By Doreen Koronios
During its February 2010 special session, the Oregon Legislature adopted Senate Bill 1045, prohibiting employers from using credit histories in making employment-related decisions. The law goes into effect on July 1, 2010 and makes it “an unlawful employment practice for an employer to obtain or use for employment purposes information contained in the credit history of an applicant for employment or an employee, or to refuse to hire, discharge, demote, suspend, retaliate or otherwise discriminate against an applicant or an employee with regard to promotion, compensation or the terms, conditions or privileges of employment based on information in the credit history.”
In my last blog, I discussed the issue of credit checks for employment purposes and how applicants should know their credit information and their rights under the various laws. It is also important for companies to know the different laws, especially in multi state businesses. Oregon joins Washington and Hawaii as the three states which have banned the use of credit history for employment purposes. Other states are busy trying to get the same legislation passed. Employers who violate the law will be subject to either an administrative claim filed with the Oregon Bureau of Labor and Industries or a private lawsuit, and can be held liable for lost wages and attorney fees, among other remedies.
Under the federal Fair Credit Reporting Act, an employer can make employment-related decisions based on credit history but, prior to running a credit check, must notify prospective employees in writing and receive their consent. Additionally, if the employer decides not to hire because of the credit report, the employer must disclose this information to the applicant and provide information on the credit bureaus used. In contrast, the Oregon law creates an outright ban on the use of credit history in employment-related decisions. However, there are four exceptions to the prohibition:
- Bank and credit union employers
- Employers that are required by state and federal law to use credit histories for employment purposes
- Public safety officer employers
- Employers that can demonstrate that credit information is “substantially job-related” and that provide written disclosure of the reasons for the use of the credit check
In light of the above, it is important that business managers and owners know the law for the states in which they hire employees and should consult legal counsel to determine if they fit into one of the statutes exceptions.
Of importance is the fact that the new Oregon law only prohibits the use of credit history, so other background checks – such as criminal background checks – are not affected.
You can find a copy of the Bill at http://www.worldofworklawblog.com/uploads/file/sb1045_en.pdf