New Law Prohibits the Use of Credit Report History in Employment Screening

Effective October 1, 2011, The Job Applicant Fairness Act goes into effect, prohibiting employers from using a Consumer Credit Report History (CCRH) of an employee or prospective employee, for certain purposes, and, authorizing employers to request or use an employee’s or prospective employee’s CCRH, under certain circumstances, provided the employer has a substantially job-related purpose for the consumer credit report history.

Some employers may elect to stop utilizing consumer credit report histories as a screening tool and most, who want to continue use of this valuable tool, will no longer be able to utilize CCRH screening on many positions.

There are several exceptions under the law. 

Employers who have a bona fide purpose for requesting or using a credit report that is substantially job-related and disclosed in writing are exempted. 

The law identifies several positions that fit this criteria, including managerial positions that involve setting the direction or control of a business or portion of a business, positions that involve access to personal information (except for personal information customarily provided in retail transactions) or that involve a fiduciary responsibility to the employer, positions that are provided expense accounts or corporate cards, and positions that have access to trade secrets or other confidential business information.

Although there are some broad exceptions, each position within a company should be evaluated. There are some alternatives that employers can take advantage of, all of which we would be happy to discuss.

For further information, or questions on this changing law, please contact Damian Levin at damian@poeknows.com.