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New Limits on Employers’ Use of Credit Histories

July 15, 2010

Article by: J.L. Wilson

Associated Oregon Industries

New regulations limiting the ability of employers to use credit histories for prospective employees and job applicants began on July 1 with Oregon Labor Commissioner Brad Avakian marking the occasion by holding sessions of a special seminar on the topic in Portland.

Both sessions were filled with owners, managers, human resource professionals and attorneys looking to get a full picture of the new law and administrative rules that prohibit most employers from using credit histories in employment decisions.

When it was clear that proponents of the law wanted to ban employer use of credit histories altogether, AOI worked to try and create a compromise in which employers could continue to use credit histories for key job positions that would have information and access to an employer’s assets. Many employers use credit histories as a key component of their hiring process.

As a result of AOI’s efforts, the legislature allowed employers to use credit histories so long as they are substantially job-related. AOI then went to work with Labor Commissioner Avakian on the regulations to try and define “substantially job-related” through rulemaking.

The final rule allows employers to obtain credit histories for substantially job-related reasons, including: 1) if an essential function of the position requires access to financial information, and 2) if a credit history is required for purposes of obtaining insurance or bonding.

July 1 marked the effective date for both the new law ( SB 1045) and BOLI’s administrative rules. Employers seeking advice on how to comply with the new law should consult their legal counsel or BOLI’s Technical Assistance for Employers Program. BOLI is making educational resources available to employers. Materials from BOLI’s seminars are now available on its Technical Assistance website at http://www.oregon.gov/boli/ta. Read the new FAQ from BOLI which is available at http://www.oregon.gov/BOLI/docs/Credit_History_FAQ_2010.pdf.

  
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