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Employers that are either located in Maryland or hiring Maryland residents must abide by the Federal FCRA, and applicable Maryland state employment laws.
This page was created to provide a simple explanation of what an end-user of a background screening report (also known as consumer report) can use in order to be in compliance with Maryland state laws. This page also contains steps an end-user must take to stay in compliance with Maryland state laws.
Please keep in mind that the EEOC must always be taken into consideration when a hiring decision is to be made. The EEOC has provided guidance on how employers can use criminal records during the hiring process. This regulation was issued on April 25, 2012. The EEOC requires employers to individually review each applicant or employee that may be disqualified due to a criminal record. This also follows the regulations set forth by the Americans with Disabilities Act (ADA). Additionally, the EEOC wants to undertake an adverse action process similar to that of the FCRA. They want to add a pre-adverse action process of their own. Although employers already have an adverse action process that is specific to information contained in consumer reports, the EEOC's adverse action process may be different.
The information that is provided on this page does not discuss requirements under the EEOC nor does it explain how to use criminal records that fall under the regulation of the EEOC. It is suggested that compliance with the EEOC be discussed with legal counsel.
For more detailed information on Maryland state laws, please consult your legal counsel.
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Consumer reporting agencies may not report criminal history information or any other adverse item of information that antedates the report by more than 7 years.
(a) Except as authorized under subsection (b) of this section, no consumer reporting agency may make any consumer report containing any of the following items of information:
(1) Bankruptcies which, from date of adjudication of the most recent bankruptcy, antedate the report by more than 10 years;
(2) Suits and judgments which, from date of entry, antedate the report by more than seven years or until the governing statute of limitations has expired, whichever is the longer period;
(3) Paid tax liens which, from date of payment, antedate the report by more than seven years;
(4) Accounts placed for collection or charged to profit and loss which antedate the report by more than seven years;
(5) Records of arrest, indictment, or conviction of crime which, from date of disposition, release, or parole, antedate the report by more than seven years; or
(6) Any other adverse item of information which antedates the report by more than seven years.
(b) The provisions of subsection (a) of this section are not applicable in the case of any consumer credit report to be used in connection with:
(1) A credit transaction involving, or which may reasonably be expected to involve, a principal amount of $50,000 or more;
(2) The underwriting of life insurance involving, or which may reasonably be expected to involve, a face amount of $50,000 or more; or
(3) The employment of any individual at an annual salary which equals, or which may reasonably be expected to equal, $20,000 or more.
State public employers are prohibited from performing a background screening unless the agency has interviewed the applicant. Inquiries into an applicant’s criminal history cannot be made at the initial stage of the state employment application process.
(a) (1) After consultation with the Department of Budget and Management, the Secretary of Planning shall adopt regulations that require a unit of the State government to submit information, as required in this section, on federal aid, including grants, instructional contracts, loans, research contracts, or other assistance.
(2) The regulations shall require a unit of the State government to obtain a State Application Identifier (SAI) from the Department of Planning.
(b) (1) Each 6 months, a unit shall submit a summary notice to the Department of Planning if, during the 6-month period that the notice covers, the unit has received an award of federal aid in the form of an instructional contract, instructional grant, research contract, or research grant.
(2) The summary notice shall state the amount of the award.
(c) (1) This subsection does not apply to an instructional contract, instructional grant, research contract, or research grant.
(2) When a unit applies for federal aid, the unit shall send to the Department of Planning a copy of the application.
(3) Within 30 days after a unit receives an award of federal aid, the unit shall submit to the Department of Planning a summary notice that states:
(i) the amount of the award; and
(ii) if the award is conditioned on matching funds:
1. the amount of those funds;
2. the source of those funds; and
3. the period for which those funds are required.
An employer can only obtain a credit report on an applicant after they have issued that applicant a conditional offer of employment. An employer may not use an applicant’s credit report or credit history to deny employment, discharge an employee, or determine compensation. An exception exists when there is a “bona fide purpose,” and the position’s duties and qualifications has a significant relationship with the credit report/history.
