Maryland – A Step Ahead of the Federal Government

In a prior post, I discussed the amendment to the Fair Credit Reporting Act which was re-introduced to the House of Representatives on January 19, 2011 and would prohibit use of consumer credit checks against prospective and current employees for purposes of making adverse employment decisions, except in certain specific circumstances, as HR 321.

Rather than waiting for the Federal government, in January 2011, the Maryland state legislature introduced the Job Applicant Fairness Act which Governor O’Malley approved on April 12, 2011. The Act, which takes effect on October 1, 2011, restricts the use of credit reports and credit history information unless certain specified conditions are satisfied. Although the term Applicant is used in the title, the law also applies to current employees and prohibits employers from using an applicant’s or any employee’s credit report or credit history in determining whether to deny employment, discharge an employee or in establishing compensation, the terms conditions or privileges of employment.

In trying to balance the interests of both employees and employers, the Job Applicant Fairness Act creates several exceptions which are much broader than those in the Federal bill. The Maryland exceptions include: (i) employers that are required to obtain an applicant’s or employee’s credit report under federal or state law; (ii) financial institutions that are federally insured or approved by the Maryland Commissioner of Financial Regulation; (iii) employers that are registered as investment advisors in the U.S. Securities and Exchange Commission; and (iv) substantial job-related bona fide purposes such as managerial, access to personal information, fiduciary responsibility and authority and access to expense account or corporate credit card.