CA Financial Privacy Bill Passes State Senate (AB 22), On to Governor's Desk

A bit more good news on the California privacy front to report: AB 22 (Mendoza), a bill that would ban credit checks from being used in the screening process for most job candidate passed the State Senate by a razor thin 21 to 17 vote. Clearly this bill is about a lot more than privacy, it strikes at the heart of the increasing shift away from the rights of workers, and the increasing power of corporations and big employers.

As pointed out by bill proponents, including the Consumer Federation of California, when companies vet potential employees they often check everything from grade point average to criminal records. More and more, they are starting to factor in a person's credit rating as well. But given this economy, this practice is both unfair and counterproductive. The fact is, a credit report is not a good indicator of a person's trustworthiness or work ethic, particularly considering how many people's credit scores have suffered due to the Great Recession.

AB 22 as also a primary target of one of the more corrupt corporate lobbying organizations this country has ever known - the California Chamber of Commerce. In fact, they even made a video about it, listing it as one of their job killer bills.

Now, before I get to some of the more specific reasons we (CFC) support this legislation, and urge the Governor to sign it, let me just briefly expose the grand hypocrisy of the Chamber of Commerce selling themselves as protectors of jobs. 

As the Center for America Progress notes, "While it tells the American public it cares about American jobs, the U.S. Chamber of Commerce actually works to send jobs overseas on behalf of its corporate members, which include some of Asia’s top offshoring companies. Its secretly-funded $75 million political ad campaign attacks the “anti-jobs record” of Sen. Barbara Boxer (D-CA), Jerry Brown (D-CA), Richard Blumenthal (D-CT), Alexi Giannoulias (D-IL), Rep. Dina Titus (D-NV), and others. 

As ThinkProgress previously noted, the Chamber has repeatedly sent out issue alerts attacking Democratic efforts to encourage businesses to hire locally rather than outsource to foreign counties. The Chamber has also bitterly fought Democrats for opposing unfettered free trade deals. The Chamber’s anti-American jobs agenda serves not only the profit-seeking of right-wing corporate executives in the United States, but also works to send jobs overseas to the following outsourcing companies, who are some of the dozens of foreign corporations that pay member dues to the Chamber of Commerce’s 501c(6) account, which is used to fund its political ads:

– InfoSys, Bangalore, India (at least $15,000 in annual member dues): “Infosys is the ‘Best Outsourcing Partner’ according to the Waters Rankings for the third consecutive year.”

– KPIT Cummins, Pune, India ($7,500): “Strategic global networking, together with industry-proven practices & processes, give KPIT Cummins a cutting edge in the realm of outsourcing.”

– Patni Americas, Mumbai, India ($15,000): “Patni, the world leader in IT outsourcing and business process outsourcing provides offshore software development, global sourcing, custom software development, and a vast array of product engineering and IT services to companies worldwide.”

– NIIT Technologies, Delhi, India ($15,000): “[L]eadership in the area of outsourcing.”

– QuEST Global, Singapore ($7,500): “QuEST is a leader in the engineering services outsourcing (ESO) space.”

– Rolta, Mumbai, India ($7,500): “Rolta’s global footprint and track record along with its capable off-shoring model gives it a unique positioning in this large market.”

– SKP Crossborder Consulting, Mumbai, India ($7,500): “SKP’s core outsourcing practice is managed out of a fully equipped, spacious premises based in Pune with access to facilities in Mumbai, Hyderabad, Delhi and Bangalore.”

– Tata Group, Mumbai, India ($15,000): “[W]orld-class solutions in outsourcing – business process outsourcing, application outsourcing, infrastructure outsourcing.”

Wipro, Bangalore, India ($15,000): “India’s biggest destination for U.S. offshoring.” 

But let's get back to AB 22 (Mendoza). All it does is simply prohibit most employers from conducting credit checks on applicants, unless it is substantially related to the job. For example, employers could still run credit reports on those potentially gaining access to confidential financial information. AB 22 will mean stronger privacy protections, a more fair work environment, and an easier time securing employment. 

As the California Labor Federation noted, "It is no secret that our economy’s collapse threw thousands of Californians out of jobs and onto unemployment rolls. The ensuing foreclosure and credit crises also remain painfully familiar to all, as does the struggle many unemployed workers face keeping their families fed, clothed and sheltered. The horrible result can range from the occasional missed utility bill to home fore­closure. There is no doubt that workers’ credit scores have suffered during this depression.

What many may not know, however, is that some employers have quietly begun conducting credit checks on prospective workers. In fact, more than 40% of employers say they use credit reports in making employment decisions. Evi­dence also suggests that some supervisors factor credit scores into decisions regarding promotion and evaluation of current workers.

In any economic situation, this practice consti­tutes an unwarranted invasion of privacy. Credit checks are not only poor indicators of future job success, but the methods used to determine credit scores remain highly suspect – given evidence that people of color possess arbitrarily and inexplicably low credit scores.

Also, credit ratings agency fraud played no small part in the housing bubble burst, subse­quent economic crisis and the reduced credit scores suffered by so many Americans. In that context, for an employer to discriminate against someone with a less than stellar credit record is unconscionable.

Wall Street excesses and Congress’ weak re­sponse have built plenty of barriers between the jobless and their prospects for future employ­ment. Allowing employers to use credit checks to deny employment only serves as another obstacle to getting Californians back to work.

So, this was an easy bill to support. It even provides exceptions in cases when the job duties include access to cash or other financial assets, when the job is in law enforcement and in other narrow areas. An employer should not have any right to obtain confidential information that is not germane to a prospective employee’s job. Credit reports do not have predictive value in determining a worker’s ability to perform job duties, but a bad credit report might unfairly influence a hiring employer’s attitude toward a job applicant. 

Unemployed workers are more likely to have suffered some downgrading of their credit score due to the circumstances of their unemployment; hence reliance on credit reports as a factor in hiring decisions might adversely impact those most in need of a job. 

Credit reports are often inaccurate, and could unfairly bias an employer. Correcting mistaken information in a credit report is a tedious, time consuming process, and in the meantime, the job applicant is harmed due to errors by credit reporting entities.

The Consumer Federation of California urges the Governor to protect the financial privacy of Californians from unwarranted snooping by prospective employers by signing AB 22.