FCRA

We just received this alert from The National Association of Professional Background Screeners (NAPBS).

Maryland HB175 Seeks to Limit Use of Credit Reports by Employers

Maryland House Bill 175 would prohibit an employer from using an applicant’s or employee’s credit report or credit history in determining whether to deny employment to the applicant, discharge the employee or determine compensation or terms, conditions, or privileges employment; authorizing an employer to request or consider an applicant’s credit report or credit history under specified circumstances; authorizing an applicant or employee to bring an action for injunctive relief, damages, or other relief for a violation of a specified provision of law; etc.

We urge you to participate in this action alert to communicate the impact this will have on employers in Maryland and on companies providing background screening services both in Maryland and nationally.

Here is the letter that we’ve sent:

Dereck Davis, Chairman,   House Economic Matters Committee

Re:  MD House Bill 175

I am writing in opposition to House Bill 175 – Credit Reports and Credit Histories of Applicants and Employees.  This bill, if enacted, would effectively prohibit employers from utilizing credit history in hiring prospective employees.

We are a member of the National Association of Professional Background Screeners (NAPBS) which represents over 700 members and their respective companies.  Our company is a national provider of background check and credential verification information for employers. Our clients are representative of the more than 88% of companies in the US who perform background checks on their employees across the country.  Our information products protect employers from liability and ensure that newly hired employees pose no financial risk.

Credit reports are integral to the hiring process because employers must determine the accuracy and completeness of a job application. Credit reports are used for employment checks to show former addresses, former employment, and the financial situation of a prospective employee. By using credit reports in the hiring process, employers avoid wasting resources on recruiting, hiring, and training new employees, only to find out later that the hiring decision was based on incomplete or falsified information. Also, employers use credit reports to safeguard against internal theft that can be a result of employees who can not meet their monthly financial obligations.

The use of credit reports for employment decisions is governed and expressly allowed by the federal Fair Credit Reporting Act (FCRA). Under the FCRA, an employer must give the consumer notice that a credit report may be used in the hiring process and require the consumer’s written consent to access their credit report. The FCRA provides important consumer protections by requiring a notice by the employer if an adverse action is taken; i.e. the applicant is not hired. The notice includes the name, address, and phone number of the consumer reporting agency or credit reporting agency that supplied the report.  Additionally, under existing federal law, potential employees already receive certain protections relating to employer consideration of prior bankruptcy filings.

It is our hope that Maryland employers will be allowed the continued use of credit reports for hiring decisions.  If you have any questions concerning how credit reports are used by employers to make decisions, please feel free to contact me.   Thank you for your time and consideration of our views.

Sincerely,

Chris Miller

President

FYI Screening, Inc.