On April 12, 2011, Maryland Governor Martin O’Malley signed into law S.B. 132/H.B. 87. Under this law, Maryland employers, except in limited circumstances, are prohibited from using an individual’s consumer credit history for hiring or other employment purposes.
Beginning October 1, 2011, employers are prohibited from using credit report data to deny employment, discharge an employee, set compensation, terms, conditions, or privileges of employment, unless, after making an offer of employment to an individual, the employer has a use for such information that is “substantially job-related.” Additionally, an employer must disclose in writing its use of such information to the employee or applicant.
While the law does not contain any individual right of action, it allows individuals to file an administrative complaint with the state Commissioner of Labor and Industry. The Commissioner is authorized to assess a civil penalty of up to $500 per initial violation and up to $2,500 for repeat violations.
Employers exempt from the new law include those required by federal law to examine credit history data, financial institutions, or entities registered with the federal Securities and Exchange Commission as investment advisors.
As we have detailed previously, several other states (Florida, Michigan, and Montana) are considering similar laws, while Hawaii, Illinois, Oregon, and Washington have already enacted laws restricting the use of credit history in employment.