Public policy insight for your business

Employer use of credit continues to be top priority in the states

Statehouses across the country continue to debate bills that would restrict or place limitations on the use of credit information for employee or prospective-employee background checks.  The proposals are intended to address what some perceive as discriminatory hiring practices. However, the results of such legislation would be to remove a valuable tool that employers use to evaluate and compare different candidates under consideration for a job. While the majority of these bills were defeated, Maryland H.B. 87 was signed into law and bills in California, Vermont and Connecticut continue to move forward.

The use of credit reports for pre-employment screening is regulated by the federal Fair Credit Reporting Act, state credit reporting statutes and a robust body of employment law. Still, misconceptions about the content of credit reports used for employment purposes have encouraged labor advocates to promote restrictions, if not a prohibition, on the practice. Since employers can be held responsible for the actions of their employees, employers should have access to tools that give better insight into whom they are hiring. The result of using credit information to make employment decisions is not that fewer employees are hired, but that the best candidates are matched to the available jobs.


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