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CHECK PLEASE! Credit Checks for Employees

Published:  February 4, 2014

Your ability to perform credit checks on employees is coming under fire. Ten states, including Connecticut and Vermont, already have limits on an employers’ ability to use credit information in employment decisions. Soon the Equal Employment Opportunity Commission may create a guidance document to further restrict the use of credit information in the employment context. Additionally, there are many state and federal bills proposed to abolish the practice of using credit information for background checks altogether, including one in Massachusetts.

A bill has been introduced to the Massachusetts Senate that would prohibit employers from using credit reports for employment purposes. The Equal Employment for All Act (S. 1837) would amend the Fair Credit Reporting Act and make any adverse employment decisions based on a credit reports unlawful. Should this bill pass, employers’ abilities to conduct background checks would be further constricted. Even with consent and authorization from employees and potential employees, credit history for employment purposes would be completely off-limits, with virtually no exceptions.

If you have any questions regarding conducting credit or background checks on employees, please contact any of the attorneys at Royal LLP at (413) 586-2288.