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Massachusetts Expected to Restrict Access to Credit Reports for Employment Purposes

22 May

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Update Applicable to:Effective date
All employers with at least 1 worker in MassachusettsJanuary 1, 2025


What happened?

On March 14, 2024, the Massachusetts House of Representatives passed legislation that would add a new provision to the Massachusetts Consumer Protection law and would bar the use of true credit reports for employment purposes.


What are the details?

The Massachusetts Senate is expected to pass the “Act Reducing Barriers to Employment Through Credit Discrimination (H.1434),” which Governor Maura Healy will likely sign into law.


Key bites:

  • The bill pertains to an applicant or employee’s credit-related information but does not affect other background checks like criminal records, driving records, etc.
  • It prohibits employers from using credit reports for employment decisions, obtaining such reports, asking about credit-related information, or requesting a waiver of these rights.
  • The bill contains an anti-retaliation and anti-discrimination provision. For reference to the exemptions click here.
  • Exemptions apply to certain employers like registered securities associations, positions requiring national security clearance, and employees at financial institutions.
    For reference to the exemptions click here.
  • Waivers of the law would be void.
  • Violations would be considered unfair trade practices under the Massachusetts Consumer Protection law, potentially leading to awards of attorney’s fees, costs, and double damages for willful or knowing violations.

For a comparison with other laws regarding Credit Checks click here.


Business Considerations

  • Employers should update their policies and practices regarding the use of consumer credit reports as part of a background check since most employers would be barred from doing so, unless exempt.
  • Monitor the progress of the bill and update the screening procedure to comply with the new requirements, if required to do so.
  • Per Littler Mendelson law firm recommendation, employers may want to proactively notify employees and applicants that no consumer reports concerning their credit worthiness, credit standing, or credit capacity will be requested or used for employment purposes. 


Resources


Source References

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This communication is intended solely for the purpose of conveying information. The present post might incorporate hyperlinks directing readers to websites managed by third-party entities. The inclusion of any links within this communication is meant to serve as points of reference and could encompass opinion articles from various law firms, articles from HR associations, official websites, news releases, and documents of government agencies, and other relevant third-party sources. Vensure has no authority over these external websites and bears no responsibility for their content. Furthermore, Vensure does not endorse the materials present on these websites. The contents of this communication should not be interpreted as legal advice or as a legal standpoint concerning specific facts or scenarios. Nor should it be deemed an exhaustive compilation of facts potentially pertinent to federal, state, or local laws. It is strongly advised that employers solicit legal guidance from an employment attorney when undertaking actions in response to any legal updates provided. This is due to the possibility of future alterations occurring in federal, state, and local laws, regulations, as well as the directives and guidelines issued by governing agencies. These changes may transpire at any given time, potentially rendering certain portions of the content within this update void or inaccurate.

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