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Vermont law restricting use of credit information in hiring process goes into effect July 1

  June 19, 2012

Vermont has joined seven other states in prohibiting employers from obtaining credit reports on applicants to use in employment decisions.  Beginning on July 1, 2012, employers will be restricted in how they use any credit information obtained from third parties, and not just information contained in a credit report.  With exceptions, employers will no longer be able to inquire into credit reports or credit histories of job applicants, which further prohibits discriminating against individuals based on their credit information.

Employers are allowed to use credit information if they meet one or more of the following conditions:

• Information required by state or federal law.

• Position in question involves access to confidential financial information.

• Employer is a financial institution or credit union.

• Position in question is that of law enforcement, emergency medical personnel, or a firefighter.

• Position in question requires a fiduciary responsibility.

• Position in question involves access to payroll information.

• Employer can demonstrate that the information is a valid and reliable predictor of employee performance in a specific position.

Even if an employer meets one of these conditions, they still are unable to use a credit history or credit report as the only factor in making an employment decision.  In addition, the Act requires employers to first obtain the written consent of the employee or applicant and disclose in writing the reasons for accessing the report. If an employer intends to take an adverse employment action based on any contents of the credit report, the employer must notify the applicant or employee in writing of its reasons for doing so, and offer the individual an opportunity to contest the accuracy of the credit report or credit history

Employers should expect the restriction on how credit information is used in the hiring process to continue.  Eight states have already enacted laws and we expect more to follow.  IntelliCorp will keep you posted.

Click here to view law.

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