Hawaii Laws on Employer Use of Credit Reports

Hawaii law limits an employer's right to consider credit information in making job decisions.

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Hawaii is one of a handful of states that limit the circumstances in which employers may use credit reports in making employment decisions. Like employers in other states, Hawaii employers must follow the notice and authorization requirements of the federal Fair Credit Practices Act (FCRA), to make sure applicants and employees know when their credit reports are used and have an opportunity to correct errors in those reports. (For more information on what the FCRA requires, see our article Can Prospective Employers Check Your Credit Report?)

In Hawaii, however, employers may consider an applicant’s credit history only after making a job offer, and only in certain situations. Although Hawaii law carves out some exceptions for certain types of employees and employers, it restricts employer use of credit information in most circumstances.

Hawaii Law on Employer Use of Credit Information

Hawaii employers may consider an applicant’s credit history or report only after making a conditional offer of employment. Even if an employer is entitled to consider credit information, it is illegal for the employer to fire, refuse to hire, or otherwise discriminate against anyone in compensation or other terms, conditions, and privileges of employment based on that person’s credit report or credit history, unless it directly relates to a bona fide occupational qualification (BFOQ).

A BFOQ is a very narrow exception to the broad prohibition on using employee or applicant credit information. To use this defense, an employer would have to show that a clean credit report was a BFOQ for the job (or for continued employment, in the case of a current employee). Under Hawaii law, this means the employer would have to prove that having good credit history:

  • is reasonably necessary to the normal operations of the business, and
  • has a substantial relationship to the functions and responsibilities of the job.

Exceptions for Certain Employers and Employees

In addition to the BFOQ defense, Hawaii was creates a few exceptions for certain employers and certain employees. For example, an employer that is a federally insured financial institution may consider credit information in making job decisions, as may an employer that is legally required or allowed to check credit history for applicants and employees.

Employers are also allowed to consider credit information for managers or supervisory employees. However, these terms are defined narrowly.

  • A manager is an employee who formulates management policies and puts them into effect by expressing and making operative the employer’s decisions.
  • A supervisory employee is an employee who has the authority, in the employer’s interest, to hire, fire, transfer, suspend, lay off, reward, promote, recall, assign, or discipline other employees; the authority to responsibly direct employees; the authority to adjust employee grievances; or the authority to effectively recommend any of these actions, as long as the employee’s role requires independent judgment and is not merely clerical or routine in nature.

For a position that meets these requirements, Hawaii employers are allowed to consider credit history in making job decisions. 

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