BOLI proposes new regulations on employer use of credit checks

Oregon's Bureau of Labor and Industries (BOLI) has proposed new regulations restricting employer use of credit checks on prospective job applicants. The new rules stem from passage of Senate Bill 1045 by the Oregon legislature in the February special session. The bill prohibited employer use of credit histories for employees and job applicants except for positions in which the use of credit checks could be construed as "substantially job related." AOI helped negotiate this language after the original version of the legislation would have had the effect of banning employer use of credit histories outright.

BOLI's primary responsibility with the new rules was to define the term "substantially job related" in order to give guidance to employers. However, BOLI's proposed regulations have a far broader impact than just defining which job classifications can still be subject to employer use of credit histories.

BOLI's proposed rules stipulate that employer use of credit histories cannot result in adverse impact discrimination. In addition, BOLI levies new notification requirements for employers who opt to continue use of credit histories. Also, BOLI adds new record keeping requirements for employers who opt to continue use of credit histories.

In testimony to BOLI, AOI comments that the proposed rules appear to exceed statutory authority in some areas and have the effect of discouraging employer use of credit histories even when the use is substantially job related.

In particular, AOI is asking BOLI to reconsider its definition of "substantially job related" in the regulations because it is too narrow in the proposed rules and should include such things as unsupervised access to cash or assets of the employer or customer, access to trade secrets, managerial positions that include supervisory duties over other employees, and positions for which a credit history may be required to obtain insurance or a surety or fidelity bond.

AOI also makes clear that the notice requirements in the proposed rules are burdensome and unnecessary. Oregon employers should not be required to provide information about the storage and disposal of their information as well as legal remedies if someone suspects that an employer isn't adequately maintaining secure records. AOI argues that there is nothing in Senate Bill 1045 that authorizes BOLI to make these additional notice requirements.

Finally, AOI believes strongly that the proposed regulations force employers to maintain a duplicate filing system to maintain only credit history records. The proposed rule appears to force employers to keep these records in perpetuity. Both the storage requirements and the length of time the records must be stored place unreasonable regulatory burdens on business. AOI also argues that to place such requirements on employers exceeds BOLI's authority under Senate Bill 1045.

BOLI closed off its official comment period on the proposed rules on Monday, but AOI is continuing its work with BOLI to make the regulations more workable for Oregon employers.

(You can see BOLI's proposed rules here.) (You can see AOI's official comments here.)