In the face of increasing unemployment, in March 2011, Florida, Michigan, and Montana joined the ranks of approximately fifteen other states that are considering bills limiting employers’ ability to use credit checks for employment purposes.

Florida. Florida’s Senate Bill 1562, introduced on March 3, would prohibit employers from using an applicant’s personal credit history as hiring criteria, except where a review of credit history is legally required. The proposed Florida law allows an employer to request credit history during the “application process if such history is shown to be directly related to the position sought by the applicant.” However, the credit history cannot be used as the “determining factor” in the hiring decision.

Michigan. Michigan’s House Bill 4363, introduced March 2, would prohibit employers from making hiring decisions based on an individual’s credit history and from inquiring about a job applicant’s or potential applicant’s credit history, unless good credit history is “an established bona fide occupational requirement of the particular position or employment classification.” Individuals cannot waive any right or protection under the proposed act and aggrieved individuals would be able to bring civil suit for damages or injunctive relief.

Montana. Montana’s House Bill 601, introduced March 1, would prohibit employers from using credit history information for employment purposes unless the employee’s current or potential position is one “for which credit is issued in goods, a line of credit is provided, or a fiduciary responsibility is owed to the employer,” or the position allows for use of such data when done in compliance with the Fair Credit Reporting Act, 15 U.S.C. §§1681(b)(2)(C) and (b)(4). Misuse of credit data or other violations of this proposed act would be punishable as a misdemeanor with fines up to $500.

Similar bills are also being considered in numerous jurisdictions such as: California, Connecticut, Georgia, Indiana, Kentucky, Maryland, Missouri, Nebraska, New Jersey, New Mexico, New York, Ohio, Pennsylvania, Vermont, and Texas. Illinois, Oregon, and Washington already have such laws in place.

“Employers with multi-state operations, in particular, must remain abreast of these developments and ensure any background check program involving credit checks complies with applicable state law. Further, due to EEOC initiatives in this area, credit checks should be limited to positions in which credit history can be deemed job-related and individualized analysis of each applicant’s history should be the goal,” counsels Richard Greenberg, a partner with Jackson Lewis LLP in New York.