4/26/2011 Maryland Gov. Enacts Law to Curb Use of Credit Reports

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And it’s official.  The state of Maryland has joined Hawaii, Washington, Illinois and Oregon by curbing employers use of employment credit reports.  Maryland Governor Martin O’Malley signed into law the Maryland Job Applicant Fairness Act on April 12, 2011 which prohibits employers’ use of credit reports in determining suitability for employment. However, there are exceptions for financial institutions as well as those who are regulated or required to do so by state and, or federal law.

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 such information is related to a ‘bona fide purpose that is substantially job-related.’  The bona fide purpose exception generally applies to those positions involving money-handling or other confidential job duties.  For instance, employers may request or use credit information for employees in managerial positions that control or direct part of the business, employees who are provided expense accounts or corporate credit cards, and employees who have access to confidential business information. Notably, where an employer chooses to request or use credit information for a bona fide purpose, it must disclose its intent to do so in writing to the employee or applicant.”

Violators of the law are subject to fines of up to $500 for an initial violation and up to $2,500 for repeat violations.

The law is set to take effect on October 1, 2011. Employers are encouraged to revisit their background screening guidelines to ensure they are in compliance.

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