Connecticut Passes Law Restricting Employment Credit Background Checks

Connecticut joins a number of other states in restricting employment credit reports as a background check for employment screening.  Washington State was the first to pass such laws, followed by Hawaii.  Since then Illinois, Maryland,  and Michigan have since passed similar laws.   Seventeen other states are either considering similar legislation or have statute proposals in the legislature.

Essentially, the law limits employers form conducting credit reports on employment candidates unless their credit status is somehow relevant to the job for which they are being considered.

The new Connecticut statute takes effect October 1st, 2011.

S.B. 361, signed by Governor Dannel Malloy, will prohibit certain employers from using credit reports in making hiring and employment decisions regarding existing employees or job applicants.

The law applies to all employers in Connecticut with at least one employee.

S.B. 361 bans almost all employers from requiring job applicants or current employees to consent to a request for a credit report as a condition of employment.  Exceptions to the statute are: employers that are financial institutions as defined under law; credit reports required to be obtained by employers by law; and credit reports “substantially related to the employee’s current or potential job.” These “substantially related” reports are allowable if the position:

• Is a managerial position that involves setting the direction or control of a business, division, unit or an agency of a business;
• Involves access to personal or financial information of customers, employees or the employer, other than information customarily provided in a retail transaction;
• Involves a fiduciary responsibility to the employer, as defined under the law;
• Provides an expense account or corporate debit or credit card;
• Provides access to certain confidential or proprietary business information, as defined under the law; 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 to prescription drugs and other pharmaceuticals.

In all, it will be interesting to see how these new laws prohibiting credit background checks actually assist in helping people with financial problems to gain employment.