Nevada places limits on employee credit screens

Most states allow employers to analyze consumer credit scores when considering promoting or hiring personnel. However, Nevada recently passed legislation that puts signification restrictions on the practice.

Seyfarth Shaw LLP reported that Nevada will soon prohibit employers from factoring in an applicant's credit history when making employment decisions. As of October 1, 2013, it will be illegal for businesses to even request a credit report for a perspective employee. However, there are some stipulations in the law that offer exceptions for certain jobs.

The source noted that workers at institutions that engage in fiduciary responsibilities may still be subject to credit screening. Also, the law enables employers to conduct a credit investigation if they believe a particular worker has conducted an illegal action in the workplace. Any employee that is in a managerial position or has access to confidential information may also have their consumer credit reports analyzed.

Although the latest legislation may appear to limit the use of an effective screening technique for employers, some have argued that the new law is a positive development. TLNT stated that the regulations still allow businesses to investigate employee credit records if workers engage in financially related functions. Also, the legislation promotes the privacy of workers that have their credit reports accessed despite little relevance to their positions. The source also speculated that the passing of the law may stop the Equal Employment Opportunity Commission (EEOC) from pushing for federal regulations that would limit access to consumer credit reports by employers, as states appear to be addressing the topic.

To date, there are 10 states that have laws regarding employment credit checks on the books. Last month, Colorado became the ninth state to pass screening regulations, according to Seyfarth Shaw, while several other states are also considering the issue. For this reason, it may be wise for a business conducting pre-employment screening to outsource the task to a professional enterprise that understands the nuances of current and pending legislation.