Employee Consumer Credit Reports

California’s Labor Code provides for employer use of consumer credit reports. These provisions are contained in Division 2, Part 3, Chapter 3.6, which was added in 2011 by Chapter 724.

Labor Code Section 1024.5 prohibits an employer or prospective employer from using a consumer credit report for employment purposes unless the position of the person for whom the report is sought holds a specific position. However, this section does not apply to certain persons or businesses subject to state and federal statutes. The terms “consumer credit report” and “managerial position” are defined.

Section 1024.6 prohibits an employer from discharging an employee or in any manner discriminating, retaliating, or taking any adverse action against an employee because the employee updates or attempts to update his or her personal information based on a lawful change of name, social security number, or federal employment authorization document.

In addition, an employer’s compliance with this section does not serve as the basis for a claim of discrimination, including any disparate treatment claim.