Skip to main content
Join Now
Magnifying glass held over an image of a person

< Back to All

Be Aware of Credit Check Restrictions that Vary by Location

July 13, 2023

By Susan Chance, courtesy of SBAM-approved partner ASE

Change is a constant, and that is certainly true in background screening laws. Some changes seem like common sense and are easy to apply, such as having a clear and concise disclosure form. Making sure that anyone giving permission for an employment background check understands what they are agreeing to is basic fairness, and unless an employer has some nefarious intent in mind for a background check, this should be an easy compliance item.

Other changes may take a little more work and training, such as the various ban the box and credit check laws. For employers with multiple locations there are more laws to track, and what can be done in one location may not be allowable in another location. This is not just from state to state; this can also be from county to county or city to city.

Credit check restrictions can be more of an issue for employers. It would seem to be common sense to run a credit check on anyone who works in accounting, for example. However, various locations restrict credit checking only allow for checking on employees in high level positions and a few other circumstances, but for the most part do not allow an employer to run credit checks for employment purposes.

This also applies to domestic help in some places such as California. Anyone hiring domestic help for themselves or for placement to work for a client can’t run a credit check unless specific conditions are met, such as the person having access to $10,000.00 or more in cash. That seems very restrictive, especially if a person is being placed with a very affluent employer. While cash may not be lying around, there can be jewelry and artwork worth much more to which a person may have access. The employees may also have access to children in the home. It would seem that an employer should have a right to basic safety in hiring, but newer laws seem to focus very narrowly on the rights of applicants.

California is now considering a new Fair Chance Act which would severely restrict any private employer from including an applicant’s conviction record for employment purposes. The act would only allow for three circumstances under which a criminal background check can be used:

  1. In response to a court order or to comply with a subpoena “issued by a court of competent jurisdiction.”
  2. When a person with a specific conviction history is prohibited by state or federal law from being hired, even when the conviction has been sealed, expunged, or dismissed.
  3. When a person with a specific conviction history is prohibited by state or federal law from being hired.

The act would also require, as many ban the box acts do, an individual assessment to determine if the conviction record would result in a “direct and adverse” relationship to the position.

This act also lists restrictions on what may be included in job postings regarding criminal history. In addition, the act restricts what interview, hiring, or continued employment decisions can be made with any conviction information provided by the applicant.

Other places such as New York City seem to follow the same path as California. While the intent to help people who have made a mistake in the past is a good one, tying the hands of employers does not seem to be the best option. Employers should take note and watch what is happening in the areas in which they conduct business and make sure their government representatives hear their voice in those areas when there are concerns.



Bill Text: CA SB809 | 2023-2024 | Regular Session | Introduced | LegiScan

California bill would ban most criminal background checks | HR Dive

California Civil Code § 1786.12 (2021) :: 2021 California Code :: US Codes and Statutes :: US Law :: Justia

California Seeks to Ban Criminal Background Checks for Most Private Sector Employers | Littler Mendelson P.C.

Share On: