As of January 1, 2011, most employers will be unable to perform credit checks on an applicant or employee due to changes in employment laws.

Employers covered under the Employee Privacy Act will be barred from the following practices:

·         Obtaining an applicant’s or employee’s credit history

·         Using a consumer report agency to look into an applicant’s or employee’s credit report

·         Initiating adverse employment action against an employee based on his or her credit report or credit history

However, certain exceptions do exist. If credit worthiness is a genuine job qualification, employers will still be able to obtain credit checks. These positions include jobs that give employees unsupervised access to over $2500 of merchandise or cash, signatory power of assets greater than $100 and positions giving access to confidential information.

Another exception is that employers can still obtain credit checks for individuals in management positions setting the control of the company or where the law requires the credit history be held as part of obtaining that job.

The following employers are also exempt from the Employee Privacy Act:

·         Banks and other financial institutions

·         Businesses engaged in the insurance business

·         State law enforcement agencies

·         State and local government agencies that require credit reports

·         Qualified debt collection agencies

The Employee Privacy Act does not however stop employers from obtaining background checks as allowed in the Fair Credit Reporting Act so long as there is no credit information contained in the report.

Employees who sue an employer under the Employee Privacy Act may be able to collect civil damages, injunctive relief and attorney’s fees and costs.