Job Applicant Fairness Act: Maryland Limits Use of Credit Checks

Job Applicant Fairness Act: Maryland Limits Use of Credit Checks

On April 12, 2011, Maryland Governor O’Malley signed into legislation the Job Applicant Fairness Act.  This new Act was created “for the purpose of prohibiting an employer from using the credit report or credit history of an employee or applicant for employment for certain purposes…”

Maryland State Delegate Kirill Reznik introduced the bill to prohibit Maryland employers, with a few exceptions, from using an applicant’s or Job Applicant Fairness Actemployee’s credit history as a vetting tool for hiring and retention.  Reznik felt that a person’s credit score should have no reflection on their ability to perform their job.

Effective Date and What this means to Employers

The Act becomes effective on 10/1/11.  The Act states that an employer may not use an applicant’s or employee’s credit report or credit history in determining whether to:

  • Deny employment to the applicant
  • Discharge the employee
  • Determine compensation or the terms, conditions or privileges of employment

Despite the above, there are instances under this Act where an employer may request or consider an applicant’s or employee’s credit report or credit history.  These instances fall under the category “substantially job-related” and are defined as follows:

  • Positions involving money-handling (authority to issue payments, collect debts, transfer money, or enter into contracts)
  • Confidential positions (access to company’s trade secrets, IP, personnel files, etc.)
  • Managerial positions that control or direct part of the business

Who is Exempt?

Certain employers are exempt from the Act, including:

  • Any employer that is required to perform credit checks by federal or state law
  • Financial institutions, or an affiliate, that accepts deposits insured by a federal agency (including any credit union share guaranty corporation that is approved by the Maryland Commissioner of Financial Regulation)
  • Investment advisors registered with the U.S. SEC

Violations:  

If an employer violates the Act, an applicant or employee may file a complaint with the Maryland Commissioner of Labor and Industry.  If it is determined that an employer willfully or negligently violated the Act, a fine may be assessed.

Compliance Q & A: 

Visit our website for compliance recommendations on the Job Applicant Fairness Act.  Learn how Outsourced Recruiting can answer questions you might have regarding the ever-changing labor laws and benefit regulations.

If you are unsure whether or not you are permitted to use a credit check under this Act (multi-state operations with similar laws), contact FosterThomas.  Our experienced specialists can assist with workforce planning systems, compliance reviews, benefits enrollment and management, recruiting, administrative support, management training, coaching and development, and more. Bottom line, we customize our on-site support to your level of need for a fraction of the cost of additional staff salaries and benefits.

Image credit to Campaignsthatmatter.com

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About the Author

FosterThomas is a leading professional services company that provides solutions in the areas of Human Resources Consulting and Outsourcing, HR Staffing, Outsourced Recruiting, Employee Benefits Brokerage, Payroll Implementation and Services, HR for Government Contractors, Business Insurance, HR Compliance and Risk Management. We help organizations by providing solutions designed with a focus on cost containment strategies and increasing HR efficiency. FosterThomas HR Consulting was established in 1993 with offices in Annapolis, Maryland (Corporate), McLean, Virginia and Raleigh, North Carolina. Today, FosterThomas occupies a unique position as a full service provider of HR services.

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