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Use of Credit Info in Employ 2012 Legis

Use of Credit Information in Employment 2012 Legislation

Last Updated: March 6, 2013

NCSL Staff Contact: Heather Morton, (303) 364-7700, Denver

The chart lists state legislation introduced or pending during the 2012 legislative session relating to the use of credit information in employment.

To date, 35 bills in 17 states and the District of Columbia were pending in the 2012 legislative session. Out of the total 35 bills, 34 addressed restrictions on the use of credit information in employment decisions. The total number of states that limit employers' use of credit information in employment is now eight: California, Connecticut, Hawaii, Illinois, Maryland, Oregon, Vermont and Washington. Washington enacted legislation in 2007, Hawaii enacted legislation in 2009, Illinois and Oregon enacted legislation in 2010. California, Connecticut and Maryland enacted legislation in 2011. Vermont enacted its legislation in 2012.

NOTE:  If you have questions regarding whether an individual employer can use credit information in employment decisions, please contact your state department of labor. NCSL is unable to provide assistance or advice in individual cases.

NCSL Related Webpages:

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STATES
BILL SUMMARY
Alabama
none
Alaska
none
Arizona
none
Arkansas
none
California
none
Colorado

S.B. 3
Passed Senate 2/21/12
The bill creates the "Employment Opportunity Act", which specifies the purposes for which consumer credit information (i.e., consumer credit reports and credit scores) can be used by an employer or potential employer (jointly referred to as "employer"). Specifically, the bill: Prohibits an employer's use of consumer credit information for employment purposes if the information is unrelated to the job; requires an employer to disclose to an employee or applicant for employment (jointly, "employee") when the employer uses the employee's consumer credit information to take adverse action against him or her and the particular credit information upon which the employer relied; authorizes an employee aggrieved by a violation of the above provisions to bring suit for an injunction, damages, or both; and requires the department of labor and employment to enforce the laws related to employer use of consumer credit information.

Connecticut
none
Delaware
none
District of Columbia

B19-38
Prohibits the use of consumer credit checks against prospective and current employees for the purposes of making adverse employment decisions.

B19-476
Passed Congressional Review 3/14/12, Law 19-0155
Amends the District of Columbia Government Comprehensive Merit Personnel Act of 1978 to require all Excepted Service appointees to be subject to a credit check and criminal background check.

Florida

H.B. 303
Died in committee 3/9/12
S.B. 102
Died in committee 3/9/12
Prohibits use of job applicant's personal credit history as hiring criterion; provides exception.

S.B. 1356
Died in committee 3/9/12
Prohibits an employer from using a job applicant’s credit report or credit history to make certain hiring, compensation, or other employment decisions; provides specific situations where an employer may use such information; provides exemptions for certain types of employers; provides remedies for aggrieved persons; provides for attorney fees and court costs; provides for a plaintiff to post a bond in certain situations.

Georgia

H.B. 780
Provides that it shall be unlawful for an employer to fail or refuse to hire, bar, discharge from employment, or otherwise discriminate against an individual because of the individual's credit history or credit report; provides for exceptions; provides a penalty.

Guam
not available
Hawaii
none
Idaho
none
Illinois
none
Indiana

S.B. 261
Prohibits an employer from using a credit report in the process of hiring a prospective employee or in determining whether to continue the employment of an employee. Provides that an employee or prospective employee may bring a civil action against an employer for violating this prohibition. Provides for an award of actual damages, court costs, and attorney's fees to an aggrieved individual, along with an injunction against the employer's further use of credit reports in violation of the prohibition.

Iowa

H.F. 2281
This bill prohibits discriminatory employment practices based upon a person’s credit score or homeowner status. The bill defines “consumer reporting agency”, “credit report”, “credit score”, and “homeowner status”. Penalty provisions for discriminatory employment practices are made applicable to discrimination based on a person’s credit score or homeowner status.

Kansas

S.B. 286
Enacts the Fair Use of Credit History Act.

Kentucky
none
Louisiana
none
Maine
none
Maryland
none
Massachusetts

H.B. 3518
Provides that for an employer to refuse to hire or employ or to bar or discharge from employment, or otherwise to discriminate against any individual in compensation or in the terms, conditions or privileges of employment of any individual because of the individual’s credit history or credit report, unless the information in the individual’s credit history or credit report directly relates to a bona fide occupational qualification. A bona fide occupational requirement requires at least one of the following: (i) state or federal law requires bonding or other security covering an individual holding the position; (ii) the duties of the position include custody of or unsupervised access to cash or marketable assets valued at $2,500 or more; (iii) the duties of the position include signatory power over business assets of $100 or more per transaction; (iv) the position is a managerial position which involves setting the direction or control of the business; (v) the position involves access to personal or confidential information, financial information, trade secrets, or commonwealth or national security information; (vi) the position meets criteria in administrative rules, if any, that the federal Department of Labor has promulgated to establish the circumstances in which a credit history is a bona fide occupational requirement; (vii) the position meets criteria in regulations promulgated by the executive office of labor and workforce development to establish the circumstances in which a credit history is a bona fide occupational requirement; (viii) the employee's or applicant's credit history is otherwise required by or exempt under federal law or any general or special law.

