Washington, D.C. Restricts Employer Use of Credit Information for Employment Purposes

The new law defines “credit information,” as any written, oral, or communication of information bearing on an employee’s creditworthiness, credit standing, credit capacity, or credit history. In addition, “inquire” means any direct or indirect conduct intended to gather credit information using any method, including application form, interviews, and credit history checks.

There are exceptions to this law. The prohibition does not apply:

1. Where an employer is otherwise required by District law to require, request, suggest, or cause any employee to submit credit information, or use, accept, refer to, or inquire into an employee’s credit information;
2. Where an employee is applying for a position as or is employed as a police officer with the Metropolitan Police Department;
3. To the Office of the Chief Financial Officer of the District of Columbia;
4. Where an employee is required to possess a security clearance under District law;
5. To disclosures by District government employees of their credit information to the Board of Ethics and Government Accountability or the Office of the Inspector General, or to the use of such disclosures by those agencies;
6. To financial institutions, where the position involves access to personal financial information; or
7. Where an employer requests or receives credit information pursuant to the lawful subpoena, court order, or law enforcement investigation.

The Commission of Human Rights is charged with enforcing the new law. Employers who commit discriminatory practice or violate the law must pay the complainant:

• $1,000 for first violation;
• $2,500 for second violation; and
• $5,000 for each subsequent violation.

The law will take effect after a 30-day period of congressional review and is accessible here for review:
http://lims.dccouncil.us/Download/33953/B21-0244-Enrollment.pdf

What This Means to You:

• Employers in Washington D.C. cannot ask about or use an applicant’s or employee’s credit information for most employment purposes (with some exceptions).
• Employers who violate the law must pay the complainant $1,000 for first violation, $2,500 for second violation, and $5,000 for each subsequent violation.
• The law will come into effect on March 17, 2017.
• Employers should determine whether they obtain credit reports on D.C. employees; and if so, whether any exemption or federal pre-exemption applies; and, if not, remove credit reports from their background screening in D.C.

Employers with functions severely affected by this restriction should consider relocating those functions out of D.C.