Vermont is the most recent state to limit employers in their use of credit reports to make employment decisions. Most employers may not use credit information to decide whom to hire, promote, or fire for most positions. The law includes exceptions for certain employers and certain positions. Even for these employees, however, Vermont prohibits employers from making decisions based solely on credit history.
Unless an exception applies, Vermont employers may not inquire about an applicant’s or employee’s credit report or credit history. Employers are also prohibited from discharging, refusing to hire, or otherwise discriminating against an applicant or employee in the terms, conditions, and privileges of employment (including compensation) based on that person’s credit report or credit history. For purposes of Vermont law, credit history means any information obtained from a third party, whether in a credit report or otherwise, that relates to the person’s current or past borrowing and repayment behavior, financial condition, and ability to meet financial obligations.
Despite the prohibition described above, some Vermont employers may use credit reports or credit history, at least for some positions. Employers are exempt from the general ban on using credit reports and credit history if:
Even if one of these exceptions applies, the employer may not use credit history or a credit report as the sole factor in making an employment decision.
Employers in every state must follow the procedures set out in the federal Fair Credit Reporting Act (FCRA), including getting written authorization before pulling an employee’s or applicant’s credit report and providing written notice before using information in a credit report as the basis for a negative employment decision. (For more information on what the FCRA requires, see our article Can Prospective Employers Check Your Credit Report?)
Vermont employers must follow a stricter set of rules. For starters, they aren’t allowed to get credit reports or credit history in most situations. Those employers who fall within one of the exceptions listed above must do all of the following: