As we reported in a prior post, there is a developing legislative trend to restrict employers’ use of credit report information in making adverse employment decisions (e.g., hiring, promotion, termination) regarding prospective or current employees.  There are currently 18 states considering legislation in this area: California, Indiana, Kentucky, Missouri, Nebraska, New Mexico, New York, Texas, Connecticut, New Jersey, Vermont, Maryland, Pennsylvania, Georgia, Ohio, Florida, Michigan, and Montana.  Hawaii, Illinois, Oregon, and Washington already have laws restricting employers’ use of employee credit report information for employment decisions. 

The bills vary in scope.  Some bills apply only to prospective employees while others apply to both prospective employees and current employees.  For example, legislation in Florida would make it an improper employment practice for an employer “to directly or indirectly use a job applicant’s personal credit history as a hiring criterion” unless the applicant’s credit history is directly related to the position sought.  Even if the applicant’s credit history is directly related to the position, the employer may not use the applicant’s credit history as the determining factor in whether to hire the applicant.  The Florida bill does not restrict an employer’s ability to use the credit report information of current employees to make employment decisions.

We will provide further updates as to the progress of these bills as state legislative sessions begin to wrap up. 

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Photo of Mike Nonaka Mike Nonaka

Michael Nonaka is co-chair of the Financial Services Group and advises banks, financial services providers, fintech companies, and commercial companies on a broad range of compliance, enforcement, transactional, and legislative matters.

He specializes in providing advice relating to federal and state licensing and…

Michael Nonaka is co-chair of the Financial Services Group and advises banks, financial services providers, fintech companies, and commercial companies on a broad range of compliance, enforcement, transactional, and legislative matters.

He specializes in providing advice relating to federal and state licensing and applications matters for banks and other financial institutions, the development of partnerships and platforms to provide innovative financial products and services, and a broad range of compliance areas such as anti-money laundering, financial privacy, cybersecurity, and consumer protection. He also works closely with banks and their directors and senior leadership teams on sensitive supervisory and strategic matters.

Mike plays an active role in the firm’s Fintech Initiative and works with a number of banks, lending companies, money transmitters, payments firms, technology companies, and service providers on innovative technologies such as bitcoin and other cryptocurrencies, blockchain, big data, cloud computing, same day payments, and online lending. He has assisted numerous banks and fintech companies with the launch of innovative deposit and loan products, technology services, and cryptocurrency-related products and services.

Mike has advised a number of clients on compliance with TILA, ECOA, TISA, HMDA, FCRA, EFTA, GLBA, FDCPA, CRA, BSA, USA PATRIOT Act, FTC Act, Reg. K, Reg. O, Reg. W, Reg. Y, state money transmitter laws, state licensed lender laws, state unclaimed property laws, state prepaid access laws, and other federal and state laws and regulations.