District of Columbia Passes Strict Credit Check Law
Posted: January 21, 2017
The District of Columbia City Council passed a sweeping ban on the use of credit checks in employment via the “Fair Credit in Employment Amendment Act of 2016.” Mayor Muriel Bowser has not yet signed the legislation – which was passed unanimously – but is expected to do so.
Under the Act, employers are prohibited from directly or indirectly requiring, requesting, inquiring into or using an employee’s credit information at any point in the hiring process. The Act includes important definitions:
- Credit history includes “any written, oral, or other communication of information bearing on an employee’s creditworthiness, credit standing, credit capacity, or credit history.”
- Inquiring means “any direct or indirect conduct intended to gather credit information using any method, including application forms, interviews, and credit history.”
- Financial institution means “a bank, savings institution, credit union, foreign bank, trust company, non-depository financial institution, or any other person which is regulated, supervised, examined, or licensed by the Department of Insurance, Securities, and Banking; which has applied to be regulated, supervised, examined, or licensed by the Department of Insurance, Securities, and Banking; which is subject to the regulation, supervision, examination, or licensure by the Department of Insurance, Securities, and Banking; or which is engaged in an activity covered by the District of Columbia Banking Code.”
There are limited exceptions including (but not limited to): if an employer is otherwise required by District of Columbia law to obtain and consider credit information, to financial institutions where the position involves access to personal information or where an employer requests or receives credit information pursuant to a lawful subpoena, court order or law enforcement investigation.
The Commission will investigate complaints and may issue a cease and desist order if an employer is found to be in violation, in addition to a fine of $1,000 for the first violation, $2,500 for the second violation and $5,000 for each subsequent violation.