(a) This section does not apply to an employer that is:
(1) required to inquire into an applicant’s or employee’s credit report or credit history under federal law or any provision of State law for the purpose of employment;
(2) a financial institution that accepts deposits that are insured by a federal agency, or an affiliate or subsidiary of the financial institution;
(3) a credit union share guaranty corporation that is approved by the Maryland Commissioner of Financial Regulation; or
(4) an entity, or an affiliate of the entity, that is registered as an investment advisor with the United States Securities and Exchange Commission.
(b) Except as provided in subsection (c) of this section, an employer may not use an applicant’s or employee’s credit report or credit history in determining whether to:
(1) deny employment to the applicant;
(2) discharge the employee; or
(3) determine compensation or the terms, conditions, or privileges of employment.
(c) (1) An employer may request or use an applicant’s or employee’s credit report or credit history if:
(i) 1. the applicant has received an offer of employment; and
2. the credit report or credit history will be used for a purpose other than a purpose prohibited by subsection (b) of this section; or
(ii) the employer has a bona fide purpose for requesting or using information in the credit report or credit history that is:
1. substantially job-related; and
2. disclosed in writing to the employee or applicant.
(2) For the purposes of this subsection, a position for which an employer has a bona fide purpose that is substantially job-related for requesting or using information in a credit report or credit history includes a position that:
(i) is managerial and involves setting the direction or control of a business, or a department, division, unit, or agency of a business;
(ii) involves access to personal information, as defined in § 14-3501 of the Commercial Law Article, of a customer, employee, or employer, except for personal information customarily provided in a retail transaction;
(iii) involves a fiduciary responsibility to the employer, including the authority to issue payments, collect debts, transfer money, or enter into contracts;
(iv) is provided an expense account or a corporate debit or credit card; or
(v) has access to:
1. information, including a formula, pattern, compilation, program, device, method, technique, or process, that:
A. derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from the disclosure or use of the information; and
B. is the subject of efforts that are reasonable under the circumstances to maintain its secrecy; or
2. other confidential business information.
(d) (1) If an employer violates subsection (b) of this section, the applicant or employee may file a written complaint with the Commissioner.
(2) If the Commissioner receives a written complaint under paragraph (1) of this subsection, the Commissioner shall investigate the matter promptly.
(3) If the Commissioner determines that the employer has willfully or negligently violated subsection (b) or (c) of this section, the Commissioner shall try to resolve the matter informally.
(4) If the Commissioner is unable to resolve the matter informally, the Commissioner may:
(i) assess a civil penalty of:
1. up to $500 for an initial violation of subsection (b) or (c) of this section; or
2. up to $2,500 for a repeat violation of subsection (b) or (c) of this section; and
(ii) send an order to pay the civil penalty to the complainant and the employer.
(5) (i) Within 30 days after an employer receives an order to pay a civil penalty under paragraph (4) of this section, the employer may request a de novo administrative hearing, subject to the requirements of Title 10, Subtitle 2 of the State Government Article.
(ii) On receipt of a request for a hearing under subparagraph (i) of this paragraph, the Commissioner shall schedule a hearing.
(iii) If a hearing is not requested under subparagraph (i) of this paragraph, the order to pay a civil penalty becomes a final order of the Commissioner.
(6) If an employer fails to comply with a final order to pay a civil penalty, the Commissioner or the complainant may bring an action to enforce the order to pay a civil penalty in the circuit court in the county where the employer or the complainant is located.
(e) This section may not be construed to prohibit an employer from performing an employment-related background investigation that:
(1) includes use of a consumer report or investigative consumer report;
(2) is authorized under the federal Fair Credit Reporting Act; and
(3) does not involve investigation of credit information.
