Connecticut Restricts Use of Credit Reports in Employment Decisions

Connecticut has passed a new law prohibiting employers from using credit reports when making employment decisions relating to employees or applicants for employment. The law states that employers may not require an employee or applicant to consent to a credit report, unless (1) the employer is a financial institution; (2) the report is required by law; (3) the employer reasonably believes the employee has engaged in specific activity that constitutes a violation of the law related to the employee’s employment; or (4) the report is substantially related to the employee’s current or potential job or the employer has a bona fide purpose for requesting or using information in the credit report that is substantially job-related (and this is disclosed in writing to the employee or applicant).

Employers may be fined $300 for each credit check that violates the law. The law takes effect on Oct. 1, 2011 and applies to all employers in Connecticut that have at least one employee. Employers in Connecticut should review their policies and procedures relating to using credit reports, in order to ensure compliance with this new law.