State of Ohio Moves to Ban Credit Reports

Nick Fishman

Ohio State Representative Alicia Reece, D-Cincinnatti has proposed a bill that would prohibits an employer from taking  adverse employment actions  based upon a consumer report or investigative consumer report if the report contains information concerning the person’s consumer creditworthiness, credit standing, or credit capacity.

And unlike similar recently adopted laws in Illinois and Maryland that are laden with exemptions, House Bill 131 exempts from the bill’s prohibition only if the position of employment is a supervisory, managerial, professional, or executive position at a financial institution.

When asked why the law was necessary, Representative Reece said, “House Bill 131 is needed because nearly 65 percent of employers now use credit checks during the hiring process.”

I respectfully suggest that the congresswoman revisit that statistic as she is most likely reacting to last year’s SHRM study which did indeed point out that 65% of all employers consider credit reports.  However, the same study found that only 13% evaluated credit on all employees.  And it is generally assumed that most of that 13% were either required to do so by state of national regulation.  She also might check out our most recent background screening market trends survey which pointed at that nearly 85% of respondents ranked credit reports as either not very or the least important factor in their hiring decision.

If passed, Ohio would join Hawaii, Illinois, Maryland, Washington and Oregon as the only states with prohibitions on employment credit reports.  As always, we would encourage employers that conduct background checks in Ohio to voice their concerns with their elected representatives.

We’ll keep a close eye on this proposed law and report back when we know more.

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