Maryland SHRM Helps Derail Bill in Annapolis; Similar Proposal Awaits Governor’s Signature in Oregon
One of the hottest HR public policy issues percolating in state legislatures this year is a proposal to restrict the use of credit check information by employers in the hiring process. Legislation is currently pending in more than a dozen states, however one such bill awaits the governor’s signature in Oregon … while another has been derailed in Maryland.
In February, the Oregon General Assembly approved and sent to Governor Ted Kulongoski S.B. 1045, which would make it an unlawful employment practice for an employer to obtain, or to use, information contained in an individual’s credit report in the hiring or promotion process.
Federally-insured banks and credit unions, employers required by law to use such information, or employers of public safety officers who are members of a law enforcement unit would be exempt from the requirements of this legislation. The bill, which has an effective date of July 1, 2010, is expected to be signed into law by the Governor soon.
In Maryland, while testifying twice before the General Assembly in Annapolis last month, Colleen Denston, the legislative director for the Maryland SHRM State Council and the Director of Human Resources at a private school located on the state’s Eastern Shore, noted, “Legislative attempts to outlaw the consideration of employee credit histories through a one-size-fits-all framework can expose organizations to financial losses and legal liability and jeopardize the security of customer and public information.”
Colleen Denston (center) testifies before the Senate Finance Committee
The Maryland legislation (S.B. 312) was voted down by the Senate Finance Committee on March 24, but is still pending in the House (H.B. 175). The legislation would have severely limited the use of credit checks in Maryland except for those employers required by state and federal law to consider credit histories of applicants, or for positions within financial firms and in instances where a “bona fide occupational qualification” exists.
SHRM Survey on Background Checks
In the coming weeks, SHRM is expected to release a comprehensive survey on members’ use of background checks in the hiring process. While the survey is still in the finishing stages, Denston was able to cite in her prepared text the findings on the use of credit check information by employers.
In her summation, she said that many people believe this legislation is intended to address the fact that individuals recently unemployed and who either have been late in their mortgage payments or are burdened with educational or health-related debt are being turned away in the hiring process.
“As witnessed by the recent SHRM survey results highlighted earlier in my testimony, most employers are limiting the use of credit information on applicants for these types of positions. In addition, reports of poor credit due to medical or educational debt, as well as a homeowner’s ability to keep current with their mortgage obligations as a result of the current economic conditions are rarely considered ‘red flags’ for employers. Debt collection and legal judgments against an applicant, however, is another story.”
To view a copy of Denston’s statement, click HERE.