Michigan
none
Minnesota
none
Mississippi
none
Missouri

H.B. 1240
This bill specifies that it will be an improper employment practice for any employer to directly or indirectly use a job applicant's personal credit history as hiring criteria. An employer may request a credit history background check as part of the application process where it is shown to be directly related to the position sought by the applicant. The history cannot be the determinant factor in whether the person is ultimately hired.

H.B. 1555
Makes it an improper employment practice for an employer to refuse to hire or to discharge, reduce compensation, or modify any condition of a person's employment based on his or her credit score or history.

Montana
No Regular 2012 Session
Nebraska

L.B. 113
Indefinitely postponed 4/18/12
Prohibits discrimination based upon an individual's credit history or credit report as prescribed.

L.B. 530
Indefinitely postponed 4/18/12
Adopts the Employee Credit Privacy Act.

Nevada
No Regular 2012 Session
New Hampshire
none
New Jersey

A.B. 704
S.B. 1102
This bill prohibits an employer from requiring a credit check on a current or prospective employee as a condition of employment, unless the employer is required to do so by law, or reasonably believes that an employee has engaged in a specific activity that is financial in nature and constitutes a violation of law. The bill does not prevent an employer from a credit inquiry or employment action if credit history is a bona fide occupational requirement of a particular position or employment classification, including: (1) A managerial position which involves setting the financial direction or control of the business; (2) A position which involves access to customers’, employees’, or employers’ personal belongings or financial information, other than information customarily provided in a retail transaction; (3) A position which involves a fiduciary responsibility to the employer, including, but not limited to, the authority to issue payments, transfer money or enter into contracts or involves leases of real property; (4) A position which provides an expense account for travel; or (5) A law enforcement officer for a law enforcement agency in this state, as defined by the bill. The bill prohibits an employer from requiring a prospective employee to waive or limit any protection granted under the bill as a condition of applying for or receiving an offer of employment. The bill also prohibits retaliation or discrimination against an individual because the individual has done or was about to do any of the following: (1) file a complaint pursuant to provisions of the bill; (2) testify, assist, or participate in an investigation, proceeding, or action concerning a violation of the bill; or (3) otherwise oppose a violation of the bill. Any current, prospective, or former employee aggrieved under the provisions of the bill may bring an action in a court of competent jurisdiction for appropriate injunctive relief and damages, including reasonable attorneys’ fees and court costs. In addition, the bill provides for the imposition of civil penalties in an amount not to exceed $5,000 for the first violation, and $10,000 for each subsequent violation, collectible by the Commissioner of Labor and Workforce Development.

A.B. 2360
This bill makes it a violation of the “Law Against Discrimination,” P.L.1945, c.169 (C.10:5-1 et seq.), for an employer to discriminate against an individual in hiring or employment because of an individual’s credit history or financial status. The bill also prohibits an employer or employment agency from expressing to an applicant for work any limitation, specification or discrimination against the applicant because of the applicant’s credit history or financial status. Finally, the bill prohibits an employer or employment agency, unless required by law to do so, from making inquiries about the credit history or financial status of an applicant for employment.

A.B. 2840
S.B. 455
Passed Senate 5/31/12
This bill prohibits an employer from requiring a credit check on a current or prospective employee, unless the employer is required to do so by law, or reasonably believes that an employee has engaged in a specific activity that is financial in nature and constitutes a violation of law. It prohibits any employment discrimination against a current or prospective employee based on information in a credit report. The bill does not prevent an employer from performing a credit inquiry or taking an employment action if credit history is a bona fide occupational qualification of a particular position or employment classification, including: 1. A managerial position which involves setting the financial direction or control of the business; 2. A position which involves access to customers’, employees’, or employers’ personal belongings or financial assets or financial information, other than information customarily provided in a retail transaction; 3. A position which involves a fiduciary responsibility to the employer, including, but not limited to, the authority to issue payments, transfer money or enter into contracts or involves leases of real property; 4. A position which provides an expense account for travel; or 5. A law enforcement officer for a law enforcement agency, or a governmental or non-governmental security personnel position, including security personnel in a homeland security agency. The bill prohibits an employer from requiring a prospective employee to waive or limit any protection granted under the bill as a condition of applying for or receiving an offer of employment. The bill also prohibits retaliation or discrimination against an individual because the individual has done or was about to do any of the following: 1. File a complaint pursuant to provisions of the bill; 2. Testify, assist, or participate in an investigation, proceeding, or action concerning a violation of the bill; or 3. Otherwise oppose a violation of the bill. Any current, prospective, or former employee aggrieved under the provisions of the bill may bring an action in a court of competent jurisdiction for appropriate injunctive relief and damages, including reasonable attorneys’ fees and court costs. In addition, the bill provides for the imposition of civil penalties in an amount not to exceed $2,000 for the first violation, and $5,000 for each subsequent violation, collectible by the Commissioner of Labor and Workforce Development.

