Vermont employers need to be aware of legislation passed this yearand signed by Governor Shumlin that will become effective July 1, 2012. The legislation focuses on information about an individual’s credit history, reports and other financial information.
Summary of the law:
After defining credit history, reports and confidential financial information,the operative provisions of the statute prohibit employers from making employment decisions (such as hiring, firing, compensation and conditions of employment)based on, or even making inquiries about, an individual’s credit report or history. It applies to applicants for employment,as well as employees.
The statute lists seven exceptionsto the prohibition: 1) information required by state or federal law; 2) employment positions with access to confidential financial information; 3) an employer that is a credit union or other financial institution; 4) employees who are law enforcement officers, emergency medical personnel or firefighters; 5) employees with financial fiduciary responsibilities to the employer or client of the employer; 6) performance in the employment position can be reliably predicted based on such information and 7) the position involves access to payroll information.
Then, it rolls back the exceptions by stating that even if one of the exceptions applies, the individual’s credit report or history may not be used “as the sole factor in decisions regarding employment, compensation, or a term, condition or privilege of employment.”
Further, an employer must: obtain the person’s written consent each time it seeks to obtain a credit report; disclose in writing the reasons for requesting the report and the reasons for any adverse action based on the report; allow the person to contest the report; ensure that the person does not incur any expense in connection with obtaining the credit report or history; keep any credit information obtained confidential; and, provide the credit report to the person or destroy it if the person is not hired or terminated.
The statute also contains the standard employment law provisions prohibiting retaliation.
The legislature says that the burdens and limitations imposed on employers are justified by several studies,including some that are claimed to demonstrate that there is no correlation between job performance and credit report information, yet the use of credit information in employment decisionsis becomingprevalentand tends to impact minorities and women more adversely. Whether that premise is correct or not, any employer who contemplates using credit information of employees or applicantsneeds to familiarize itself with the requirements and prohibitions of this legislation.