May I run a credit check on a job applicant or an employee?

Under California law, employers and prospective employers (not including certain financial institutions) are generally prohibited from using a consumer credit report for employment purposes. There are certain limited exceptions for the use of credit reports, which include:

• A managerial position (as defined in the executive exemption of Wage Order 4 of the IWC).
• A position in the state DOJ.
• A sworn peace officer or other law enforcement position.
• A position for which the information in the report is required by law to be disclosed or obtained.
• A position that involves regular access (for any purpose other than routine solicitation and processing of credit card applications in a retail establishment) to all of the following types of information of any one person:
• Bank or credit card account information.
• Social Security number.
• Date of birth.
• A position in which the person is, or would be, any of the following:
• A named signatory on the bank or credit card account of the employer.
• Authorized to transfer money on behalf of the employer.
• Authorized to enter into financial contracts on behalf of the employer.

If a credit report is allowed under one of these exceptions, a release is required from the employee or applicant, and the employer must provide a number of notices to the employee or applicant throughout the process.

Read more about Obtaining Applicant and Employee Credit Reports in the HR Library.