In March, The Massachusetts House of Representatives passed legislation restricting employers from performing and/or utilizing a credit report in employment decisions. The purpose of the act is to reduce employment barriers through credit discrimination. This Act amends Massachusetts Consumer Protection Law (G.L. c. 93A). On May 6, 2024, the Senate read and referred to the committee on Senate Ways and Means. The new legislation is expected to pass Senate and will go into effect January 1, 2025.
Restriction Specifics
Employers are prohibited from requesting a credit report from a CRA (Consumer Reporting Agency) and pertains to any information associated with an applicant or employee’s credit standing. A credit report cannot be used in determining employment eligibility for applicants and/or employees. Employers cannot require an employee or applicant to answer questions regarding their credit worthiness nor request that the employee or applicant waive their rights.
Exceptions
Employers required under federal, state law, or self-regulatory agency to use a credit report for employment purposes as well as employees and/or applicants that require a national security clearance are exempt from following the new Act.
Fine Print
Employers could face penalties if found in violation of the new act. Employers are barred from taking adverse action against employees and/or applicants who file a complaint or participate in any proceedings regarding the new law.
Known Jurisdictions with Restrictions
Please note that Massachusetts is not the first jurisdiction to enact legislation regarding anti-discrimination measures in credit reporting. A growing number of municipalities and states have laws restricting credit reports used in employment decisions. Examples include California, Colorado, Connecticut, Hawaii, Illinoi, Maryland, Nevada, New York, Philadelphia, Vermont, and Washington.
This blog is intended to be informative and not all-inclusive. You must consult with an employment attorney to ensure your processes are compliant and up to date with all federal and local regulations.
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