Like other employers trying to make careful hiring decisions,  health care employers often make pre-hire inquires regarding applicant credit histories and base  hiring decisions, in part, on credit reports obtained.  In a growing trend, many states have proposed legislation prohibiting or substantially limiting the practice.  Nebraska recently introduced two bills to limit the use of credit checks for this purpose.

State Senator Annette Dubas introduced LB 113 which would add the use of credit histories or reports to Nebraska’s list of unlawful employment practices. The bill contains exceptions where information in a credit check directly relates to the occupation for the job being sought.

State Senator Brenda Council of Omaha introduced  LB530 which would prohibit employers from inquiring about or using an employee’s or prospective employee’s credit history as a basis for employment, recruitment, discharge or compensation.  The proposed legislation is entitled the “Employee Credit Privacy Act.”  This proposed bill makes it unlawful for an employer to order or obtain an employee’s or applicants credit history from a consumer reporting agency  unless it is a bona fide occupational requirement.  The Bill provides a pre-determined list of bona fide occupational requirements.  This bill also contains an anti-retaliation provision. Both bills were recently referred to the Business and Labor Committee for hearing. 

Nebraska is just one of many states that has proposed legislation prohibiting employers’ use of  employees or applicants credit history in basing an employment decision.  Currently, four states have enacted legislation including Hawaii, Washington, Oregon and Illinois that limit credit checks for employment purposes and approximately 17 states have proposed similar legislation.  Employers with multi-state operations need to review periodically their background check procedures to ensure they are not running afoul of individual state background check legislation. 

Special thanks to Chad Richter, Partner in Jackson Lewis’ Omaha, Nebraska office, for this contribution.