On January 29, 2020, the House of Representatives passed the Comprehensive CREDIT Act of 2020 (the “Act”), which would change federal laws pertaining to consumer reporting agencies and credit checks in a number of ways. Significantly for employers, the Act includes an amendment (originally H.R. 3614 – “Restricting Credit Checks for Employment Decisions Act”) to the Fair Credit Reporting Act (“FCRA”), which would restrict the use of credit information for most employment decisions.
Currently, the FCRA does not expressly prohibit employers from using credit checks when making employment decisions. The Act would amend Section 604 of the FCRA by precluding employers from requesting a consumer report bearing on the creditworthiness, credit standing, or credit capacity of an individual for employment purposes, except in limited circumstances where:
the employer is required to obtain the report by federal, state, or local law or regulation;
the information contained in the report is being used with respect to a national security investigation; or
the report is necessary for a background check or related investigation of financial information that is required by federal, state, or local law or regulation.
Under the Act, if an employer intends to invoke one of these exceptions, the employer must disclose to the candidate the reason as well as a citation to the applicable law.
Note that this amendment of the FCRA would not impact other aspects of obtaining consumer reports for employment purposes, so employers would still be able to conduct background checks (subject to state and local restrictions). FULL ARTICLE