Recently, Vermont Governor, Peter Shumlin, enacted into law Act 154 (S.95), (http://www.leg.state.vt.us/docs/2012/ACTS/ACT154.pdf ) which greatly restricts an employer’s use of credit information when making an employment decision.
Vermont now joins California, Connecticut, Hawaii, Illinois, Maryland, Oregon and Washington to become the eighth state to have enacted such legislation. This continues the trend we have seen recently, as most states on this list enacted their legislation within the last two years.
The law becomes effective July 1, 2012.
As with all of these laws, there are exceptions, however the exceptions are narrow in scope. Our legal counsel, Seyfarth Shaw, has reviewed the legislation and has broken down the exceptions as follows:
- The information is required by state or federal law or regulation;
- The position of employment:
- involves access to “confidential financial information,” defined as sensitive financial information of commercial value that consumers or clients explicitly authorize the employer to have and which the employer only entrusts to certain employees;
- is that of a law enforcement officer, emergency medical personnel or a firefighter (as these terms are defined by state law);
- requires a financial fiduciary responsibility to the employer or its clients, including authority to issue payments, collect debts, transfer money, or enter into contracts; or involves access to employer’s payroll information.
- The employer is a financial institution or credit union (as these terms are defined by state law); or
- The employer can demonstrate that the information is “valid and reliable predictor of employee performance in a specific position of employment.”
Corporate Screening continues to monitor legislation proposed throughout the country and will continue to alert you of any changes to state or federal law regarding the use of credit information for employment purposes; many states have bills in various stages of the legislative process.
If you would like to see if your state has any pending legislation, the National Conference of State Legislation (http://www.ncsl.org/issues-research/banking/use-of-credit-info-in-employ-2012-legis.aspx) has created a website to monitor the activity on this issue.
If you have any questions, please feel free to contact your account representative at 800-229-8606.