BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
482 (Mendoza)
Hearing Date: 8/2/2010 Amended: 7/15/2010
Consultant: Bob Franzoia Policy Vote: L&IR 4-0
Judicicary 3-1
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BILL SUMMARY: AB 482 would prohibit an employer, with the
exception of certain financial institutions, from obtaining a
consumer credit report for employment purposes unless the
information is (1) substantially job-related, meaning that the
person for whom the report is sought has access to money, other
assets, or trade secrets or other confidential information, and
(2) the position of the person for whom the report is sought is
a position in the Department of Justice, a managerial position,
that of a sworn peace officer or other law enforcement position,
or a position for which the information contained in the report
is required to be disclosed by law or to obtained by the
employer.
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
New enforcement Up to $60 Up to $120 Up to $120Special*
requirement
* Labor Enforcement and Compliance Fund
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STAFF COMMENTS: Credit reporting activities are regulated by
state and federal law. The federal Fair Credit Reporting Act
requires that the employer notify the applicant and obtain
consent for the background check.
Thought not specified, enforcement would likely be the
responsibility of the Division of Labor Standards Enforcement
(DLSE) within the Department of Industrial Relations, which
investigates complaints alleging discriminatory retaliation in
the workplace on the basis of various Labor Code sections, or
the Department of Fair Employment and Housing (DFEH). Initial
information indicates this bill would have little or no impact
on the operations of the DFEH.
As part of the state government trailer bill Chapter 12 /2009
(AB 12x4, Evans), the Director of Industrial Relations would be
authorized to levy a separate surcharge upon all employers, as
defined, for the purposes of deposit in the newly created Labor
Enforcement and Compliance Fund. Chapter 12 requires that the
total amount of the surcharges be allocated between employers in
proportion to payroll respectively paid in the most recent year
for which payroll information is available. The surcharge
levied shall not exceed $37,000,000 in the 2009-10, adjusted for
as appropriate to reconcile any over/under assessments from
previous fiscal years, and shall not be adjusted each year
thereafter by more than the state-local government deflator.
The cap of $37,000,000 represents the amount expended by the
DSLE for the enforcement of wage and hour violations. With this
cap, the DLSE will be force to begin prioritizing enforcement
activities if enforcement duties and costs exceed the cap as
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AB 482 (Mendoza)
adjusted by the deflator. For 2009-10, the deflator was 0.003
percent. For 2010-11, deflator is estimated to increase to
0.014 for an increase of $518,000 in additional enforcement
funding.
This analysis assumes that at a maximum, the provisions of this
bill may increase enforcement workload up to the equivalent of
one time Deputy Labor Commissioner III ($5,269 to $6,945 monthly
plus benefits). (Deputy Labor Commissioners I and II have
monthly salary ranges of $4,357 to $5,361 and $5,027 to $6,186
respectively.)
This bill is similar to AB 943 (Mendoza) 2009 which was vetoed
by the Governor with the following message:
?This is similar to a bill I vetoed last year on the basis that
California's employers and businesses have inherent needs to
obtain information about applicants for employment and existing
law already provides protections for employees from improper use
of credit reports. As with last year's bill, this measure would
also significantly increase the exposure for potential
litigation over the use of credit checks.
That veto message refers to AB 2918 (Lieber) 2008 which was
vetoed by the Governor with the following message:
This bill would significantly increase businesses' exposure to
civil actions over the use of credit cards. Further, the bill
would increase administrative costs to those employers who must
legitimately use credit reports as a screening tool by requiring
that the employer first abide by its onerous requirements.
California employers and businesses have inherent needs to
obtain information about applicants for employment. The bill
would become a new employer obstacle to the use of available
information needed to make hiring decisions.