Maryland joins Illinois, Washington, Oregon, and Hawaii in restricting the use of credit reports in employment decisions.
April 28, 2011On April 12, 2011, Governor O’Malley signed into legislation the Job Applicant Fairness Act, which goes into effect on October 1, 2011. This law prohibits most employers from using credit information in determining whether to deny employment to an applicant; terminate an employee; decide compensation; or evaluate other terms and conditions of employment, unless it meets timing and job-relatedness requirements. Various financial institutions, as well as employers who are required to inquire into an applicant’s or employee’s credit history under federal or state law, are excluded from the Act’s prohibitions.
Some exceptions 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. If 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.
Individuals who believe an employer has violated the Act must file a complaint with the Commissioner of Labor and Industry, and an investigation will take place. The Commissioner may assess a civil penalty of up to $500 for an initial violation, and up to $2,500 for repeat violations. Fifteen other states currently have legislation pending, as well as the Federal H.R. 321: Equal Employment for All Act, aiming to restrict employers’ use of credit reports.
