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California limits use of credit checks in hiring

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Business owners in California will now be strictly limited in the use of consumers' credit reports during the hiring process after a new bill was signed into law.

Under the bill, workers will now only be able to use credit checks for certain positions, such as managerial slots, law enforcement officers, jobs involving confidential information or large amounts of cash. The regulations go into effect on January 1.

While job organizations said the rules would remove valuable information from the hiring process, lawmakers said it could help consumers find work.

"This bill has the ability to put countless unemployed Californians back to work and will end the needless catch-22 that occurs when those seeking work to pay their bills cannot find it due to poor credit," said assemblymember Tony Mendoza, who sponsored the bill.

Mendoza had actually proposed similar legislation twice before, only to have it vetoed by then-Governor Arnold Schwarzenegger. California becomes the eighth state to pass similar laws.

Business owners should take care to follow this, along with all other legal requirements during the hiring process, in order to avoid business insurance claims and potential lawsuits.

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