New Mexico
none
New York

A.B. 4052
S.B. 7716
Prohibits the use of job applicant's personal credit history as hiring criteria, unless a reasonable nexus exists.

A.B. 8070
Passed Assembly 6/20/12
S.B. 4905
Enacts the "credit privacy in employment act" to prohibit the use of credit information in hiring and employment determinations.

A.B. 9772
Relates to limiting an employer's access to consumer credit reports in connection with employment applications.

North Carolina
none
North Dakota
No Regular 2012 Session
Ohio
none
Oklahoma

H.B. 2860
Creates the Employee Credit Privacy Act; defines terms; prohibits employer from using credit history or credit reports as hiring criteria; provides applicability for employees and applicants; exempts certain employers; prohibits waiver of rights under the act; provides civil remedies for violations of act; mandates attorney fees; allows certain background investigations.

Oregon
none
Pennsylvania

H.B. 2619
Provides that it shall be an unlawful discriminatory practice for any employer or any employer's agent, representative or designee to require an employee or prospective employee to consent to the creation of a credit report that contains information about the employee's or prospective employee's credit score, credit account balances, payment history, savings or checking account balances or savings or checking account numbers as a condition of employment unless one of the following applies: (1) Such report is substantially related to the employee's current or potential job. (2) Such report is required by law. (3) The position is with the Office of Attorney General, Pennsylvania State Police or other law enforcement agency.

Puerto Rico
none
Rhode Island

S.B. 2587
This act regulates the use of credit reports by prospective employers for hiring purposes.

S.B. 2727
This act prevents a prospective employer from using or requesting a job applicant’s credit report history unless certain conditions or circumstances are met.

South Carolina

H.B. 4823
Adds §41-1-120 so as to prohibit an individual's credit score from being the basis of any personnel action, and provides penalties.

South Dakota
none
Tennessee
none
Texas
No Regular 2012 Session
Utah
none
Vermont

H.B. 42
Passed House 4/15/11
Generally prohibits employers from making employment decisions based on an applicant’s credit report.

S.B. 95
Signed by governor 5/17/12, Act 154
Provides that an employer shall not: (1) Fail or refuse to hire or recruit; discharge; or otherwise discriminate against an individual with respect to employment, compensation, or a term, condition, or privilege of employment because of the individual’s credit report or credit history. (2) Inquire about an applicant or employee’s credit report or credit history. An employer is exempt from these provisions if one or more of the following conditions are met: (A) The information is required by state or federal law or regulation. (B) The position of employment involves access to confidential financial information. (C) The employer is a financial institution as defined in 8 V.S.A. §11101(32) or a credit union as defined in 8 V.S.A. §30101(5). (D) The position of employment is that of a law enforcement officer as defined in 20 V.S.A. §2358, emergency medical personnel as defined in 24 V.S.A. §2651(6), or a firefighter as defined in 20 V.S.A. §3151(3). (E) The position of employment requires a financial fiduciary responsibility to the employer or a client of the employer, including the authority to issue payments, collect debts, transfer money, or enter into contracts. (F) The employer can demonstrate that the information is a valid and reliable predictor of employee performance in the specific position of employment. (G) The position of employment involves access to an employer’s payroll information.

Virginia
none
Washington
none
West Virginia
none
Wisconsin

A.B. 350
Failed to pass pursuant to Senate Joint Resolution 1 3/23/12
This bill prohibits employment discrimination based on credit history. The bill specifies that employment discrimination because of credit history includes an employer, labor organization, employment agency, licensing agency, or other person requesting an applicant, employee, member, licensee, or any other individual, on an application form or otherwise, to authorize that person to procure the individual’s credit history, except that it is not employment discrimination to request that authorization: 1) if the circumstances of an individual’s credit history are substantially related to the circumstances of a particular job or licensed activity; or 2) if employment, membership, or licensing depends on the bondability of the individual and the individual may not be bondable due to his or her credit rating. The bill also specifies that it is not employment discrimination because of credit history to refuse to employ, admit, or license, or to bar or terminate from employment, membership, or licensing, any individual if: 1) the circumstances of an individual’s credit history are substantially related to the circumstances of the particular job; or 2) if the individual is not bondable when bondability is required by state or federal law, administrative regulation, or established business practice of the employer. Under the bill, credit history means information provided in a consumer report under the federal Fair Credit Reporting Act (FCRA), which defines consumer report as any written, oral, or other communication by a consumer reporting agency bearing on an individual’s creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living, which is used or expected to be used as a factor in establishing the individual’s eligibility for credit, insurance, employment, or any other purpose allowed under federal law. The FCRA further defines consumer reporting agency as any person who, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on individuals for the purpose of furnishing consumer reports to third parties, and who uses any means or facility of interstate commerce for the purpose of preparing or furnishing consumer reports.

