Maryland law prohibits most employers from using credit reports or credit history in making employment decisions. Unless an exception applies, employers may not use credit information to decide whom to hire, promote, or fire for most positions. An employer that falls within an exception to the law must notify the employee or applicant, in writing, that it is requesting a credit report or credit history.
Ban on Using Credit Reports in Employment
Unless an exception applies, Maryland employers may not use an applicant’s or employee’s credit report to determine whether to hire, whether to fire, or what rate of pay or other terms of employment to offer. Maryland employers may obtain a credit report for a current employee, or an applicant who has already received a job offer, but may not use it to deny employment or to set the person’s compensation or other terms of employment.
An employer who obtains a credit report on an employee or applicant must follow all of the notice and authorization procedures set out in the federal Fair Credit Reporting Act (FCRA). (For information on what the FCRA requires, see our article Can Prospective Employers Check Your Credit Report?)
Exceptions for Certain Employers and Employees
Despite the prohibition described above, some Maryland employers may use credit reports or credit history, at least for some positions. The following employers are not covered by the law:
- employers that are legally required, by state or federal law, to consider credit information
- financial institutions that accept federally insured deposits
- privately insured credit unions, and
- employers that are registered with the Securities and Exchange Commission (SEC) as investment advisors.
In addition, an employer may use credit history or credit reports in making employment decisions if the employer has a bona fide purpose for using the information that is substantially job-related and is disclosed, in writing, to the applicant. Positions to which this exception applies include:
- managerial positions that involve setting the direction or control of the business or one of its units
- positions that involve access to personal financial information (beyond the information typically disclosed in a retail transaction)
- positions that include a fiduciary obligation to the employer, such as job duties that include entering into contracts, collecting debts, transferring money, or making payments
- positions that involve access to trade secrets or other confidential business information, and
- positions that will be provided an expense account or corporate credit card.