Law Bans Employment Credit Checks

In 2010 Oregon became one of a handful of states to limit employers from using credit history in the job application process.  Credit reporting companies claim that credit checks are essential to reduce theft or embezzlement, but there isn’t any research to tie poor credit to bad employees.  Given the hard economic times at the time the law passed, credit checks were looked at as blocking good employees from a job due to something outside of their control.

credit report

The law makes it unlawful to obtain for employment purposes credit history information.  It specifically prohibits the refusal to hire or to promote, terminate, discipline or demote an employee based on their credit history.

The law makes credit check exceptions for certain employers.

  • Federally insured banks and credit unions.
  • Law enforcement agencies.
  • Employers that are required by law to use individual credit histories for employment purposes.
  • Employers that obtain or use credit history information because it is “substantially job-related” and only if the reason for use is disclosed in writing to the employee or applicant.

The last exception seems like it would cover individuals inside a dental office that manage money but according to the state substantially job-related is defined as:

  • An essential function of the job requires access to financial information not customarily required in a retail transaction other than a loan or extension of credit (i.e., beyond check information, credit card numbers or debit card numbers).
  • The employer is required to obtain credit history information as a condition of bonding or insuring the employee.

Employers need to use the substantially job-related exception with care.  For most employees a credit history is not substantially job-related.

If you have any questions regarding this issue, or questions in general, please contact our office, we are here to help!

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