L.B. Chamber opposes credit check bill

You may have seem my earlier item about Assembly Bill 943, which would ban the practice of checking job candidates' credit histories for most positions. The bill, which was written by Assemblyman Tony Mendoza, D-Norwalk, is headed to the governor's desk.

Dear Governor Schwarzenegger,

The Long Beach Area Chamber of Commerce OPPOSES AB 943 (Mendoza), which restricts employers from using legitimate information related to employment issues and exposes employers to undue liability.

AB 943 prohibits employers from using consumer credit reports for employment purposes unless the information is "substantially job related," as defined, including positions that handle cash, other assets, or personal information, and at least one of the following conditions: managerial, municipal, sworn peace officer or other law enforcement, or as otherwise required by law.

Current law allows for the procurement and use of these reports under the following conditions:

Prior to requesting a consumer credit report, an employer must provide a written notice stating the source of the information and how it will be used.
Provide a copy of the consumer credit report to the consumer, if desired.
If an adverse employment action is taken against a person due to the information contained in a consumer credit report, the user must provide the name and contact information for the reporting agency to the consumer.

While a person's credit history by itself is not predictive of potential theft, access to credit information can reveal patterns that may present an unreasonable risk to businesses. Employee theft is a growing problem. The U.S. Chamber of Commerce rates the annual cost at $40 billion. According to the Federal Bureau of Investigation, this is the fastest growing crime in the United States and many experts estimate that it increases at a rate of 15 percent annually. On average, businesses lose as much as two percent of sales to employee theft.

In small businesses, many employees perform a wide variety of duties that may not be part of their normal daily routine and may include access to cash, other assets, or confidential information. By restricting access to this important information, AB 943 may expose the business' customers and employees to an increased risk. Such risks include identity, financial, and asset theft. For instance, an employee with high consumer debt who handles cash or assets may be more likely to steal, but this bill prohibits an employer from accessing this important information as a part of their hiring process.

Employers strive to recruit and retain the best employees who they trust and will help grow their businesses. Consumer credit reports provide important insight into one aspect of a potential employee's ability to handle responsibility for cash, other assets, and personal information. These reports also provide information that allows for verification of employment history.

AB 943 prohibits employers from performing their due diligence in screening applicants, thus subjecting employers to a greater risk of inadvertently violating the law or being subject to frivolous employment litigation. This risk is compounded by the fact that, in most situations, employers are liable for the actions of employees in the performance of their job duties, so an employee may take actions that bring an unacceptable level of liability on their employer.

For any employer the risk created by AB 943 represents a major liability that discourages business growth in California. For small businesses, every little bit counts and it is their right and responsibility to protect the business within reason. We believe this bill unduly restricts the ability of businesses to use all legally available information in employment decisions.

We respectfully request your "VETO" AB 943 (Mendoza) when it comes before you.

Sincerely,


Randy Gordon
President and CEO