Industry News, Fair Credit Reporting Act, USA

Senate Bill Limiting Credit Reports Proposed

If passed, Senate Bill 1837 would prohibit employers from asking employees and prospective employees about their credit histories or from obtaining that information from a consumer or credit report. Employers would not be permitted to use, or cause to be procured, a consumer report or investigative consumer report with information on a consumer’s creditworthiness, credit standing, or credit capacity. The prohibition would apply when the information is used for employment purposes or when an employment-related adverse action is taken. The prohibition would apply even if the consumer consents to or otherwise authorizes the procurement or use of a consumer report for employment purposes or in connection with an employment-related adverse action.

There are two exceptions in the bill. An employer may use a consumer report when (1) the consumer applies for, or currently holds, employment that requires national security clearance, or (2) it is otherwise required by law.

Senate Bill 1837 is very similar to House Bill 645 that was initially filed by Representative Steve Cohen in February 2013. The only difference is House Bill 645 allows for additional exceptions. Employers would not be prohibited from inquiring about credit histories when the consumer applies for or holds:

  • employment that requires FDIC clearance;
  • employment with a State or local government that otherwise requires a consumer report; or
  • a supervisory, managerial, professional, or executive position at a financial institution.

This type of legislation is a growing trend at the state level. In 2013, Colorado and Nevada passed legislation restricting employers’ use of credit information. States with similar laws include California, Connecticut, Hawaii, Illinois, Maryland, Oregon, Vermont, and Washington. There are four states that are currently considering similar legislation, and another three states have already pre-filed legislation for consideration in 2014. backgroundchecks.com will continue to monitor and report on this trend going forward.

A copy of Senate Bill 1837 is available here:
http://www.gpo.gov/fdsys/pkg/BILLS-113s1837is/pdf/BILLS-113s1837is.pdf

A copy of backgroundchecks.com's report on Colorado legislation is available here: http://www.backgroundbiz.com/compliance/complianceupdate_04292013.html

A copy of backgroundchecks.com's report on Nevada legislation is available here: http://www.backgroundbiz.com/compliance/complianceupdate_06042013.html

Michael Klazema

About Michael Klazema The author

Michael Klazema is Chief Marketing Technologist at EY-VODW.com and has over two decades of experience in digital consulting, online product management, and technology innovation. He is the lead author and editor for Dallas-based backgroundchecks.com with a focus on human resource and employment screening developments.

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