On April 12, 2011, Governor O'Malley signed into legislation the Job Applicant Fairness Act which prohibits most employers from using credit history in determining whether to deny employment to a job applicant, discharge an employee, decide compensation, or evaluate other terms and conditions of employment unless it meets specific timing and job-related requirements. This law goes into effect on October 1, 2011.

The Act applies to employers of any size, but excludes various financial institutions, as well as employers who are required to inquire into an applicant's or employee's credit history under federal or state law.

Limited exceptions to the Act allow employers to request or use credit information where such information is substantially job related. This includes positions involving money handling or other confidential job duties. An employer must disclose its intent to request a credit history check in writing to the applicant or employee.

In a growing trend, Maryland joins Illinois, Washington, Oregon, and Hawaii as states that prohibit the use of credit information for employment purposes. Fifteen other states currently have legislation pending along with the federal H.R. 321: Equal Employment for All Act, which will restrict employers' use of credit reports for employment purposes.

Unlike other states, Maryland's law will not provide a private right of action. Instead, applicants and employees who feel that an employer has violated the Act must file a complaint with the Commissioner of Labor and Industry who will investigate the matter. Penalties may include a civil penalty of $500 for an initial violation of the Act and up to $2,500 for repeat violations.

For more information on Maryland's Job Applicant Fairness Act and how it affects your business, visit http://mlis.state.md.us/2011rs/billfile/hb0087.htm#Synopsis