• Careful With Credit Checks: Oregon BOLI Issues Final Rules
  • June 25, 2010 | Author: Michael Porter
  • Law Firms: Miller Nash LLP - Vancouver Office ; Miller Nash LLP - Portland Office
  • In the 2010 special session, the Oregon legislature made it unlawful for employers to use credit histories when making most employment decisions. In June, the Oregon Bureau of Labor and Industries ("BOLI") implemented new final regulations to carry out this statutory prohibition and provide guidance on the statutory exceptions and notice that must be given
    to employees.

    Under Oregon law, it is now generally illegal to obtain information contained in an individual's credit history or to make employment decisions based on credit information. Employees or applicants for employment can file a complaint with BOLI or sue an employer that violates the statute and recover prevailing-plaintiff attorney fees.

    EXCEPTIONS: The rule prohibiting use of credit history has some exceptions. An employer can still use information from an individual's credit history in making employment decisions if the employer:

    • Is a federally insured bank and credit union;
    • Is required by state or federal law to consider credit history;
    • Is hiring for positions responsible for enforcing Oregon criminal laws, such as law enforcement and certain municipal peace officers; or
    • Can show that the information is substantially job-related.

    Application of this last exception poses the greatest challenge to employers because the determination whether credit history is substantially job-related will be made on a case-by-case basis. The final regulations filed by BOLI, however, do present some factors to aid in the evaluation. Credit history is substantially job-related if:

    1. the employee will have access to financial information (other than information provided in retail transactions) to perform the essential functions of his or her position; or
    2. the employer is required to obtain credit history for the particular position in order to obtain insurance, a surety, or a fidelity bond.

    NOTICE: Under the final rules, the employer must inform the employee or applicant in writing that the person's credit information may be obtained and explain the reasons for its use.

    These new final regulations become effective July 1, 2010. Employers that have not already done so should develop new policies and procedures to implement the new law. Specifically:

    • Employers should begin updating their practices by evaluating their positions to determine whether it is permissible to obtain credit information and take action concerning it;
    • Employers should ensure that their new-hire paperwork meets the standards for the notice requirement if credit information will be sought;
    • Employers should make sure that their practices comply with the final regulations as opposed to the proposed rules presented by BOLI on March 12, 2010, because the two sets of regulations vary significantly; and
    • Because law became effective upon passage in February 2010, employers should refrain from using credit information as the basis for employment decisions unless the "substantially related" exception described above clearly applies.

    The new regulations will affect each workplace differently. Miller Nash is pleased to provide support to employers with questions about the use of credit-history information, or other labor and employment issues.