Credit Reports.jpgConnecticut recently joined five other states that restrict the use of credit report information in employment decisions. These five other states are Maryland, Illinois, Oregon, Washington, and Hawaii. 

Proposed Michigan Legislation 

Michigan does not presently have similar legislation in place. But State Representative Jon M. Switalski is the primary sponsor of House Bill 4362 (PDF), which would create similar restrictions under the proposed Job Applicant Credit Privacy Act.   

This proposed act restricts employers from making hiring decisions based on a person’s credit history. It would also prevent employers from inquiring about a job applicant’s credit history, unless good credit history is “an established bona fide occupational requirement of the particular position or employment classification.”

Further, employers cannot ask that individuals waive any right or protection under the proposed act.

A violation of the proposed act allows for the aggrieved individual to bring a civil suit for damages or injunctive relief. Additionally, the proposed act specifically requires a court to award costs and reasonable attorney fees to an individual who prevails as a plaintiff in a suit authorized by the act.

Intent Behind Proposed Job Applicant Privacy Act

Representative Switalski explained that the motivation behind the proposed bill as follows: 

Michigan residents shouldn’t be punished and passed over for jobs because their credit rating has suffered during these tough economic times. A lot of good hard-working people have lost their jobs and are trying to get back on their feet. Many job seekers are behind on their bills because they lost their job, but they can’t get hired because they have a low credit rating – it’s a vicious cycle.

The Take Away for Employers 

We will continue to monitor this legislation and encourage you to subscribe to this blog for future updates on this and other employment law topics.

But in the meantime, it is important for employers to comply with existing statutory requirements that may come into play when a person’s credit related information is used in employment decisions. Also, there are restrictions applicable to related information under the Bankruptcy Code that employers must also comply with when making employment decisions.