Credit Checks and Job Applicants

Maryland law limits an employer's ability to use credit reports when making decisions about hiring, firing and compensation of job applicants and employees. Under the Job Applicant Fairness Act, employers may not use an applicant’s or employee’s credit report or credit history in determining whether to:

  1. deny employment to the applicant;
  2. discharge the employee; or
  3. determine compensation or the terms, conditions, or privileges of employment.

However, the employer may use the applicant's credit report for another purpose after extending an offer to the applicant. Also, the employer may use the credit report if there is a job-related reason for seeking this information and the employer tells the applicant in writing that it will be using the credit report.

The law lists job-related reasons for using the applicant's credit report. If the job:

  1. is managerial and involves setting the direction or control of a business, or a department, division, unit, or agency of a business;
  2. involves access to personal information, as defined in §14–3501 of the Commercial Law Article, of a customer, employee, or employer, except for personal information customarily provided in a retail transaction;
  3. involves a fiduciary responsibility to the employer, including the authority to issue payments, collect debts, transfer money, or enter into contracts;
  4. is provided an expense account or a corporate debit or credit card; or
  5. has access to:
    1. information, including a formula, pattern, compilation, program, device, method, technique, or process, that:
      1. derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from the disclosure or use of the information; and
      2. is the subject of efforts that are reasonable under the circumstances to maintain its secrecy; or
    2. other confidential business information.

Jobs Excluded

The law specifically excludes some jobs from the law. Some employers are required to disclose information about their employees. These include employers that are required to inquire into an applicant’s or employee’s credit report or credit history under law. In addition, many financial institutions are excluded from the law. These include:

  • financial institutions that accept deposits that are insured by federal agencies;
  • credit union share guaranty corporations that are approved by the Maryland Commissioner of Financial Regulation; or
  • entities registered as an investment advisor with the United States Securities and Exchange Commission.

Penalties

Applicants can file a complaint with the Commissioner of Labor. If the Commissioner finds that employer has violated the law, the Commissioner may fine the employer $500 for the first violation and $2,500 for each subsequent violation. Read the Law: MD Code Labor & Emp. §3–711

Is this legal advice?

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