April 10, 2017

Asking About or Using Employee Credit Information Is an Unlawful Employment Practice in D.C.

3 min

Effective April 7, 2017, pursuant to the new Fair Credit in Employment Amendment Act of 2016 (the "Act"), an amendment to the D.C. Human Rights Act, most D.C. employers are now prohibited from requesting or utilizing a current or prospective employee's credit information. A violation of the Act will be considered an unlawful discriminatory practice and may subject offending employers to a fine imposed by the D.C. Commission on Human Rights or a private cause of action.

What is prohibited?

The law eliminates a covered employer's ability, during both the hiring process and the employment relationship, to investigate or use in its decision-making process an employee's or applicant's credit information. Specifically, a covered employer is prohibited from "requiring, requesting, suggesting, or causing any employee [current or prospective] to submit credit information, and from using, accepting, referring to, or inquiring into an employee's credit information." "Inquiring" is defined by the Act as any method used to gather credit information, including job applications, interviews, and credit history checks. Moreover, "credit information" includes any communications regarding an applicant or employee's creditworthiness, credit standing, credit capacity, or credit history. It is important to note that the Act is also applicable to unpaid interns.

Which employers and job positions are covered?

The new law applies to all employers, employment agencies, and labor organizations in the District of Columbia, with the exception of the following:

  • Job positions with financial institutions where the position involves access to personal financial information;
  • Job positions where the employer is required by D.C. law to collect credit information;
  • Some job positions within the D.C. government, such as a special police officer or a position in the office of the D.C. Chief Financial Officer;
  • Job positions that require security clearance under D.C. law; and
  • Situations in which an employer receives the credit information pursuant to a subpoena, court order, or law enforcement investigation.

What penalties apply?

Similar to D.C.'s 2014 "ban-the-box" law prohibiting employers from questioning applicants about arrests, an aggrieved applicant or employee may file an administrative complaint with the D.C. Commission on Human Rights. If the Commission finds a violation, it may impose monetary penalties, which are awarded to the complainant and range from $1,000 to $5,000. Specifically, $1,000 may be awarded for the first violation, $2,500 for the second violation, and $5,000 for the third and each subsequent violation. Because the penalty is awarded to the complainant, employers should exercise extra caution – covered employees and applicants will have an incentive to file charges.

As with other employment discrimination charges under the D.C. Human Rights Act, employees and applicants may also pursue a claim in court – a remedy that is not available under D.C.'s "ban-the-box" law.

What should you do?

Covered employers should review their employment applications and hiring policies and then:

  • Remove any questions from initial application forms regarding an applicant's credit information or credit history;
  • State in the personnel manual and/or other relevant policy documents that, in compliance with this law, the organization does not inquire about employee credit history or information;
  • Train your human resource professionals and others with interviewing responsibilities to avoid questions about credit history or that might indirectly cause an applicant to submit credit information;
  • Ensure that pre-employment background checks (including those performed by third-party agencies) do not investigate applicant credit history or a credit report; and
  • Educate managers and supervisors about the limited ability to consider applicant and employee credit history.