California bans use of credit reports for employment purposes

Within days, the state of California will begin punishing employers that consider credit reports when making hiring decisions. The Golden State’s legislature is the seventh to vote in favor of the new rules, and although there are a few exceptions for those applying for certain political and law enforcement positions, the law is intended to prohibit discrimination.

Proponents of the bill says any employer that uses a credit report to determine an applicant’s eligibility should consider evaluating their employment screening policies. After all, there are other indiscretions that could automatically disqualify a candidate, such as workplace violations, felony convictions and a lack of required education.

But some argue that a credit report is quite telling. Like other pre-employment screening tools, such as a college degree requirement, credit reports provide objective information about an individual’s past behavior or character, which can be an indicator of potential future behavior. That can be important information for companies hiring for a financial management position.

A credit report can provide valuable information regarding an applicant’s overall responsibility, reliability, and integrity, which can help employers reduce future litigation and loss, according to the California Chamber of Commerce.

There are obviously two sides to the argument. Regardless of whether your state permits the use of credit reports in hiring decisions, TruDiligence can promptly produce a report that verifies every employee’s background. The process is simple: you choose the things you want to know about and TruDiligence scours databases that contain the public information. Good or bad, it’s best to legally dig up all details about an employee that can provide insight on their ability to fulfill their assigned duties.