Employers may not inquire into an applicant’s criminal history during the initial stage of the employment process. Questions regarding criminal history may not be on the employment application form. Inquiries into criminal history can only be made after making a conditional offer of employment.
A copy of Maryland’s House Bill 541 can be found at the following link: http://mgaleg.maryland.gov/2018RS/bills/hb/hb0541F.pdf
The Fair Credit Reporting Act (FCRA) is a set of federal guidelines that helps regulate hiring practices. The FCRA was created to ensure privacy, accuracy, and fairness of consumer information. The FCRA accomplishes this by having a set standard for collecting, disseminating, and using consumer information.
Employers obtaining consumer reports for background screening purposes must follow specific procedures. For example, employers must disclose to the candidate what the background screening is, what information it includes, and how they intend to use it. They must obtain the written consent of the candidate before obtaining a background screening. They may not misuse the information contained in the background screening. There are also strict procedures an employer must follow should they decide not to hire a potential candidate based on the information in the background screening.
The purpose of the FCRA is to help protect employers, employees, and potential job candidates.
This material is time sensitive. Contact us for updates. This information is subject to frequent change through legislative and court action.
All materials in this page and accompanying information are for general educational purposes and not intended to provide legal, scientific or medical advice. Consult with an appropriate professional to address specific issues.
Employers may not inquire into an applicant’s criminal history during the initial stage of the employment process. Questions regarding criminal history may not be on the employment application form. Inquiries into criminal history can only be made after the candidate has completed a first interview.
You have a right to obtain one free copy of your credit file from a credit rating agency during every 12 month period. You may be charged a reasonable fee, not exceeding $5, for any subsequent report received in that same twelve-month period. However, there is no fee if (1) you have been notified of an adverse action taken towards you based on information appearing in your consumer file and you have requested your report within 30 days of receipt of said notification, (2) you suspect that your file may contain fraud or that you have been the victim of identity theft, (3) disclosure is made to a person, designated by you, of the deletion from your consumer report of information found to be inaccurate or no longer verifiable, or (4) if you are unemployed or are currently receiving financial assistance.
The credit rating agency must provide someone to help you interpret the information in your credit file. The consumer reporting agency shall indicate the amount of the fee to the consumer before providing the report or furnishing the information.
If the consumer reporting agency receives written notice from you restricting the sale or other transfer of information in your file, the consumer reporting agency may not sell, offer to sell, or furnish such information to a mail-service organization, a marketing firm, or any other similar organization that obtains consumer information for marketing purposes.
A consumer reporting agency shall, upon your request and proper identification, provide you an exact copy of any file on you, except any part of the file which contains medical information; a written explanation of codes or trade language used; a description of the rights of the consumer under this subtitle; and the name, address, and telephone number of the Commissioner.
Whenever access to a file or a copy of a file has been furnished to a consumer, the consumer reporting agency may delete the sources of information acquired solely for use in an investigative report and used for no other purpose. If any action is brought by the consumer under these rules, the consumer reporting agency shall make such sources available to the plaintiff under appropriate discovery procedures.
Whenever adverse action is taken against you, at the time the adverse action is communicated to you, you have the right to make a written request for the reasons for the adverse action. The user of a consumer report on which adverse action is based must clearly and accurately disclose to you your right to make the written request.
If you dispute the completeness or accuracy of any item of information in your consumer report and the dispute is directly conveyed to the consumer reporting agency in writing, the consumer reporting agency shall within 30 days reinvestigate and record the current status of that information unless it has reasonable grounds to believe that the dispute is frivolous or irrelevant.
If after reinvestigation the information is found to be inaccurate or can no longer be verified, the consumer reporting agency shall within 7 business days delete the information and mail written notice of the correction to you and to each person to whom the erroneous information was furnished, and a statement of the rights of the consumer under this subtitle.
If after reinvestigation the information is found to be accurate or is verified, the consumer reporting agency shall within 7 business days mail written notice of the finding to you along with a statement of the rights of the consumer under this subtitle.
