A new Connecticut law will bar employers from using credit reports in employment decisions involving existing employees and job applicants. The law, which takes effect October 1, 2011, prohibits Connecticut employers from requiring employees or applicants to consent to credit report requests as a condition of employment. It applies to any employer engaged in business with at least one employee, including the state and political subdivisions.
The law does not apply to the following:
- financial institutions
- when the credit report is required by law;
- when the employer reasonably believes that the employee has engaged in specific activity that constitutes a violation of the law related to the employee’s job; and
- when the credit report is substantially related to the employee’s current or potential job or the employer has a bona fide purpose for requesting or using information in the report that is substantially job-related and is disclosed in writing to the employee or applicant.
Under the last exception, information in a credit report is “substantially related” to an employee’s current or potential job when that position:
- is a managerial one involving setting the direction or control of a business, division, unit, or agency of a business;
- involves access to customers’ employees’ or the employer’s personal or financial information other than information customarily provided in a retail transaction;
- involves a fiduciary responsibility to the employer;
- provides an expense account or corporate debit or credit card;
- provides access to certain confidential or proprietary information; or
- involves access to the employer’s nonfinancial assets valued at $2,005 or more, including, but not limited to, museum and library collections and prescription drugs and other pharmaceuticals.
Employees and applicants may file complaints for violations of the law with the Labor Department, who may issue a $300 civil penalty for each violation.
Before using credit reports in connection with employment decisions, Connecticut employers should make sure that their use falls within one of the exceptions to this law or consult with counsel.
The full text of the law (P.A. 11-223) can be found here: http://www.cga.ct.gov/2011/ACT/PA/2011PA-00223-R00SB-00361-PA.htm.