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New Maryland Law Prohibits Employer Use of Applicant and Employee Credit Information

Posted by Marc Smith | May 16, 2011 | 0 Comments

Many employers require applicants to sign forms providing authorization for the employer to access an employee's credit report — particularly in the banking and financial services fields. When negative information is uncovered, such as poor credit or bankruptcy, that information is often used as the basis for denying employment.

However, effective October 1, 2011, a new law will severely constrain the ability of Maryland employers to request or use an applicant's or employee's credit report or credit information to make employment decisions. The Job Applicant Fairness Act applies to all employers (with several exceptions outlined below) and allows an employer to request or use an applicant's credit information only after an offer of employment has been made. Even then, credit information cannot be used: (i) to deny employment; (ii) as the basis for terminating the employee; or (iii) to determine the terms, conditions or privileges of employment, such as the employee's salary level.

Although most employers will be required to comply with this new law, the Job Applicant Fairness Act does not apply to various financial institutions, as well as employers who are required to inquire into an applicant's or employee's credit history under federal or state law.

The Act does not provide a private right of action — i.e. individuals cannot sue for violations. Rather, a complaint must be filed with the Commissioner of Labor and Industry who can assess a civil penalty of up to $500 for an initial violation and up to $2500 for repeat violation.

For more information, see House Bill 87.

About the Author

Marc Smith

Marc J. Smith is a Rockville, Maryland employment attorney and a founding member of the law firm formerly known as Smith, Lease & Goldstein, LLC. In 2018, after 18 years managing Smith, Lease & Goldstein, LLC's employment counseling and litigation practice, Marc launched his own boutique practice...

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Representation Of Employers And Employees

The Law Office of Marc J. Smith, LLC is a boutique employment law practice based in downtown Rockville, Maryland near the Montgomery County Circuit and District Courts. The Firm’s practice focuses exclusively in the employment law arena and provides counseling, litigation and a wide range of other employment-related services to employers and employees throughout the State of Maryland, Washington D.C. and other jurisdictions. The Firm also represents individuals who have failed to register with the Selective Service System and who are trying to apply for or maintain federal employment.

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