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Legislative Alert – July 28th, 2014

 

Ban The Box

ban the boxThe state of Illinois joins the wave of banning the box.  Governor Pat Quinn signed the  initiative into law, which is intended to help ex-offenders applying for jobs in the private sector.  Employers and employment agencies must now hold off on criminal background checks until after applicants are deemed qualified for the job in question.

Last year, Governor Quinn used an administrative order to require the same considerations for those applying for employment with the state. “Everyone deserves a second chance when it comes to getting a job,” Governor Quinn said. “This law will help ensure that people across Illinois get a fair shot to reach their full potential through their skills and qualifications, rather than past history.”  The governor also says the law will help reduce recidivism, fight poverty and prevent violence by putting more people back to work.

Illinois’s Ban the Box law goes into effect January 1, 2015.

E-Verify Updated in Spanish

The Spanish-language version of the E-Verify website has been redesigned to match the upgraded English site.  The changes to the English site were released in October.  The upgrades include new features, graphics and more “plain language content.”

A new Customer Support and Federal Contractors section has been added.  The updates were made to help employers and workers whose native language is Spanish.

Employment Background Investigations is a technology driven leader in domestic and global pre-employment background checks, drug testing, occupational healthcare and I-9 compliance. We specialize in development, implementation and management of customized employment screening programs for large and multi-national clients. We are dedicated to information security.  EBI is the only NAPBS Accredited background screening company to hold both an ISO 27001-2005 certification for information security and an ISO 9001-2008 certification for Quality Management.

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Credit Reports For Employment Purposes – State Law Compliance

 

Employment Credit ReportsCredit Reports Can Be An Important Element Of Background Screening
Credit reports are a critical element of the background screening process for many employers. Banking, finance, security, public safety and pharmaceuticals are just a few industries that rely heavily on credit reports for making a hiring decision as an indication of integrity and stability. Consider a candidate for a government position who has defaulted on a government backed student loan or possesses tax liens against them.  What about an employee that has fiduciary responsibility over company funds, check writing authority, or access to large amounts of cash?  Consider an employee that is granted a company credit card and struggles to manage their own personal credit within acceptable limits.  What about an employee that has access to customer credit card information or confidential consumer information which could lead to potential identity theft?  A credit report may give insight into a candidate’s stability and trustworthiness for a specific position, although there is no proven correlation to a candidate’s credit score and their ability to perform a job.  For that reason, a credit score is not part of an employment credit report. 

Proper use of a credit report within the hiring decision process is imperative to avoid discrimination and legal liability.  Each should be reviewed on an individual basis and employers should provide a candidate/employee with an opportunity to respond to derogatory information found within their credit history, since many times there are unavoidable circumstances which lead to poor credit.  Create a policy that is consistent when using credit reports as part of the screening process and be aware of restrictions within your state.

Individual States That Restrict Credit Report Use
A few states have considered, or passed, legislation that provides specific language around the use of credit reports for employment purposes. Employers need to be sure that their hiring, retention, and promotion practices fall within these guidelines. Below is a sampling of state by state considerations as of September 1, 2011. It is important that you stay current on new developments through your HR legal counsel as state and federal legislation is constantly changing.

  • Colorado Active Legislation - The Colorado “Employment Opportunity Act”, Colo. Rev. St 8-2-126, will drastically limit consumer credit information from being used for employment purposes. The law, which was signed on April 19, 2013, and which will go in effect on July 01, 2013, will be the ninth state law to significantly limit how employers may use consumer credit information to make employment decisions. The law defines “employment purposes” to encompass evaluation of a person for “employment, hiring, promotion, demotion, reassignment, adjustment in compensation level, or retention.” Effective July 01, 2013, Colorado employers may only use consumer credit information for employment purposes if:  “The employer is a bank or financial institution; the report is required by law; or the report is substantially related to the employee’s current or potential job and the employer has a bona fide purpose for requesting or using information in the credit report that is substantially related to the employee’s current or potential job and is disclosed in writing to the employee.”
     
  • California Active Legislation - Governor Jerry Brown signed Assembly Bill 22 on October 10, 2011. The new guidelines go into effect January 1, 2012, and employers in California may only use a consumer credit reports for employment purposes if the report is sought for one of the following:  (1) A managerial position;  (2)  A position in the state Department of Justice;  (3)  A sworn peace officer or other law enforcement;  (4)  A position for which the information contained in the report is required by law to be disclosed or obtained; (5)  A position that involves regular access to confidential information ( credit card account information, Social security number, or Date of birth); (6) A position which the person can enter into financial transactions on behalf of the company; (7) A position that involves access to confidential or proprietary information; or (8) A position that involves regular access to employer, customer, or client cash totaling $10,000 or greater during the workday.  Please be aware that there are additional provisions regarding written disclosure, a check box available for the applicant to request a copy of their report at no additional charge, and disclosure of reasons for obtaining such information on the applicant.

