Effective October 1, 2013, Nevada Senate Bill S.B. 127 limits employers’ use of an applicant’s or employee’s credit history in hiring and personnel issues. The bill, which was signed on May 25, 2013 by Nevada Gov. Brian Sandoval, adds Nevada to the list of other states that have similar laws: California, Connecticut, Hawaii, Illinois, Maryland, Oregon, Vermont, Colorado and Washington. This trend is expected to continue at both the state and federal level. The Equal Employment Opportunity Commission (EEOC) also continues to actively investigate the use of credit reports by some employers.
The New Law’s Requirements
Nevada Senate Bill 127 amends Chapter 613 (Employment Practices) of the Nevada Revised Statutes to restrict the ability of employers to use an employee or prospective employee’s “consumer credit report” or any “consumer credit information” for employment purposes.
An employer may not:
- Directly or indirectly, require, request, suggest, or cause any employee or prospective employee to submit a consumer credit report or other credit information as a condition of employment.
- Use, accept, refer to, or inquire about a consumer credit report or other credit information.
Further, employers may not discharge, discipline, discriminate against in any manner, deny employment or promotion to, or threaten to take any such action against any employee or prospective employee:
- Who refuses, declines, or fails to submit a consumer credit report or other credit information.
- On the basis of the results of a consumer credit report or other credit information.
- Who has filed any complaint, instituted or caused to be instituted any legal proceeding, or has testified or may testify in any legal proceeding instituted pursuant to the new law.
- Who has exercised his or her rights, or has exercised on behalf of another person the rights afforded to him or her under the new law.
Exceptions include circumstances where:
- The employer is required or authorized, pursuant to state or federal law, to use a consumer credit report or other credit information for an accepted purpose;
- The employer reasonably believes that the employee or prospective employee has engaged in specific activity that may constitute a violation of state or federal law; or
- The information contained in the consumer credit report or other credit information is reasonably related to the position for which the employee or prospective employee is being evaluated for an accepted purpose.
The new Nevada law defines “reasonably related” to mean, where the duties of the position involve:
- The care, custody and handling of, or responsibility for, money, financial accounts, corporate credit or debit cards, or other assets;
- Access to trade secrets or other proprietary or confidential information;
- Managerial or supervisory responsibility;
- The direct exercise of law enforcement authority as an employee of a state or local law enforcement agency;
- The care, custody and handling of, or responsibility for, the personal information of another person;
- Access to the personal financial information of another person;
- Employment with a financial institution chartered under state or federal law, including a subsidiary or affiliate of such a financial institution; or
- Employment with a licensed gaming establishment (as defined by statute).
The new law provides for both a public and a private right of action. Specifically, aggrieved employees and prospective employees may file a private lawsuit against employers that violate the new law. Courts are authorized to award a successful plaintiff the following remedies:
- Employment, reinstatement, or promotion to the position at issue.
- Lost wages and benefits.
- Attorney’s fees and costs.
- Any other equitable relief the court deems appropriate.
On the public enforcement side, the Nevada law grants the Labor Commissioner the authority to impose penalties in an amount up to $9,000 per violation against employers that violate the law. The Labor Commissioner may also initiate a lawsuit against the employer to obtain equitable relief including employment, reinstatement, and promotion for the aggrieved employee.
The new law includes a generous three-year statute of limitations.
Next Steps for Employers
Nevada employers or those that hire from Nevada should carefully evaluate their hiring processes to ensure compliance. Employers should also continue to monitor efforts in Congress to regulate the use of credit history information, as well as advisory guidance from, and litigation initiated by, the EEOC in this area.
To view Nevada Senate Bill 127, visit http://www.leg.state.nv.us/Session/77th2013/Bills/SB/SB127.pdf