BOLI issues Credit Check ban regulations

Oregon BOLI Proposes Regulations on Credit Check Law
By Michael Porter, Kathryn L. Kammer
Miller Nash LLP, Oregon law firm

Oregon now bars most employers from using credit histories in making employment decisions. In the February 2010 special session, the Oregon legislature passed Senate Bill 1045, generally prohibiting employers from considering an individual’s credit history when making any employment decisions, such as hiring, promotion, compensation, and termination. The law became effective upon passage, and will be added to ORS Chapter 659A. The full language of the new law can be found HERE.

The Oregon Bureau of Labor and Industries (“BOLI”) recently proposed  regulations for the law. The regulations reiterate the statutory prohibition against discrimination against an employee or applicant for employment based on information in the individual’s credit history. It is now an unlawful employment practice to obtain or use information contained in the individual’s credit history or to refuse to hire, discharge, demote, suspend, or retaliate based on credit information. Employers are further prohibited from discriminating against individuals because of their credit history in making employment decisions about their terms of employment, such as promotion and compensation. Employees or applicants for employment can sue an employer that violates the statute and recover prevailing plaintiff attorney fees.

EXCEPTIONS: The rule prohibiting use of credit history has some exceptions. An employer can still use information from an individual’s credit history in making employment decisions if:

It is a federally insured bank and credit union;
It is required by state or federal law to consider credit history;
It is hiring for positions responsible for enforcing Oregon criminal laws, such as law enforcement and certain municipal peace officers; or
The information is substantially job related.

Application of this last exception poses the greatest challenge to employers because the determination whether credit history is substantially job related will be made on a case by case basis. The new rules, however, do present some factors to aid in the evaluation. For instance, the credit information may be substantially job related, and therefore open to the employer, for:

Managerial positions in which the employee has a role in setting the direction for the business;

An employee who, as part of his or her responsibilities, has access to customers’, employees’, or the employer’s personal or financial information; or
An employee who owes a fiduciary responsibility to the employer in performing certain tasks, such as issuing payments, transferring money, and entering into contracts.

NOTICE: An employer invoking one of these exceptions will be required to comply with specific notice provisions under the proposed regulations. The notice must include:  (1) explanation of which exception applies allowing the employer to access the information; (2) information about the individual’s rights under the Oregon Consumer Identity Theft Protection Act (“OCITPA”) and Fair Credit Reporting Act (“FCRA”); (3) information about where the individual’s credit file will be stored and under what circumstances it will be destroyed; and (4) the individual’s remedies in case the records are not secured in accordance with the law.

RECORD KEEPING: Additionally, if the employer gathers credit history information, in managing those records, it must comply with OCITPA, FCRA, the Health Insurance Portability & Accountability Act (“HIPAA”), and the Americans With Disabilities Amendments Act of 2008. If the records are not maintained and secured in the manner prescribed by those laws, the applicant or employee can file a complaint with BOLI.

A public hearing on the proposed rules, a complete copy of which may be found HERE, will be held on May 3, 2010, at 3:30 in Room 1-B of the Portland State Office Building, 800 N.E. Oregon Street, Portland, Oregon 97232. Comments on the proposed rules will be accepted by BOLI until May 3rd as well.

In the meantime, until the rule is finalized and becomes effective, employers should begin developing new policies and procedures to implement these regulations. Employers should begin by evaluating their positions to determine whether any of the exceptions apply and verify that their record-keeping protocols are compliant. Finally, because the enabling statute enacted by Senate Bill 1045 was effective immediately, employers should refrain from using credit history information as the basis for employment decisions unless one of the exceptions described above clearly applies. Employers that do request credit histories should use a notice meeting BOLI’s proposed regulatory requirements.

The new regulation will affect each workplace differently. Miller Nash is pleased to provide support to employers with questions about the use of credit history information, development of an appropriate notice, or other labor and employment issues.

Related Areas
Employment Law and Labor Relations

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