | Employment and Labor Law

Can You Check a Prospective Employee’s Credit Before Hire?

Employment and Labor Law | Employment and Labor Law | Bringing a new employee on to your team can be stressful. As an employer, you may have concerns about how the new employee will contribute, whether he or she will be the right fit for the job and what degree of responsibility he or she will take on. Even after you have interviewed the candidate and contacted any references, you might still want to investigate the applicant further. This curiosity leads some employers to pull credit reports, reasoning that a good or poor credit history will reflect the candidate’s level of personal responsibility. While federal law allows employers to check the credit reports of prospective employees, there are 10 states that limit this right, including California.

Under both federal and California law, an employer must give a prospective employee notice if it plans to check his or her credit report. The only times when it is legal in California to use a credit report for employment decisions is for managerial positions, jobs within the Department of Justice, law enforcement positions, positions that involve working with sums of at least $10,000 per workday, positions where an employee will have access to an employer’s trade secrets and a small handful of other specific jobs. The employer must indicate in its notice which exception it is relying on in checking the employee’s credit.

If an employer makes an employment decision based on the contents of the report, it must also disclose this to the employee. Because an employee is federally permitted to also obtain a copy of the report, he or she will have an opportunity to examine the same information that an employee is using to make its hiring decision.

Some employers have the right to check the credit reports for applicants applying for certain positions. However, California has very stringent laws governing this process and employers should be familiar with these laws before requesting such information. In these situations, it is best to contact a Bakersfield employment law attorney at Young Wooldridge, LLP, who can help you. The employment and labor law attorneys at Young Wooldridge, LLP can inform you of legal options you may not know you have. 

Call today for a confidential consultation! 661.855.4886

Like us on Facebook for more information!