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Lawmakers in Maryland have joined a growing number of states that are prohibiting the use of credit history in making employment decisions. In April, Governor Martin O’Malley signed the Job Applicant Fairness Act which prohibits most employers from using an applicant’s credit information to deny employment, discharge an employee, decide compensation or evaluate other terms and conditions of employment.

Exceptions to the law include financial institutions and employers that are mandated by federal or state law to inquire into credit histories. The law also allows employers to request or use credit information in situations where a “bona fide purpose that is substantially job-related” exists.  Such situations include employees who have expense accounts, corporate credit cards, handle money or other have confidential job duties.

If a Maryland employer intends to request credit information for a bona fide purpose, this must be disclosed in writing to the employee or applicant. Beginning October 1, 2011, individuals who feel that an employer has violated the Job Applicant Fairness Act can file a complaint with the Commissioner of Labor and Industry for investigation. Penalties of up to $500 for an initial violation and up to $2,500 for repeat occurrences could be assessed by the Commissioner.

While Maryland joins only four other states – Illinois, Washington, Oregon and Hawaii – in prohibiting the use of credit information for employment decisions, there are currently 15 additional states that have similar pending legislation. Employers who currently use credit history as part of their background screening process may want to reevaluate this practice given the topic’s increasing interest among state legislators.

Questions? Please contact Corporate Screening Support at 800-229-8606 and select option 3 or contact your Account Representative.