Nevada Law Bans Use of Credit Reports in Most Hiring Decisions

This week, Nevada Gov. Brian Sandoval signed into law Senate Bill 127, which prohibits employers from using information found on credit reports to make a hiring decision.

This is not an all-out ban for employers

The law which will go into effect on October 1, 2013 includes exemptions under which credit can be used in the employment background screening process:

The employer is required or authorized, pursuant to state or federal law, to use a consumer credit report or other credit information for that purpose;
The employer reasonably believes that the employee or prospective employee has engaged in specific activity which may constitute a violation of state or federal law; or,
The information contained in the consumer credit report or other credit information is “job related” or reasonably related to the position for which the employee or prospective employee is being evaluated for employment, promotion, reassignment or retention as an employee.

Defining just what “job related” is

Their definition of “job related” is as follows:

Responsibility for financial assets or employment with a financial institution;
Access to confidential information;
Managerial or supervisory responsibility
Direct exercise of law enforcement authority;
Responsibility for or access to another person’s financial information; and;
Employment with a licensed gaming establishment.

The last bullet point is especially important to take note of since a significant portion of the state’s employment opportunities are in the casino and gaming industry.

A common sense bill

This is a common sense bill that allows those who really need to consider credit reports in their hiring process to continue doing so while prohibiting those who really shouldn’t have been considering it in the first place from continuing the practice.

I also think that this type of state legislation should give the Equal Employment Opportunity Commission (EEOC) pause in their quest to develop federal guidelines around this issue. The states are clearly addressing this in a balanced fashion and are taking into account all parties involved before making decisions.

Nevada is the 10th state to enact such legislation, joining California, Connecticut, Colorado, Washington, Hawaii, Oregon, Illinois, Maryland and Vermont.

This was originally published on EmployeeScreen IQ.