Further Restrictions on Use of Credit Information in Employment Decisions: Oregon Joins Washington and Hawaii in Restricting Use; Legislation Pending at the Federal Level

Employers should be aware of recent state legislation and proposed federal legislation restricting the use of credit history in employment decisions.

On March 29, 2010, Oregon Governor Kulongoski signed legislation (S.B. 1045) that specifically prohibits employers from using credit history in making hiring, discharge, promotion, and compensation decisions unless the applicant or employee is given advanced written notice and the credit history is substantially related to the position sought.  The legislation provides additional exceptions for financial institutions and public safety offices.  Although the proposed legislation was to be effective July 1, 2010, the Governor declared the legislation effective immediately.

Oregon now joins Washington and Hawaii in requiring relatedness between the credit history and the position sought before an employer can use such information in making employment decisions.  There is also pending legislation in Illinois that recently passed the House of Representatives, which would impose similar restrictions.

At the federal level, H.R. 3149 was introduced in the U.S. House of Representatives in July 2009, to amend the Fair Credit Reporting Act.  Known as the "Equal Employment for All Act," it seeks to prohibit the use of consumer credit checks against prospective and current employees for the purposes of making adverse employment decisions.  This bill is currently in committee; however passage of laws in Oregon and other states may drive further interest in this bill at the federal level.  In addition, independent of this federal legislation, the Equal Employment Opportunity Commission has recently taken particular interest in the use of credit checks in employment decisions. 

For more information, please contact the Seyfarth attorney with whom you work or any Labor & Employment attorney on our website.