A.B. 578
Failed to pass pursuant to Senate Joint Resolution 1 3/23/12
This bill prohibits employment discrimination based on credit history. The bill specifies, however, that it is not employment discrimination because of credit history for an employer to request or use the credit history of an employee or an applicant for employment if any of the following applies: 1. The employer has offered employment to the applicant and the credit history of the applicant will be used for a purpose other than to refuse to hire the applicant on the basis of credit history. 2. The employer has a bona fide purpose for requesting or using information in the credit history of the employee or applicant that is substantially related to the job-related responsibilities of the position in which the employee is employed or the applicant is seeking employment and the employer discloses that purpose to the employee or applicant in writing. The bill specifies that the positions for which an employer has such a bona fide purpose include all of the following: 1) a position that is managerial and that involves setting the direction or control of the business of the employer or of a department, division, unit, or agency of the employer; 2) a position in which the individual holding the position has access to personal information of the employer or of any employee or customer of the employer, other than personal information that is customarily provided in a retail transaction; 3) a position in which the individual holding the position has a fiduciary responsibility to the employer, including the authority to issue payments, collect debts, transfer money, or enter into contracts; 4) a position in which the employer provides the individual holding the position with an expense account, a credit card, or a debit card; or 5) a position in which the individual holding the position has access to a trade secret or any other confidential business information. The bill also specifies that it is not employment discrimination because of credit history for an employer to refuse to employ an individual or to bar or terminate an individual from employment if the employer is any of the following: 1. Required under any state or federal law to inquire into the credit history of an employee or applicant for the purpose of employment. 2. A bank, savings bank, savings and loan association, or credit union (depository institution) that accepts deposits that are insured by the Federal Deposit Insurance Corporation, the National Credit Union Administration, or any other federal agency or an affiliate or subsidiary of a depository institution that accepts those deposits. 3. The Wisconsin Credit Union Savings Insurance Corporation. 4. An investment adviser that is registered under the federal Investment Advisers Act of 1940 (federal covered investment adviser) or an affiliate of a federal covered investment adviser. Under the bill, “credit history" means credit account information bearing on an individual’s creditworthiness, credit standing, or credit capacity that is provided in a consumer report under the federal Fair Credit Reporting Act (FCRA), which defines consumer report" as any written, oral, or other communication by a consumer reporting agency bearing on an individual’s creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living, which is used or expected to be used as a factor in establishing the individual’s eligibility for credit, insurance, employment, or any other purpose allowed under federal law. The FCRA further defines consumer reporting agency" as any person who, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on individuals for the purpose of furnishing consumer reports to third parties, and who uses any means or facility of interstate commerce for the purpose of preparing or furnishing consumer reports.

S.B. 246
Failed to pass pursuant to Senate Joint Resolution 1 3/23/12
This bill prohibits employment discrimination based on credit history. The bill specifies that employment discrimination because of credit history includes an employer, labor organization, employment agency, licensing agency, or other person requesting an applicant, employee, member, licensee, or any other individual, on an application form or otherwise, to authorize that person to procure the individual’s credit history, except that it is not employment discrimination to request that authorization: 1) if the circumstances of an individual’s credit history are substantially related to the circumstances of a particular job or licensed activity; or 2) if employment, membership, or licensing depends on the bondability of the individual and the individual may not be bondable due to his or her credit rating. The bill also specifies that it is not employment discrimination because of credit history to refuse to employ, admit, or license, or to bar or terminate from employment, membership, or licensing, any individual if: 1) the circumstances of an individual’s credit history are substantially related to the circumstances of the particular job; or 2) if the individual is not bondable when bondability is required by state or federal law, administrative regulation, or established business practice of the employer. Under the bill, credit history means information provided in a consumer report under the federal Fair Credit Reporting Act (FCRA), which defines consumer report as any written, oral, or other communication by a consumer reporting agency bearing on an individual’s creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living, which is used or expected to be used as a factor in establishing the individual’s eligibility for credit, insurance, employment, or any other purpose allowed under federal law. The FCRA further defines consumer reporting agency as any person who, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on individuals for the purpose of furnishing consumer reports to third parties, and who uses any means or facility of interstate commerce for the purpose of preparing or furnishing consumer reports.

Wyoming
none

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