BILL ANALYSIS
AB 482
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 482 (Mendoza)
As Amended July 15, 2010
Majority vote
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|ASSEMBLY: | |(June 3, 2009) |SENATE: |21-14|(August 26, |
| | | | | |2010) |
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(vote not relevant)
Original Committee Reference: ED.
SUMMARY : Prohibits the use of consumer credit reports for
employment purposes, except as specified.
The Senate amendments delete the contents of the bill and
instead:
1 Prohibit the use of a consumer credit report employment
purposes unless:
a) The information contained in the report is substantially
job-related, meaning that the position of the person for
whom the report is sought has access to money, other assets
or trade secrets or other confidential information; and,
b) The position of the person for whom the report is sought
is a managerial position, a position in the Department of
Justice, 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 be
obtained by the employer.
2)Provide that these provisions do not apply to a person or
business subject to the federal Gramm-Leach-Bliley Act
(governing financial institutions) and implementing
regulations, if the person or business is subject to
compliance oversight by a state or federal regulatory agency
with respect to those laws.
3)Add related legislative findings and declarations.
FISCAL EFFECT : According to the Senate Appropriations
Committee, though not specified, enforcement would likely be the
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responsibility of the Division of Labor Standards Enforcement.
These enforcement costs are estimated at up to $120,000 annually
in special funds.
AS PASSED BY THE ASSEMBLY , this bill required the State Board of
Education (SBE) to revise the reading/language arts framework to
address the needs of English learners, as specified.
COMMENTS : The federal Fair Credit Reporting Act (FCRA) was
enacted to promote accuracy, fairness, and privacy of personal
information assembled by consumer credit reporting agencies.
The FCRA regulates how employers may use consumer reports, which
are defined as reports containing information pertaining to a
person's credit worthiness, credit standing, credit capacity,
character, general reputation, personal characteristics, or mode
of living. The FCRA does not exempt employers from complying
with state laws governing background checks.
The FCRA only applies where an employer uses a third-party to
perform a background check. In that event, the FCRA requires
that the employer notify the applicant and obtain consent for
the background check. If an adverse decision is made based upon
the background check, the employer must provide the applicant
with notice of the adverse decision and the name, address, and
telephone number of the consumer reporting agency making the
report. The employer is also required to give the applicant a
copy of the report and information on how to dispute the
contents of the report.
California's Consumer Credit Reporting Agencies Act (CCRAA), the
state's counterpart to the FCRA, generally regulates consumer
credit reporting agencies. (Civ. Code Sec. 1785.1 et seq.)
Among other things, the CCRAA requires every consumer credit
reporting agency to allow a consumer, upon request and with
proper identification, to visually inspect all files pertaining
to him or her that the agency maintains at the time of the
request. The CCRAA permits consumers to dispute inaccurate
information and requires a consumer credit reporting agency to
reinvestigate disputed information without charge.
Additionally, California law, the Investigative Consumer
Reporting Agencies Act, generally regulates investigative
consumer reporting agencies. (Civ. Code Sec. 1786 et seq.)
Such agencies are defined as any person, corporation, or other
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entity that collects, reports, or transmits information
concerning consumers for the purpose of providing investigative
consumer reports to third parties, as specified. Investigative
consumer reports may be given only to third parties the agency
believes is using the information for: 1) employment purposes;
2) determining a consumer's eligibility for insurance; 3) hiring
a residential unit; or, 4) other specified reasons.
Proponents of this bill argue that working families in
California are facing the worst economic crisis since the Great
Depression. Unemployment is at a twenty-five year high, 500
families lose their homes to foreclosure each day, and those who
have jobs are facing furloughs and wage cuts. According to
proponents, in this economic climate particularly, a person's
credit history says nothing about his or her character or
ability to do a job effectively and responsibly. Yet,
proponents argue, employers routinely rely on credit reports to
deny employment to those who would have otherwise been given a
job. Proponents are also concerned that conducting credit
checks is flawed by the high rate of errors in credit reports as
well as the over reliance on out-dated information about an
individual.
In opposition to the bill, a coalition of business interests
contends that "while an individual'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 resulting from an irresponsibility with regard to, or
inability to, handle personal financial commitments." The
opposition further asserts that this bill "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."
This bill is similar to AB 943 (Mendoza) from last year, which
was vetoed by the Governor.
Analysis Prepared by : Ben Ebbink / L. & E. / (916) 319-2091
FN: 0005369
AB 482
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