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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.
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:
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:
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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