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 (the Act), employers may not use an applicant’s or employee’s credit report or credit history in determining whether to:
- deny employment to the applicant;
- discharge the employee; or
- determine compensation or the terms, conditions, or privileges of employment.
However, the employer may use the applicant's credit report for any other purpose after extending an offer to the applicant. Also, the employer may use the credit report if there is a substantially job-related reason for seeking this information, and the employer tells the applicant or employee in writing that it will be using the credit report and what is the job-related reason.
The law lists job-related reasons for using the applicant's credit report, including if the job:
- is managerial and involves setting the direction or control of a business, or a department, division, unit, or agency of a business;
- 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;
- involves a fiduciary responsibility to the employer, including the authority to issue payments, collect debts, transfer money, or enter into contracts;
- is provided an expense account or a corporate debit or credit card; or
- has access to:
- information, including a formula, pattern, compilation, program, device, method, technique, or process, that:
- 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
- is the subject of reasonable efforts to maintain its secrecy; OR
- other confidential business information.
- information, including a formula, pattern, compilation, program, device, method, technique, or process, that:
Read the law: Md. Code, Labor and Employment § 3-711
Jobs Excluded from the Act
The Act specifically excludes some jobs from its coverage. For instance, jobs for which any other law requires the employers to inquire into an applicant’s or employee’s credit report or credit history for employment purposes are excluded. The Act also excludes many financial institutions:
- financial institutions that accept deposits insured by federal agencies;
- credit union share guaranty corporations that are approved by the Maryland Commissioner of Financial Regulation; AND
- entities registered as investment advisors with the United States Securities and Exchange Commission.
Read the law: Md. Code, Labor and Employment § 3-711
Penalties for Violating the Act
Applicants and employees can file a complaint with the Commissioner of Labor regarding a violation of the Act. If the Commissioner finds that an employer has violated the law, the Commissioner will try to resolve the matter informally. If the Commissioner cannot resolve the matter informally, then the Commissioner may fine the employer up to $500 for the first violation and up to $2,500 for each subsequent violation.
Read the law: Md. Code, Labor and Employment § 3-711