Washington, D.C., Mayor Signs Law Curbing Employer Use of Credit Reports

By Jennifer L. Mora and Ethan Balsam © Littler Feb 22, 2017

On Feb. 15, District of Columbia Mayor Muriel Bowser signed a bill prohibiting—with limited exceptions—employers' use of or obtaining a job applicant's or employee's credit information for employment purposes.  

Washington, D.C., joins the growing list of jurisdictions that have enacted similar laws: California, Chicago, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, New York City, Oregon, Philadelphia, Vermont and Washington.

This trend is likely to continue. Employers who use credit reports for employment purposes in any of these jurisdictions therefore should review, and if appropriate, modify, their policies for compliance.

All employers should continue to stay abreast of additional developments in this rapidly evolving area of employment law.  

Broad Restrictions

The D.C. "Fair Credit in Employment Amendment Act" amends the Human Rights Act of 1977 to make it unlawful for an employer to "directly or indirectly require, request, suggest or cause any employee to submit credit information or use, accept, refer to or inquire into an employee's credit information." 

"Credit information" is defined as "any written, oral or other communication of information bearing on an employee's creditworthiness, credit standing, credit capacity or credit history." 

"Inquire" is broadly defined to mean "any direct or indirect conduct intended to gather credit information using any method, including application forms, interviews and credit history checks." 

The law provides very limited exceptions to the general prohibition, of which only a few apply to private-sector employers. Specifically, the prohibition does not apply:

  • Where an employer is otherwise required by district law to require, request, suggest or cause any employee to submit credit information or use, accept, refer to or inquire into an employee's credit information.
  • Where the individual is applying for certain police officer positions.
  • To the Office of the Chief Financial Officer of the District.
  • Where the individual will work in a position that requires possession of a security clearance under District law.
  • To disclosures by district government employees of their credit information to the Board of Ethics and Government Accountability or the Office of the Inspector General, or to the use of such disclosures by those agencies.
  • To financial institutions where the position will involve access to personal financial information.
  • Where an employer requests or receives credit information pursuant to a lawful subpoena, court order or law enforcement investigation.  

Remedies

The law is unclear as to whether an aggrieved applicant or employee may pursue a private right of action against a covered employer. 

An aggrieved applicant or employee who elects to file an administrative complaint with the Office of Human Rights will have his/her complaint investigated and, if the Commission on Human Rights ultimately finds that a covered employer violated the law, the commission may impose the following fines:

  • $1,000 for the first violation.
  • $2,500 for the second violation.
  • $5,000 for each subsequent violation.

Next Steps for Employers

The law will take effect following a 30-day period of congressional review as provided in the District of Columbia Home Rule Act and publication in the District of Columbia Register.  

Employers in the District of Columbia that use credit reports or other credit information for employment purposes should consult with an experienced employment attorney to determine whether this law will prohibit them from continuing to do so. 

Multistate employers should also review their practices to help ensure they comply with this bill and the laws of any other jurisdictions in which they operate. 

Employers should also monitor congressional efforts to regulate the use of credit history information and advisory guidance from—and litigation by—the Equal Employment Opportunity Commission in this area. 

In addition, employers should evaluate their screening procedures (e.g., disclosure and authorization forms and pre- and final adverse action notices) in order to confirm that they are following the requirements of the federal Fair Credit Reporting Act and its state and local counterparts. This includes obtaining advance, written consent for credit checks and providing specific notices before and when an adverse employment decision is based, in whole or in part, on information concerning an individual's credit history.

Jennifer L. Mora is an attorney with Littler in Los Angeles. Ethan Balsam is an attorney with Littler in Washington, D.C. © Littler. All rights reserved. Reposted with permission.

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