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 a partner in the firm’s Financial Institutions practice group. He represents banks and other financial institutions on a wide variety of bank regulatory, enforcement, legislative and policy issues.  Mr. Nonaka also is co-chair of the firm’s Fintech Initiative and works…

Michael Nonaka is a partner in the firm’s Financial Institutions practice group. He represents banks and other financial institutions on a wide variety of bank regulatory, enforcement, legislative and policy issues.  Mr. Nonaka also is co-chair of 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 big data, blockchain and related technologies, bitcoin and other virtual currencies, same day payments, and online lending.