Matthew D. Lowe
O’Donnell Clark & Crew LLP
During its February, 2010 special session, the Oregon Legislature passed Senate Bill 1045, which bars employers from using information contained in an employee’s credit history in making employment-related decisions about that employee. If signed into law by the Governor, which is fully expected, Oregon will join only Washington and Hawaii as states that have effectively banned the fairly common employment practice of running credit checks on prospective employees.
Specifically, under the new law, which will become effective July 1, 2010,
[i]t is an unlawful employment practice for an employer to obtain or use for employment purposes information contained in the credit history of an applicant for employment or an employee, or to refuse to hire, discharge, demote, suspend, retaliate or otherwise discriminate against an applicant or an employee with regard to promotion, compensation or the terms, conditions or privileges of employment based on information in the credit history of the applicant or employee.
Notably, the new law does not affect an employer’s ability to conduct criminal background checks and to otherwise look into a prospective employee’s employment history prior to hiring that employee. Employers who violate the law will be subject to either an administrative claim filed with the Oregon Bureau of Labor and Industries or a private lawsuit, and can be held liable for lost wages and attorney fees, among other remedies.
The law contains limited exceptions for employers, including an exception allowing an employer to obtain or use information in the credit history of an applicant or employee where the information “is substantially job-related and the employer’s reasons for the use of such information are disclosed to the employee or prospective employee in writing.” As of the date of this article, the Oregon Bureau of Labor and Industries has not yet adopted rules to guide employers on how this exception will be applied, but it would appear that employees responsible for an employer’s finances or receiving cash would fall within the exception.
The Oregon Bureau of Labor and Industries is prepared to act quickly to adopt rules to guide employers on how to comply with the new law; however, this process typically takes several months to complete. In the absence of administrative rules or any decisions from the courts, employers desiring to conduct credit history checks are cautioned to proceed with extreme caution. Employers who intend to conduct credit history checks on prospective employees that the employer believes will fit within the “job-related” exception described above are urged to consult with legal counsel and to develop and implement appropriate policies and practices to govern this process. Please do not hesitate to contact the author at [email protected] or 503-306-0224 with any questions on the effect of this new law on your employment practices.
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