Washington, D.C. employers wishing to run credit checks on prospective hires will have more difficulty doing so under a new act passed by the local City Council. Per a report from JD Supra Business Advisor, the D.C. City Council has voted to pass the Fair Credit in Employment Amendment Act. The Act doesn’t outright ban the use of credit checks for employment purposes, but it does restrict it considerably, reports explain.
As coverage indicates, when it was passed in 1970, the Fair Credit Reporting Act (FCRA) was designed to make sure that credit reports provided by consumer reporting agencies were completely accurate. Under the Act, employers seeking credit reports from their job applicants must get written permission to do so. If an employer decides to take adverse hiring action due to information found on the credit report (e.g. not hire the applicant), the organization must first take several steps. The employer must notify the applicant of the adverse action, provide the applicant with a free copy of the credit report, and allow the applicant to dispute the accuracy of the information contained in the report.
Now, reports indicate, legislators and regulators are questioning whether credit reports have a place in job screenings at all. The D.C. City Council proposed that credit history was not a relevant or “reliable way to measure a person’s ability to do a job.” That belief ultimately led to the passing of the Amendment Act.
The act prohibits employers in the D.C. area from running credit checks at any point in the hiring or screening process. Previously, reports explain, employers would typically ask for a credit report only after extending a contingent job offer. Such practices are now banned under the Fair Credit in Employment Amendment Act.
There are seven exceptions to the act. These exceptions are:
1. Employers who are required by existing laws to ask for credit history checks.
2. Employers hiring police officers or other law enforcement officers.
3. Positions in the Office of the Chief Financial Officer of D.C.
4. Jobs that involve security clearance requirements.
5. Positions that require government employees or officials to disclose credit information to certain government offices.
6. Jobs with financial institutions that involve “access to personal financial information.”
7. Employers pursuing “lawful subpoena, court order, or law enforcement investigation” against their employees or applicants.
All employers who are exempt from the Fair Credit in Employment Amendment Act must still comply with all provisions of the FCRA.