California Law on Credit Checks for Employment (2024)

FAQs

Can you be denied a job because of bad credit in California? ›

The general rule in California is that an employer may not consider acquire or consider a person's credit report in making job decisions except for applicants for or employees in: managerial positions. positions with the state Department of Justice.

Here's an overview of the laws employers should be aware of: California forbids employers from using credit checks in hiring decisions, unless the job in question falls under one or more of these specific exceptions: Managerial jobs. Jobs with the state Department of Justice.

You can be denied a job because of your credit, but you do have rights, thanks to the Fair Credit Reporting Act. Here are the steps employers must take, as required by this law: Notification and permission: An employer must notify you if it intends to check your credit and must get your written permission.

First, know the laws in your state or local area when applying for jobs. Potential employers cannot conduct a credit check without your permission. Under the Fair Credit Reporting Act, employers must receive written permission from job candidates before conducting a credit check.

In the majority of states, employers can deny you employment if you have bad credit. Some states and cities have passed laws that prohibit the practice, though there are some exceptions, such as for jobs in the financial sector.

Employers may never consider an applicant's arrest that didn't result in a conviction, an expunged record, a juvenile arrest or detention, or a non-felony marijuana conviction that is two or more years old.

The FCRA includes a seven-year rule that prohibits background check companies from reporting certain types of adverse information that is older than seven years when the position the applicant has applied for pays a salary of less than $75,000 per year, which will be explained below.

(a) An employer or prospective employer shall not use a consumer credit report for employment purposes unless the position of the person for whom the report is sought is any of the following: (1) A managerial position. (2) A position in the state Department of Justice.

Passed in 1970, FCRA governs how information is furnished to and reported by consumer reporting agencies, as well as the circ*mstances under which users may lawfully obtain and use consumer report information.

While it's unlikely that a lousy credit score will get you canned, it's much more likely to stop you from being hired in the first place, it certainly can happen, especially if you're in one of the states that don't restrict the use of employer credit checks.

How to pass a credit check with bad credit? ›

States That Ban or Restrict Credit Checks for Employment

At least eleven states have passed laws prohibiting employers from pulling credit reports at all or restricting how and when employers may use them to make hiring or other job decisions. Those states are: California.

If an employer conducts a credit check and finds a number of red flags, such as high levels of debt, bankruptcy, or a history of late payments, they may reconsider their decision to offer you the job. Although it may seem unfair, it's legal in many states for employers to take this action.

In general, when employers use a third party to conduct background checks on applicants or employees, the federal Fair Credit Reporting Act (FCRA) will apply. The FCRA governs how employers obtain and handle consumer reports, which include standard background checks.

Federal laws allow employers to check your credit report and use it for hiring and employment considerations, but you might want to research local laws about employment credit checks. You can reach out to your state's labor offices to learn more about how any local laws may impact you.

The short answer is no, your credit score doesn't usually show up on a standard background check — though sometimes landlords may submit a request for a credit check separately. (You'll have to give your written permission for them to do so.)

This law doesn't apply to sex offenses requiring registration, any position in K-12 education, serious felony crimes, or violent crimes. If someone has an old conviction for a serious felony, they can still file a petition with the court to ask for sealing, but the record won't be automatically sealed.