  • Connecticut Active Legislation Senate Bill 361 will prohibit most employers from utilizing applicant and employee credit reports for employment decisions effective October 1, 2011. The law specifies employers may not require an employee or prospective employee to consent to a request for a credit report unless: (1) such employer is a financial institution, (2) such report is required by law, (3) the employer reasonably believes that the employee has engaged in specific activity that constitutes a violation of the law related to the employee's employment, or (4) such report is substantially related to the employee's current or potential job or the employer has a bona fide purpose for requesting or using information in the credit report that is substantially job-related and is disclosed in writing to the employee or applicant.  The law defines credit report information as “substantially related” and provides scenarios for various positions.

  • Hawaii Active Legislation - House bill 31(HB31 CD1) became law on July 15, 2009, overriding Governor Lingle’s veto. This law establishes employer's use of an individual's credit history in hiring and termination decisions as an unlawful discriminatory practice, provided that the individual's credit information directly relates to a bona fide occupational qualification, and that employers are expressly permitted to inquire into credit history for employment purposes pursuant to any federal or state law.  The bill also provides notable exemptions to the legislation.

  • Illinois Active Legislation -    Illinois State Governor Pat Quinn has signed the Employee Credit Privacy Act (HB4658) into law.  Effective January 1, 2011, Illinois employers and agents of employers may not “discriminate against an individual with respect to employment, compensation, or a term, condition, or privilege of employment because of the individual's credit history or credit report”  or “order or obtain an applicant's or employee's credit report from a consumer reporting agency.”  The law applies to all Illinois-based employers of any size; however, provides exceptions for use within specific industry and for certain positions.

  • Maryland Active Legislation - the Maryland Job Applicant Fairness Act was signed into law on April 12, 2011, and the new law restricts employers from using an applicant/employee's credit report or credit history in determining whether to deny employment; discharge an employee; or determine compensation, terms, conditions or privileges of employment. This law goes into effect on October 1, 2011, and specifies that the employer may request or use the applicant/employee’s credit information after the applicant has received an offer of employment and if the employer has a substantially job-related bona fide purpose for requesting or using information in a credit report or credit history.  Under the act, a position for which an employer has a substantially job-related bona fide purpose for requesting or using information in a credit report or credit history includes a position that is qualified for credit report use.

  • Nevada Active Legislation - Senate Bill 127 which went into law on May 25, 2013, enacts several restrictions on the use of consumer credit information for employment purposes in Nevada, including that an employer cannot request or require any employee or prospective employee to submit to a consumer credit report or to provide other credit information. It also restricts employers from using, accepting, or referring to consumer credit information, and prohibits employers from disciplining, discharging, or discriminating against employees who refuse, decline, or fail to submit to a consumer credit report. Employers should refer to Section 7 of Senate Bill 127 for a full list of restrictions. 

    However, the legislation provides several exceptions for employers, and states that employers may request and/or use a consumer’s credit report for employment purposes if the employer meets certain criteria, as outlined in Section 7.5 of the Bill.

  • Oregon Active Legislation – As of March 29, 2010, Oregon Senate Bill 1045 was signed by Governor Kulongoski and went into effect July 1, 2010. This bill places additional restrictions on the use of credit reports, and prevents employers from utilizing credit reports for employment, including hiring, discharge, promotion, and compensation unless the credit report use is "substantially job-related".  There are also exceptions under this new law for certain industries or positions.

  • Vermont Active Legislation - Vermont Governor Peter Shumlin has signed Senate Bill 95 into law, generally restricting an employer’s right to inquire, obtain, and utilize credit history information for employment decisions effective July 1, 2012. Importantly, the new law does exempt Vermont employers from the new provisions if one or more conditions are applicable:  A complete list of provisions are listed within the Bill.

  • Washington Active Legislation - The state of Washington amended existing legislation with RCW 19.182.020. An immediate effect of this legislation revolves around the use of amended forms and the ability for WA employers to communicate the reasons that a credit report is substantially related to a particular job. Under this amended Washington Law, employers cannot obtain a credit report as part of a background check unless the information is substantially “job related” and must include the employer’s reason for use and be disclosed in writing.  The use is also acceptable if required by law.

Even with only a few states weighing in on the use of credit reports, all current, pending and even vetoed legislation address the critical need for proper use, and the valuable resource it brings to employers. EBI provides this information as awareness to current trends and issues within the background screening industry; however, this information should not be taken as legal advice as it relates to the proper use of credit reports.

Employer Resources For Consumers
The following are additional resources that provide consumers guidance with Federal law and guidelines around credit reports and their rights.

Federal Trade Commission (FTC)
FTC – Consumer Credit Information 
Yearly Credit Report Review 

Employment Credit Reports From EBI
At EBI, we understand the critical role that credit reports play for assessing a candidate or even a current employee. EBI offers access to FCRA compliant employment credit reports in a secure and confidential manner.  EBI can provide a complete picture of your candidate, confirming the candidate’s true identity, address history, and credit worthiness with our “one stop” background screening solutions.

EBI is committed to providing employers with valuable education and resources on changing legislation and cutting-edge and compliant solutions to meet federal, state, local and international mandatory requirements. If you found this information useful, select the button listed below and access more industry news, resources and tips from EBI, an NAPBS Accredited screening firm and global leader in the background screening industry!

