The Fair Credit Reporting Act protects consumers and their information that is collected by credit reporting agencies. This law governs who may access this information and for what purpose, including for employment reasons. If an employer misuses information provided in a consumer credit report, an employee may have a claim under the Fair Credit Reporting Act for damages, and an experienced Maryland employment lawyer can help in enforcing your claim. To learn more about your legal rights, call or contact HKM Employment Attorneys, LLP in Baltimore to schedule a consultation.
What is in a Consumer Credit Report?
A consumer credit report must contain more than a person’s credit history. Credit agencies collect all types of information on consumers that may be provided to employers and others about a particular person. Some of the information collected by credit agencies includes, but is not limited to, the following:
- Driving records
- Employment records
- Criminal history
- Educational information
- Professional licenses
- Bill payment history
- Past loans and current debts
- Present and previous addresses
- Any history of bankruptcy
- Any arrearages in child support payments, and more.
Employers will sometimes use a consumer credit report for employment purposes, such as making a decision on whether to hire, fire, retain, reassign, or promote an employee. If it does so, the employer must comply with the provisions of the federal Fair Credit Reporting Act as well as any applicable state laws. Failure to do so could result in liability for the employer and damages for the employee.
What is the Fair Credit Reporting Act?
The Fair Credit Reporting Act (FCRA) is a federal law that regulates the collection of information on citizens for their credit reports as well as protects the accuracy, fairness, and privacy of that information. The FCRA contains rules about how long information may be kept by credit reporting agencies, how the information is obtained, and how the information may be shared with others.
If an employer wishes to use a consumer credit report for use as a criminal background check on applicants or employees, the Fair Credit Reporting Act requires notification and written consent. If an applicant or employee is disqualified based on this information, the employer must provide the applicant or employee with a written copy of the report so that they may be aware of its contents. An employer also has a duty under the FCRA to take reasonable steps to ensure that the information provided is accurate and up-to-date. If an applicant or employee disputes the contents of a consumer credit report, the employer has a duty to conduct a reasonable investigation and must inform credit reporting agencies of any errors that it discovers.
Maryland Job Applicant Fairness Act
Maryland law provides additional protection to employees and applicants when an employer wishes to use a consumer credit report in their employment decision making. Under this law, employers in Maryland are prohibited from using a credit report to determine whether to hire an applicant, terminate an employee, or determine the rate of pay or other conditions of employment for an employee. The only exceptions are employers that are required by law to consider an employee’s credit report, financial institutions, credit unions, and employers governed by the SEC.
The Job Applicant Fairness Act states that an employer is only allowed to consider the information provided in a consumer credit report if an applicant has already been offered a job and the report will not be used to determine conditions of employment or if the employer has a bona fide reason because the information is substantially job-related. In this situation, the employer must take a number of steps to ensure full disclosure to the applicant or employee before using this information. Examples of bona fide need include determination of employment in a managerial position, a position that has access to personal information of others, positions of fiduciary responsibility, positions with access to business debit or credit cards, a position with access to important intellectual property of the employer, and positions with access to confidential business information.
Use of Credit Reports in Employment Decisions
Under both federal and state law, if an employer wishes to use the information provided in a consumer credit report in an employment decision, they must notify the employee or applicant in writing that they are using the information in a credit report for a bona fide, substantially related job purpose. The Fair Credit Reporting Act also requires that employers not only notify an employee or applicant if they wish to use a consumer credit report in an employment action but also get the permission of that person before doing so.
In addition, the Fair Credit Reporting Act requires that employers notify a job applicant or employee if they take an adverse employment action against them based on the information provided in a credit report. An adverse action can include the decision to terminate, demote, reassign, transfer, or refuse to hire based on the information provided in the credit report or their credit history.
Compensation for Fair Credit Reporting Act Violations
If an employer is found in violation of the FCRA, they may be liable for damages to the applicant or employee that incurred an adverse employment action based on the misuse of consumer credit report information. Compensation for violations includes actual monetary damages, fines up to thousands of dollars, attorneys’ fees, and in some cases punitive damages. Punitive damages go above and beyond actual damages and are meant to punish the employer for willful and wanton misuse of consumer credit information as well as serve as a deterrent to others who may consider similar action. To learn more, talk to our office now.
Call or Contact HKM Employment Attorneys, LLP
Do you have reason to believe that an employer took an adverse employment action against you because of information misused in a consumer credit report? If so, you may have a claim under the Fair Credit Reporting Act, and the knowledgeable lawyers at HKM Employment Attorneys, LLP are here to help. Call the office or contact us today to schedule a consultation now to learn more about your legal options.
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