Within 60 days after receiving the notice, you may request in writing that the consumer reporting agency disclose the name, address, and telephone number of each person contacted during the reinvestigation. Within 30 days after receiving your written request under this paragraph, the consumer reporting agency shall make the requested disclosure.
A person contacted during the reinvestigation who determines that the information was inaccurate shall correct the information in the person's records within 12 business days after the determination occurs.
The presence of contradictory information in your file does not in and of itself constitute reasonable grounds for believing the dispute is frivolous or irrelevant. If a consumer reporting agency finds that a dispute is frivolous or irrelevant, the agency within 5 business days shall mail a written notice of the finding, including the reasons for the finding, to you; and a statement of the rights of the consumer under this subtitle.
If the reinvestigation does not resolve the dispute, you may file a brief statement setting forth the nature of the dispute. The consumer reporting agency may limit statements to not more than 100 words if it provides you with assistance in writing a clear summary of the dispute. Whenever a statement of a dispute is filed, unless there are reasonable grounds to believe that it is frivolous or irrelevant, the consumer reporting agency shall, in any subsequent consumer report containing the information in question, clearly note that it is disputed by you and provide either the your statement or a clear and accurate codification or summary of it.
You have a right to make a request, following any deletion of information which is found to be inaccurate or whose accuracy can no longer be verified, that the consumer reporting agency furnish notification that the item has been deleted to any person specifically designated by you who has within two years prior received a consumer report for employment purposes, or within 1 year prior received a consumer report for any other purpose, which contained the deleted or disputed information. The disclosure shall be made at or prior to the time the information is deleted or your statement regarding the disputed information is received.
Except as authorized no consumer reporting agency may make any consumer report containing any of the following items of information:
The provisions above are not applicable in the case of any consumer credit report to be used in connection with:
You have a right, under § 14-1212.1 of the Commercial Law Article of the Annotated Code of Maryland, to place a security freeze on your credit report. The security freeze will prohibit a consumer reporting agency from releasing your credit report or any information derived from your credit report without your express authorization. The purpose of a security freeze is to prevent credit, loans, and services from being approved in your name without your consent.
You may elect to have a consumer reporting agency place a security freeze on your credit report by written request sent by certified mail or by electronic mail or the Internet if the consumer reporting agency provides a secure electronic connection. The consumer reporting agency must place a security freeze on your credit report within 5 business days after your request is received, or within 3 business days starting July 1, 2008. Within 5 business days after a security freeze is placed on your credit report, you will be provided with a unique personal identification number or password to use if you want to remove the security freeze or temporarily lift the security freeze to release your credit report to a specific person or for a specific period of time. You also will receive information on the procedures for removing or temporarily lifting a security freeze.
If you want to temporarily lift the security freeze on your credit report, you must contact the consumer reporting agency and provide all of the following:
A consumer reporting agency must comply with a request to temporarily lift a security freeze on a credit report within 3 business days after the request is received, or within 15 minutes starting January 31, 2009, for certain requests. A consumer reporting agency must comply with a request to remove a security freeze on a credit report within 3 business days after the request is received.
If you are actively seeking credit, you should be aware that the procedures involved in lifting a security freeze may slow your own applications for credit. You should plan ahead and lift a security freeze, either completely if you are seeking credit from a number of sources, or just for a specific creditor if you are applying only to that creditor, a few days before actually applying for new credit.
A consumer reporting agency may charge a reasonable fee not exceeding $5 for each placement, temporary lift, or removal of a security freeze. However, a consumer reporting agency may not charge any fee to a consumer who, at the time of a request to place, temporarily lift, or remove a security freeze, presents to the consumer reporting agency a police report of alleged identity fraud against the consumer or an identity theft passport.
A security freeze does not apply if you have an existing account relationship and a copy of your credit report is requested by your existing creditor or its agents or affiliates for certain types of account review, collection, fraud control, or similar activities."