Can a Potential Employer Run a Credit Check on Me? In California, yes.
A bill went through the California Legislature last year that would have prohibited employers from running credit checks on perspective employees, but it was vetoed by Governor Schwarzenegger.
However, a potential employer must have the written authorization of the potential employee before running a credit check. In addition, if the employer decides not to hire the applicant after running the credit check, the employer must give the applicant the name and contact information of the company that prepared the report, as well as a copy of the report. The applicant can then dispute the completeness or accuracy of the report.
Lawmakers in 16 states have proposed banning most credit checks on potential employees, claiming the practice traps people in debt because it gives those with past financial problems a tough time in finding work. Hawaii and Washington currently have laws in place that prevent employers from running credit checks when hiring for most positions, unless the information is relevant to the job.
Employers who use credit checks as a hiring tool claim they help make better hiring decisions. A 2008 survey by the Association of Certified Fraud Examiners found that the two most common red flags for employees who commit workplace fraud are living beyond their means and having trouble meeting financial obligations.