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August 15, 2009
Chamber Opposes Credit Report Changes
The Garden Grove
Chamber of Commerce OPPOSES AB 943 (Mendoza), which restricts
employers from using legitimate information related to
employment issues and exposes employers to undue liability.
AB 943 prohibits employers from using consumer credit reports
for employment purposes unless the information is “substantially
job related,” as defined, including positions that handle cash,
other assets, or personal information, and at least one of the
following conditions: managerial, municipal, sworn peace officer
or other law enforcement, or as otherwise required by law.
Current law allows for the procurement and use of these reports
under the following conditions:
• Prior to requesting a consumer credit report, an employer must
provide a written notice stating the source of the information
and how it will be used.
• Provide a copy of the consumer credit report to the consumer,
if desired.
• If an adverse employment action is taken against a person due
to the information contained in a consumer credit report, the
user must provide the name and contact information for the
reporting agency to the consumer.
While a person’s credit history by itself is not predictive of
potential theft, access to credit information can reveal
patterns that may present an unreasonable risk to businesses.
Employee theft is a growing problem. The U.S. Chamber of
Commerce rates the annual cost at $40 billion. According to the
Federal Bureau of Investigation, this is the fastest growing
crime in the United States and many experts estimate that it
increases at a rate of 15 percent annually. On average,
businesses lose as much as two percent of sales to employee
theft.
In small businesses, many employees perform a wide variety of
duties that may not be part of their normal daily routine and
may include access to cash, other assets, or confidential
information. By restricting access to this important
information, AB 943 may expose the business’ customers and
employees to an increased risk. Such risks include identity,
financial, and asset theft. For instance, an employee with high
consumer debt who handles cash or assets may be more likely to
steal, but this bill prohibits an employer from accessing this
important information as a part of their hiring process.
Employers strive to recruit and retain the best employees who
they trust and will help grow their businesses. Consumer credit
reports provide important insight into one aspect of a potential
employee’s ability to handle responsibility for cash, other
assets, and personal information. These reports also provide
information that allows for verification of employment history.
AB 943 prohibits employers from performing their due diligence
in screening applicants, thus subjecting employers to a greater
risk of inadvertently violating the law or being subject to
frivolous employment litigation. This risk is compounded by the
fact that, in most situations, employers are liable for the
actions of employees in the performance of their job duties, so
an employee may take actions that bring an unacceptable level of
liability on their employer.
For any employer the risk created by AB 943 represents a major
liability that discourages business growth in California. For
small businesses, every little bit counts and it is their right
and responsibility to protect the business within reason. We
believe this bill unduly restricts the ability of businesses to
use all legally available information in employment decisions.
August 10, 2009
Chamber Opposes Workplace Lawsuit Reform Proposal
The Garden Grove Chamber of Commerce respectfully OPPOSES AB 793
(Jones), as amended April 29, 2009, which would revise the
statute of limitations law for any workplace claim or lawsuit
relating to compensation so that the statute of limitations is
renewed each time an employee’s compensation is “affected,”
including each time it is paid. AB 793 would encompass a broad
array of workplace decisions, including hiring, job evaluations,
and promotions.
The Chamber OPPOSES AB 793 because it unreasonably expands
employer liability in workplace lawsuits far beyond the federal
Lilly Ledbetter Fair Pay Act of 2009. Although AB 793 is modeled
after the federal Lilly Ledbetter Fair Pay Act of 2009, enacted
earlier this year, there are major differences. We believe AB
793 should be amended to more closely conform to the scope of
the provisions and liability adopted under the federal Lilly
Ledbetter Fair Pay Act with respect to the following two issues:
First, AB 793 applies to any California statute, while the
federal law was limited to only those federal statutes
comparable to the California Fair Employment and Housing Act (FEHA).
We believe AB 793 should be amended accordingly to expressly
apply to FEHA so as to avoid uncertainty and confusion over its
scope.
Second, because of differences between California’s FEHA and the
federal employment laws, application of the federal “Ledbetter
law” in California will result in far greater liability exposure
for employers. One significant difference is that federal law
applies a two-year back-pay limit to wage damages. California
FEHA has no such limit, meaning that California private and
public sector employers could be exposed to virtually unlimited
liability in lawsuits challenging any California employer
decision that impacts pay or benefits.
For example, if an employee believes that he or she was denied a
pay increase at the time of an annual performance evaluation,
each paycheck impacted from that one decision would restart the
statute of limitations, regardless of the passage of 10, 20, or
30 years. The statute of limitations could continue to remain
alive throughout the employee’s retirement years, so long as
retirement pay was also affected. This would render the statute
of limitations meaningless. Therefore, we believe AB 793 should
be amended to apply a two-year backpay limit to claims brought
under the new statute of limitations section which would be
codified by AB 793.
As currently worded, the scope of AB 793 is far more expansive
than the federal Lilly Ledbetter Fair Pay Act and could pose
unreasonable and exponentially greater liability for California
employers.
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