Washington D.C. Council Passes Ban on Credit History Screens

Posted Thursday, February 16th, 2017 by Debbie Lamb

Young man and woman looking at papers

The beginning of the year has been very busy with changes in hiring and employment laws from stringent ban the box laws in Los Angeles to bills being introduced on the local, state and federal levels banning salary history. These changing laws impact the hiring practices of every organization, big or small.

Fair Credit in Employment Amendment Act

Washington D.C. city council is the latest municipality to pass legislation to protect job candidates from discriminatory action during the hiring process. The City Council unanimously passed the Fair Credit in Employment Amendment Act to amend the Human Rights Act of 1977 to prevent employers from “taking discriminatory action against applicants, intern and employees based on the individual’s credit history.” Employers would be prohibited from running a credit history report at any point during the hiring or background screening process even if a job offer was extended. The legislation is intended to protect Washington D.C. residents from being disqualified from potential employment opportunities because of misleading credit information.

The Fair Credit in Employment Amendment Act bans most employers from requiring a job candidate to submit credit information as part of the application and hiring process. It also prohibits most employers from “using, referring to or inquiring into an applicant, intern or employee’s credit information.” The law does not apply to federal jobs, D.C. police, special police, campus police, positions that have security clearance requirements, or financial institutions where the job involves access to personal financial information or otherwise required by D.C. law or under lawfully issued subpoenas. If an organization is found in violation of this new law, they could be fined starting at $1,000 for a first offense up to $5,000 for multiple offenses.

The legislation is still under review by Mayor Muriel Bowser, who hasn’t indicated yet whether she supports and will sign the law. But, the Fair Credit in Employment Act would be veto-proof if the city council still has unanimous support. Once the law is approved, the act will be submitted to the U.S. Congress for a 30-day review process. If after 30 days, Congress fails to enact a joint resolution disapproving the amendment (including a signature by the President); the Fair Credit Act would become law in Washington D.C. This entire process could be completed as early as spring of this year.

Fair Credit Reporting Act (FCRA)

All the employers who are exempt from the changes in the Fair Credit in Employment Act must still comply with all of the provisions of the Fair Credit Reporting Act (FCRA). This consumer protection Act was the first law to require accurate and fair consumer reporting. It was created to protect consumers and their personal information including credit reporting and background screening reports. Background screening providers are regulated by the FCRA, which promotes accuracy, fairness and privacy of information in the files of consumer reporting agencies. Consumers have the right to know what is in their consumer file and must be told if the information in their credit report or another type of consumer file (such as background screening) has been used against you to deny an application for credit, insurance or employment. The Act also gives consumers the right to dispute incomplete or inaccurate information.

Staying Compliant

Washington D.C. organizations and businesses will need to review their hiring and background check policies for potential changes that may be needed if the Fair Credit in Employment Act goes into effect. Other cities will look at the success of the changes of this law to see if they would also like to implement these changes. Sterling Talent Solutions will keep an eye on the legislation for any further changes. Companies are advised to consult with legal counsel before implementing any changes to their employment screening program. For more information about how to protect a company from the increasing amount of ban the box laws across the United States, download our white paper, Ban the Box is Out of Control: What You Need to Know to Protect Your Business.