Labor and Employment Alert
April 12, 2010
Authors:
Laura R. Salerno
laura.salerno@klgates.com
+1.503.226.5702
Patrick M. Madden
patrick.madden@klgates.com
+1.206.370.6795
K&L Gates includes lawyers practicing out
of 36 offices located in North America,
Europe, Asia and the Middle East, and
represents numerous GLOBAL 500,
FORTUNE 100, and FTSE 100
corporations, in addition to growth and
middle market companies, entrepreneurs,
capital market participants and public
sector entities. For more information,
visit www.klgates.com.
New Oregon Statute Bars Use of Credit
History When Making Most Employment
Decisions
Are you hiring, promoting or terminating employees in Oregon? Are you basing
some of those decisions on an employee’s credit history? If so, you should take note
of Senate Bill 1045, signed into law on March 29, 2010, by Governor Kulongoski.
As of July 1, 2010, most Oregon employers will be prohibited from relying on credit
histories when evaluating most applicants or taking any action in relation to most
employees. The new law provides:
[i]t is an unlawful employment practice for an employer to obtain or use for
employment purposes information contained in the credit history of an
applicant for employment or an employee, or to refuse to hire, discharge,
demote, suspend, retaliate or otherwise discriminate against an applicant or
an employee with regard to promotion, compensation or the terms,
conditions or privileges of employment based on information in the credit
history of the applicant or employee.
The law expressly excludes a few employers (e.g., federally insured banks and credit
unions). It also provides a general exception (1) when information in an employee’s
credit history is “substantially job-related” and (2) the reasons for the employer’s use
of the credit history are provided in writing to the prospective or current employee.
A key issue for employers that is not addressed in the statute is: “What makes
information in a credit history ‘substantially job-related’?” Based on the areas that
are expressly excluded in the statute as well as the legislative history, it appears that
information is substantially job-related when a job involves access to sensitive
financial information such as Social Security numbers, bank statements and
confidential information that can put customers at risk for identity theft. The
legislative history makes clear that these factors are meant to distinguish, for
example, a cashier at a convenience store who handles money and credit cards but
does not have access to any identifying confidential information. With this minimal
guidance in place, employers must carefully consider whether some or all of their
applicants and employees fall within this exception.
Fortunately, the new law is limited to credit histories, and does not affect an
employer’s ability to conduct criminal background checks or to look into a
prospective employee’s employment history.
Employers who violate the law may be subject to an administrative claim filed with
the Oregon Bureau of Labor and Industries and a private lawsuit, and can be held
liable for lost wages, attorney fees, and other relief.
Employers should review their policies regarding the use of employee credit histories
and consult with counsel if they have any questions regarding this new law.
Labor and Employment Alert
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K&L Gates includes lawyers practicing out of 36 offices located in North America, Europe, Asia and the Middle East, and represents numerous
GLOBAL 500, FORTUNE 100, and FTSE 100 corporations, in addition to growth and middle market companies, entrepreneurs, capital market
participants and public sector entities. For more information, visit www.klgates.com.
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This publication is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon
in regard to any particular facts or circumstances without first consulting a lawyer.
©2010 K&L Gates LLP. All Rights Reserved.
April 12, 2010
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