Daneshvar Law

Employee Credit Checks

Nationwide Push to Ban Pre-Employment Credit Checks

Have you ever been asked to sign an authorization form allowing a company to check your credit report when applying for a job, and wondered “why in the world would they want that?”  It’s quite understandable why employees would feel uneasy about disclosing such personal information.  After all, an employee may wonder what their ability or inability to pay their debts has to do with a day’s work?  Ironically enough, it’s that same need to repay debts that sends people to work in the first place.  On the other hand, it’s also understandable why employers may want to obtain these applicant’s credit reports. Perhaps there is information within the pages of that credit report that may point to dishonesty that will assist the employer in making his decision to hire or not.  

I know that when drafting employee handbooks for my clients, I usually include language requiring the employee to provide written consent to obtain his or her credit report.  This is especially important with job positions where the employee has access to money, financial records, and or billing.  

Recently, however, there has been a nationwide trend in banning credit reports before hiring employees for certain job positions.  According to the Associated Press, “Last year California lawmakers voted to curb the use of such checks, but Gov. Arnold Schwarzenegger vetoed the bill under pressure from Chamber of Commerce leaders who called it a “job-killer.”  However, given today’s poor economy and exceptionally high unemployment rate in California, I believe it’s very likely that legislation protecting consumer rights will follow. 

States may ban credit checks on job applicants 


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