7/21/2011 Connecticut Passes Law to Curb Use of Credit Reports
July 21, 2011
On July 13, 2011, Connecticut governor Daniel P. Malloy signed into law a bill which will prohibit most employers from evaluating a candidate’s credit report as part of the employment screening process. The law is akin to a similarly a passed measure in the state of Maryland earlier this summer in that it carves out a number of exemptions and that it does not allow a private right of action.
According to labor and employment attorney Pam Devata of Seyfarth Shaw, “The Act also provides limited exceptions that allow employers to request or use credit information where a credit report is ‘substantially related to the employee’s current or potential job.’ This exception generally applies to those positions involving money-handling and other confidential job duties. For instance, employers may request credit information for employees in managerial positions that involve the direction and control of the business; employees who have access to financial information; employees with fiduciary duties to the employer; employees who have an expense account or corporate debit or credit card; employees with access to an employer’s nonfinancial assets valued at $2,005 or more (i.e., museum and library collections, prescription drugs, and other pharmaceuticals); and employees with access to confidential or proprietary business information. Notably, where an employer chooses to request credit information pursuant to the substantial purpose exception, it must disclose its intent to do so in writing to the employee or applicant.”
Violators will be subject to $300 fine per incident but will not face a private action from offended parties.
Connecticut now joins a growing list of states that have adopted similar measures including Oregon, Washington, Hawaii, Illinois, Maryland.
Employers note that this law will go into effect on October 1, 2011.
I know that mine might be an unpopular point of view in our industry, but I actually think that recently bills passed in Illinois, Maryland and Connecticut are effective models to curb the misuse of this background screening instrument. While I believe that credit reports are an integral part of the screening process for some, it should not be a requirement for all positions. Quite honestly, it is those that have been misusing these reports for positions where credit really shouldn’t be required that has caused the states to take these actions. I feel like the exemptions that are carved out effectively allow those that should be conducting credit reports do so. I also think that disallowing private action is fair to employers.
There, I’ve been holding that in for about a year. I feel better already. Feel free to rip me and my position now.
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