Connecticut joins five other states (Hawaii, Illinois, Oregon, Washington, and Maryland) in limiting what credit report information employers may use in making hiring or employment decisions. Other states have considered similar measures.

Under the new law, effective October 1, 2011, employers (including their agents, representatives or designees) may not demand that an employee or prospective employee consent to a credit report as a condition of employment unless:

  1. the employer is a financial institution, 
  2. the credit report is required by law,
  3. the employer reasonably believes that the employee has engaged in specific activity that constitutes a violation of the law related to the employee’s employment, or
  4. such report is "substantially related to the employee’s current or potential job" or the employer has a bona fide purpose for requesting or using information in the credit report that is substantially job-related and is disclosed in writing to the employee or applicant.

For purposes of this law, a credit report is a report that contains information about the employee’s or prospective employee’s credit score, credit account balances, payment history, savings or checking account balances or savings or checking account numbers. The report will be treated as being "substantially related to the employee’s current or potential job," where the position:

  • is a managerial position which involves setting the direction or control of a business, division, unit or an agency of a business,
  • involves access to customers’, employees’ or the employer’s personal or financial information other than information customarily provided in a retail transaction,
  • involves a fiduciary responsibility to the employer, including, but not limited to, the authority to issue payments, collect debts, transfer money or enter into contracts,
  • provides an expense account or corporate debit or credit card,
  • provides access to certain confidential or proprietary business information, including trade secret information under certain circumstances; or
  • involves access to the employer’s nonfinancial assets valued at $2,005 or more, including, but not limited to, museum and library collections and to prescription drugs and other pharmaceuticals.

Employees or prospective employees who believe the law has been violated may file a complaint. Employers could be liable for $300 in civil penalties for each inquiry that violates the law.

In addition to affecting the traditional employee-employer relationship, this law (and those cited above) may affect the practice of requiring employees of a company’s vendors to jump through certain hoops before coming on-site. Increasingly, company A, when it utilizes the services of employees of company B (such as for back office processing or health care staffing needs) will require company B to ensure its employees undergo certain background checks and other certification procedures and tests. Those arrangements need to consider these limitations on the kinds of inquiries that can be made by employers.