Under the federal Fair Credit Reporting Act and California Consumer Reporting Agencies Act, anyone with a “legitimate business need” may access your credit report. Employers have a legitimate business need to see an applicant’s or employee’s consumer credit as part of their background check as long as the employer uses this report to evaluate the applicant for hire and to evaluate a current employee for promotion, retention, or reassignment.2. Does an employer need to provide notice that it is accessing my credit report?
Yes. If an employer accesses an employee’s or applicant’s credit report, the employer must give written notice to the individual ahead of time. This notice must include the source of the report and should allow the applicant to receive a copy of the report at no charge. The written notice must be:
Exception: Notice is not required if an employer uses a third party, such as an investigation agency, to conduct an investigation of an employee suspected of wrongdoing or misconduct, such as sexual harassment. In such case, the employers also not required to disclose the findings to the employee before any adverse action is taken.3. Does the employer need my permission to access my credit report?
If an employer uses a third party to conduct a background check or to access the credit report of an employee or applicant, the employer must obtain written consent prior to beginning the investigation/accessing the credit report. If an employer conducts his or her own investigation or obtains their own credit report, the employer must obtain consent either verbally or by including it in a job application or other document.
Exception: Consent is not required prior to conducting a background check or prior to accessing an employee’s credit report, if the employer suspects an employee of wrongdoing or misconduct.4. How long does my consent last?
If the employer wishes to conduct an additional background check from an employee in the future, it may do so for employment purposes only, by obtaining written consent from the employee. An employer does not need permission to run an additional check however, if they suspect the employee of wrongdoing or misconduct (CA Civil Code Section 1786.16(2)).5. Are certain things from my past excluded from the credit report?
Under California law, a credit report may not contain any of the following:
Under federal law however, a credit report may contain records of criminal convictions indefinitely.6. Can an employer use my credit report against me?
An employer may take adverse action based on a consumer credit report, but it also has to:
If an employer takes adverse employment action based on a report obtained through an investigation of employee wrongdoing or misconduct:
While a consumer credit report may contain information found in the “Megan’s Law” (registered sex offender database), the employer is not permitted to use this information for employment-related decisions unless the employer could reasonably believe that the information would put someone at risk. To determine this risk, the employer must perform a full assessment of the employee and the job to determine if disregarding the information would put someone at risk.