Effective March 17, 2017, the District of Columbia will join a dozen other jurisdictions across the country that prohibit an employer’s use of “credit information” in employment decisions. The new law, D.C. Act 21-673, amends the District of Columbia’s existing human rights law by adding credit information as a prohibited basis for discrimination for any employment decision (not just hiring), and applies to employers of any size. See D.C. Code § 2-1402.11(a)(1) and (a)(1)(4)(D), as amended.
According to a 2012 SHRM survey, 47% of employers check potential employees’ credit reports as part of the hiring process. In seeking to eliminate or regulate this practice, the District of Colombia joins at least eleven other states and two cities. Numerous other jurisdictions have also considered, or are considering, similar laws. We anticipate that the trend will continue as the movement gains traction, similarly to the successful “Ban the Box” movement.
The new District of Columbia law is broad. It purports to prohibit any type of inquiry, oral or written, whether pre- or post-offer, into an employee’s “credit information,” which is now defined as “any written, oral, or other communication of information bearing on an employee’s creditworthiness, credit standing, credit capacity, or credit history.” D.C. Code § 2-1402.11(e)(1), as amended. Unlike similar laws around the country, the District of Columbia’s law also extends to the use of credit information for other employment decisions beyond hiring, including compensation, promotions, and other privileges or terms of employment.
Despite this breadth, it also contains seven exemptions, including for financial institutions (if the employee has access to personal financial information), and for employers whose employees require security clearances. The new law also does not preempt existing District of Columbia laws that require employers to obtain credit information about its employees. See D.C. Code § 2-1402.11(d)(1)-(7), as amended. Exempt employers must also still comply with the federal Fair Credit Reporting Act in administering any credit inquiry.
The District of Columbia Commission on Human Rights (“Commission”) is now empowered to levy fines for violations. It may, after making findings of law and fact, order offending employers to pay employees a fine of $1,000 for the first offense, $2,500 for the second, and $5,000 for each subsequent violation. See D.C. Code § 2-1403.13(a)(3), as amended. Employees in D.C. also have a private cause of action and can proceed directly to court without first exhausting administrative remedies. See D.C. Code § 2-1403.16 (private cause of action).
Even as the initial news of the law fades away, the Commission has been directed to ensure that information about the new law remains public and available. The amendment codifies an instruction to the Commission that it “develop and conduct a public information campaign to educate employees and employers about the requirements of the Human Rights Act . . . pertaining to unlawful discriminatory practices based on the credit information of an individual.” See D.C. Code § 2-1411.03(10), as amended.