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Schwarzenegger Veto Allows Employers to Continue Credit Report Check

By Faye Mergel
Published: Saturday, October 24th, 2009

Governor Arnold Schwarzenegger vetoed a bill that would have imposed more restrictions on employers regarding their use of credit during hiring process. AB 943 left the governor’s desk unsigned yesterday, after about rolling through Assembly and Senate floor for almost half a year. Consumer advocates are expressed dismay over the decision, recalling that Schwarzenegger vetoed a similar bill in 2008.

Schwarzenegger Veto Allows Employers to Continue Credit Report CheckCalifornia employers can still use credit report as basis for denying employment after Governor Schwarzenegger denied Assembly Bill 943. The bill would have prevented employers from pulling out consumer credit report except when the position being offered involves handling large amount of cash and access to sensitive information. Norwalk Assemblyman Tony Mendoza authored the bill, arguing that a person’s credit standing is not predictive of his job performance. The bill walked through Senate and Assembly floors on partisan votes, majority of which are from Mendoza’s Democrat party. AB 943 gained further momentum with organizations such like the Consumer Federation of California airing their support as it approached the governor’s office.

Supporters of AB 943 say that an employer does not have any right to obtain confidential information regarding a person, especially if it does not determine how well he does his job. They add that bad credit report influences the way employers see an applicant, and this could lead to a biased evaluation during screening. They also say that unemployed residents are more likely to have tarnished credit reports, therefore such check adversely affects the chances of those who need a job most. They likewise cite errors in consumer reports as another major disadvantage for credit check. As noted by consumer advocates, identity theft and minor mistakes such as typos affect a person’s record with the credit bureaus. Economic recession, rise in medical costs, and death in the family are some of other uncontrollable factors they cited which have negative effects on consumer debt status.

Meanwhile, bill opponents say disallowing an employer from knowing a potential employee’s debt standing is not fair since it limits his ability to fully know a person’s qualities. They also argued that debt management is an excellent indication of responsibility, and consumers who handle their finances well are more suitable to be considered trustworthy.

Schwarzenegger refused to give his signature, saying in his veto message that businesses and employers in California need all the information they can get regarding job applicants. He continues that there are already existing laws which protect consumers from malpractices by employers.

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