Maryland Governor Martin O'Malley recently signed into law the Job Applicant Fairness Act (the "Act"), which prohibits most employers from using an applicant's or employee's credit report or credit history in determining whether to deny employment to an applicant, discharge an employee, or determine compensation or terms, conditions, or privileges of employment. Employers may, however, request or use such information under certain circumstances, such as if the applicant has received an offer of employment and the employer has a "substantially job-related" purpose for using the information and discloses it in writing to the applicant. Additionally, the law exempts certain employers from coverage, including those that are required by law to inquire into an applicant's or employee's credit report or credit history and financial institutions that accept deposits that are insured by a federal agency. Though the Act does not provide for a private right of action, employees who feel that an employer has violated the Act may file a written complaint with the Maryland Commissioner of Labor and Industry who will investigate and may assess penalties of up to $2,500 for repeat violations. The Act will take effect on October 1, 2011.
Maryland becomes the fifth state to enact a law restricting employer use of credit history information, joining Hawaii, Illinois, Oregon, and Washington. Similar legislation is also pending in several other states, including California, Florida, New Jersey, New York, and Pennsylvania.
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