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Illinois Law And EEOC Lawsuit Place Focus On Employer Credit Reports

 

As the new year begins, the use of credit reports for employment purposes is once again in the spotlight.

On January 1st, the Illinois Employee Credemployer credit reportsit Privacy Act (HB 4658) became law.  Illinois is now the fourth state to restrict employers from using credit information for employment decisions; Hawaii, Oregon, and Washington have similar legislation in place.

The law states that Illinois employers and agents of employers may not “discriminate against an individual with respect to employment, compensation, or a term, condition, or privilege of employment because of the individual’s credit history or credit report” or “order or obtain an applicant’s or employee’s credit report from a consumer reporting agency.” 

employer credit reportsThe concern of how organizations are using employer credit reports within the hiring process is further emphasized by the December 21, 2010, U.S. Equal Employment Opportunity Commission (EEOC) lawsuit filed against Cleveland based Kaplan Higher Education Corporation.  The lawsuit states that the use of the job applicant’s credit history by Kaplan was discriminatory.  The EEOC further claimed:  “This practice has an unlawful discriminatory impact because of race and is neither job-related nor justified by business necessity.”

For many employers, credit reports continue to be an important element of background screening.  Banking, finance, security, public safety and pharmaceuticals are just a few industries that rely heavily on credit reports for making a hiring decision as an indication of integrity and stability.  Although a credit report may give insight into a candidate’s stability and trustworthiness for a specific position, there is no proven correlation to a candidate’s credit score and their ability to perform a job. 

The Fair Credit Reporting Act (FCRA) authorizes the use of credit report information for employment purposes, but the proper use of this information within the hiring decision process is imperative to avoid discrimination and legal liability.  As best practice, employers should always review credit report information on an individual basis, per applicant, and only as it relates directly to the specific job function.

EBI advises employers to meet with legal counsel to review compliance guidelines on the use of credit reports within their state. 

 

Illinois Law Restricts The Use Of Employer Credit Reports

 

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Illinois Governor Signs Employee Credit Privacy Act (HB 4658) Into Law

Illinois State Governor Pat Quinn has signed the Employee Credit Privacy Act (HB4658) into law.  Illinois is now the fourth state to restrict employers from using credit information for employment decisions; Hawaii, Oregon, and Washington have similar legislation in place. 

Effective January 1, 2011, Illinois employers and agents of employers may not “discriminate against an individual with respect to employment, compensation, or a term, condition, or privilege of employment because of the individual's credit history or credit report”  or “order or obtain an applicant's or employee's credit report from a consumer reporting agency.” 

The law applies to all Illinois-based employers of any size with the following exceptions: 

  • Any bank holding company, financial holding company, bank, savings bank, savings and loan association, credit union, or trust company, or any subsidiary or affiliate thereof, that is authorized to do business under the laws of this State or of the United States.
  • Any company authorized to engage in any kind of insurance or surety business pursuant to the Illinois Insurance Code, including any employee, agent, or employee of an agent acting on behalf of a company engaged in the insurance or surety business.
  • Any State law enforcement or investigative unit, including, without limitation, any such unit within the Office of any Executive Inspector General, the Department of State Police, the Department of Corrections, the Department of Juvenile Justice, or the Department of Natural Resources.         
  • Any State or local government agency which otherwise requires use of the employee's or applicant's credit history or credit report.
  • Any entity that is defined as a debt collector under federal or State statute. 

Employers must apply the law to all employees, unless a satisfactory credit history is an established “bona fide” occupational requirement of a particular employee position or group/department.  A satisfactory credit history is not a bona fide occupational requirement unless at least one of the following circumstances is present: 

  • State or federal law requires bonding or other security covering an individual holding the position.
  • The duties of the position include custody of or unsupervised access to cash or marketable assets valued at $2,500 or more.
  • The duties of the position include signatory power over business assets of $100 or more per transaction.
  • The position is a managerial position which involves setting the direction or control of the business.
  • The position involves access to personal or confidential information, financial information, trade secrets, or State or national security information.
  • The position meets criteria in administrative rules, if any, that the U.S. Department of Labor or the Illinois Department of Labor has promulgated to establish the circumstances in which a credit history is a bona fide occupational requirement.
  • The employee's or applicant's credit history is otherwise required by or exempt under federal or State law. 

Employers may not require an applicant or employee to waive any right under the Employee Credit Privacy Act, or retaliate or discriminate against a person for exercising rights under the Act.  Employers who violate the Act may be sued and ordered to pay damages including attorneys’ fees. 

Employers subject to these new provisions should consult with the Illinois Department of Labor and/or their legal counsel immediately, and update and revise their current HR policies accordingly.


All information contained herein is provided by Employment Background Investigations, Inc. (EBI), PO Box 629, Owings Mills, MD  21117, and is solely for the convenience of its readers. EBI is not providing legal advice or counsel and nothing provided within should be deemed as legal guidance or advice. Readers should consult with their own legal counsel to determine their legal responsibilities or if they have questions on any information provided by EBI.

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