There are a number of states that are considering passing, or have passed, laws that regulate how credit reports may or may not be used by employers for employment pre-screening purposes. Below introduces current legislation in the West Coast states of California, Oregon, Washington and Hawaii.
The Golden State – California
The State of California’s Assembly Bill 22 added a labor code chapter that prevents prospective employers from obtaining credit reports for all employment purposes. However, there are position exceptions for managers, law enforcement, financial professionals and Department of Justice employees. Any position that requires the employee to access financial records, personal information, proprietary data and cash over $10,000 qualifies for credit reports during employment screening activities. The written notice that informs the recipient of a consumer credit report must include the exact reason for the request.
The Beaver State – Oregon
Oregon’s Senate Bill 1045 prohibits employers from using credit histories when making employment decisions related to hiring, firing, promotion and compensation. Similar to California’s new bill, SB 1045 contains exceptions for financial, government and public safety organizations. This law allows employees to request an exception through demonstrating that the credit report information is critical to the proper functioning of the job. Of course, employers still must disclose the reasons in writing to the prospective employee.
The Evergreen State – Washington
Employers cannot obtain a credit report through a background check unless the information is intimately connected to the propriety and performance of the job. Certain state and federal agencies require credit checks to be completed during pre-employment screening processes, so these are automatically allowed per the law. Employers in Washington must carefully review job positions and description in order to formally justify when credit reports are necessary. The Fair Credit Reporting Act revised Washington’s RCW Chapter 19.182 and RCW 19.182.020.
The Hawaiian Fair Employment Practices Act made it an illegal and discriminatory practice for employers to terminate or refuse to hire employees based on their credit history and credit report. House Bill 31 SD1 CD1 only allows exceptions for qualifying bona fide occupations. Part two will cover states in New England and the East Coast.
Contact us to learn about recent legislative updates and the best compliance tactics.