Know Employment Credit Check Limitations Per State - American Society of Employers - Susan Chance

Know Employment Credit Check Limitations Per State

credit reportMost employers are at least somewhat familiar with the restrictions placed on employment credit checks by California and New York City, but there are additional states and cities with restrictions on employment checks.

Colorado only allows employment credit checks in a few circumstances:

  • The employer is a bank or financial institution.
  • The report is required by law.
  • The report is substantially related to the employee's current or potential job.

If there are any issues with the report, the employer must give the subject of the credit check the opportunity to explain the circumstances, such as being laid off from a job, which led to the credit issues on the report.

 

Connecticut limits the use of credit scores in hiring decisions to the following:

  • The potential employer is a financial institution, or
  •  A credit report is required by law, or
  • The employer reasonably believes that the employee has engaged in specific activity that constitutes a violation of the law related to the employee's employment, or
  • The report is substantially related to the job and the purpose for the request and disclosed in writing to the subject of the report

Hawaii employers can only use information from a credit report if:

  •  A conditional offer of employment has been made, and
  • Is a federally insured financial institution, bank, or credit union, or
  • Is a managerial or supervisory position, or
  • If permitted or required by law to check credit history

Illinois only allows credit checks when:

  • There is a “bona fide occupational requirement” or,
  • The business is a financial institution, insurance or surety bond company, state law enforcement, state/local government, or debt collector, or
  • A report is required by state or federal law, or
  • The position has unsupervised access to cash or assets that can be sold with a value of $2,500 or higher, or
  • The position has signatory power over business assets of $100 or higher per transaction, or
  • A managerial position that has control over or sets the direction of the business, or
  • The position meets criteria set by the U.S. or the Illinois Departments of Labor for what is a bona fide occupational requirement, or
  • If required by state or federal law

Maryland restricts the use of credit checks to circumstances in which:

  • The check is required by state or federal law, or
  • The employer is a federally insured financial institution such as banks and credit unions, or
  • The employers and entities are registered as investment advisors with the SEC, or
  • Is a bona fide occupational qualification and is substantially related to the job such as:

o   A managerial position that has control over or sets the direction of the business

o   A position that has access to personal information for customers, employees, or the employer

o   A position with fiduciary responsibility

o   A position with an expense account or corporate credit or debit card

o   A position that has access to information that for which an employee can gain economic value

o   A position with access to confidential information

This is just a partial list of states that limit credit checks for employment purposes. Michigan does not have any specific limitations on pre-employment credit checks. Although, Ban the Box applies for government applications.

As always, check with your legal counsel if you are unsure of the laws regarding employment credit checks where you do business.

 

Additional ASE Resources

ASE Background Checking – ASE’s full background screening service can take the burden off of HR.  Our system integrates with most ATS systems and we have updated, competitive pricing.  Contact Susan Chance to discuss your background screening needs or get a quote.

CCH HRAnswersNow – ASE members have access to CCH, a compliance database with a state employment law section that includes all 50 states.  ASE members can access CCH via the ASE Member Dashboard.

 

Sources: Colorado.gov, advance.lexix.com, cga.ct.gov, illinoislegalaid.org, ilga.gov, Hawaii.gov, dllr.state.md.us

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