Another State Restricts Use of Credit Reports in Employee Background Screening
March 31, 2010
On March 29, 2010, Oregon Governor Kulongoski signed legislation (S.B. 1045) that specifically prohibits employers from using credit history in making hiring, discharge, promotion, and compensation decisions unless the applicant or employee is given advanced written notice and the credit history is substantially job-related. Although the proposed legislation was to be effective July 1, 2010, the Governor declared the legislation effective immediately.
Oregon joins Washington and Hawaii as one of three states that have effectively banned workplace credit checks. There is also pending legislation in Illinois that recently passed the House of Representatives, which would impose similar restrictions. This trend underscores the importance of employers being aware of state law restrictions pertaining to credit and background checks, particularly in multistate businesses.
There are four exceptions to the Oregon law:
- Bank and credit union employers
- Employers that are required by state and federal law to use credit histories for employment purposes
- Public safety officer employers
- Employers that can demonstrate that credit information is “substantially job-related” and that provide written disclosure of the reasons for the use of the credit check
The statute does not further define what “substantially job-related” means, nor has the Oregon Bureau of Labor and Industries (BOLI) adopted rules to inform employers on how it will be applied.
In the absence of clear rules or guidance from BOLI, employers that intend to continue utilizing credit histories after March 29th, 2010, should proceed with caution and consult legal counsel to determine whether they fit into one of the statute’s exceptions. If they do not fit within an exception, employers should develop alternatives to current practices to avoid penalties and civil liability. A violation of the new law is an unlawful employment practice, and an aggrieved individual can file a complaint with BOLI and a civil lawsuit for injunctive relief, reinstatement or back pay, and attorney’s fees.
Compliance steps for Oregon Employers:
- Do not run credit reports for employees or applicants, unless your company fits into one of the four exceptions.
- Seek counsel to determine if credit information is “substantially job-related.”
- You can still run other types of background checks (criminal record searches, employment and education verifications, etc.) as you did before this law.
Sources: Seyfarth Shaw, Davis Wright Tremaine LLP
Photo credit: Neubie
NH Courts to Close As Furloughs Hit Judicial System
March 16, 2010
In order to meet a budget shortfall of 3.1 million dollars, the New Hampshire Judicial Branch announced that all New Hampshire courts and judicial branch administrative offices will be closed on the following days:
- Friday April 2, 2010
- Friday April 30, 2010
- Friday May 28, 2010
Read more about the court furloughs (pdf).
Photo credit: Zoom Zoom
New Mexico Job Seekers Don’t Have to Disclose Criminal Records
March 9, 2010
Here is an interesting trend that we will be watching.
The New York Times reports:
New Mexico became the second state to ”ban the box” with Gov. Bill Richardson’s signature on a law prohibiting employment applications for government agencies from asking job seekers if they’d been convicted of a crime.
The measure was signed Monday and covers job applications for state, county or local government but not private business.
The legislation doesn’t prohibit employers from asking the question once they’re face-to-face with applicants and doesn’t stop them from doing background checks.
It passed the New Mexico Senate 35-4 and the House 54-14.
The National Conference of State Legislatures and the National Employment Law Project say Minnesota passed similar legislation in 2009, becoming the first state to outlaw the conviction question.
