Legislative Session 2013

Legislative Session 2013
The Prospective Employee Credit Privacy Act, sponsored by Senator Bill O’Neill now sits on the Governor’s desk for signature.  Thank you to Representative Jane Powdrell-Culbert for speaking on behalf of SB 128 on the House floor and thank you to Senator Bill O’Neill for sponsoring this piece of legislation.
Purpose:  To prevent a prospective employee’s credit information from being used by a prospective employer to deny that person an interview, with certain exceptions.

Rationale:  Information contained in a credit report has no correlation to job performance and credit reports do not provide meaningful insight into a candidate’s character, responsibility, or prospective job performance.

 

Facts:

States are evoking their rights and creating pathways for consumers to be heard locally; 8 states have limited employers’ use of credit information in employment: California, Connecticut, Hawaii, Illinois, Maryland, Oregon, Vermont and Washington. Washington enacted legislation in 2007, Hawaii enacted legislation in 2009, Illinois  and Oregon enacted legislation in 2010. CaliforniaConnecticut and Maryland enacted legislation in 2011. Vermont enacted its legislation in 2012.

Equifax stopped selling reports to employers in late 2009, noting the controversy of this method to screen potential employees within the current US economic climate.

It is a permissible use under The Fair Credit Reporting Act, administered by the Federal Trade Commission, for Credit Bureaus to provide consumer [credit] reports to employers “for employment purposes, including hiring and promotion decisions, where the consumer has given written permission”.  Sections 604(a)(3)(B) and 604(b)

SB 128 is eliminating the use of credit information for employment screening or recruitment

Residents that are most likely to have limited positive information on their consumer [credit] report are:

  • foster youth and youth in general;
  • those who manage accounts on a cash basis;
  • those who have never had the need or desire to borrow collateralized funds;
  • lower income families who make choices between food, gas, and utilities every month.
Some items that impact your consumer (credit) report:
  • Percentage of credit allowance that is being used – e.g., if you have a credit limit of $500 and you are holding $400 of credit, you are above the 30% rule and your score will be negatively impacted.
  • How many times your credit has been pulled (most often when applying for credit) within a small block of time.
  • How many times you have relocated to new housing.
  • How many times you have changed employment.
  • How often you have made late payments.
  • How much debt you retain.
  • Financially related public records.
According to the FTC report release February 11, 2013, one in four consumers identified errors on their credit reports that might affect their credit scores.