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Maryland’s Job Applicant Fairness Act Takes Effect October 1, 2011: Prohibits Many Employers from Using Credit Reports or History

Earlier this year, the Maryland General Assembly passed the Job Applicant Fairness Act (JAFA), which prohibits many employers from using the credit reports or credit history of an applicant or employee to decide whether to deny employment to the applicant, to terminate the employee, or to determine the terms, conditions, compensation, or privileges of employment. JAFA is scheduled to take effect October 1, 2011. The essence of the new legislation is that it significantly limits when and under what circumstances employers can consider an applicant’s credit report or credit history. JAFA does not apply to an employer who is required under federal or state law to inquire into an applicant’s or employee’s credit report or credit history; is a financial institution that accepts deposits; is a credit union share guaranty corporation; or is a registered investment advisor.

When an Employer May Request or Use an Employee's or Applicant's Credit Report

Under the terms of the statute, an employer who is not otherwise exempt from JAFA may request or use an applicant’s or an employee’s credit report or credit history in the following circumstances: (i) the applicant has received an offer of employment and (ii) the credit report or credit history will be used for a purpose other than a purpose prohibited by the statute, or the employer has a bona fide purpose for requesting and using information in the credit report or credit history that is substantially job related and is disclosed in writing to the employee or applicant. A bona fide purpose that is substantially job related is defined under JAFA to include a position that:

  1. Is managerial and involves setting the direction or control of a business, or a department, division, unit, or agency of a business;
  2. Involves access to personal information (as that term is defined in the Maryland code) of a customer, employee, or employer, except for personal information customarily provided in a retail transaction;
  3. Involves a fiduciary responsibility to the employer, including the authority to issue payments, collect debts, transfer money, or enter into contracts; or
  4. Is provided an expense account or a corporate debit or credit card.


JAFA authorizes the Commissioner of Labor to investigate complaints of violations of the statute and to determine whether a violation has occurred. If a determination is made that a violation has occurred, the Commissioner can attempt to resolve the matter informally. If that process is not successful, then the Commissioner has the authority to award civil penalties. Employers have 30 days in which to request an administrative hearing to contest any penalty that is imposed. If the request is not made in a timely manner, then the penalty becomes a final order.

* * *

Employers should consult with counsel before conducting credit checks and/or using an employer’s credit report or credit history, particularly in situations when it is not crystal clear that it is lawful to do so.

Marc Engel is an employment attorney at Lerch, Early & Brewer in Bethesda, Maryland who brings nearly 25 years of wide-ranging civil litigation and counseling experience to his practice, and has represented clients in state and federal courts and before administrative agencies and various arbitration panels. For more information about how JAFA may affect your workplace, contact Marc at (301) 657-0184 or


This content is for your information only and is not intended to constitute legal advice. Please consult your attorney before acting on any information contained here.


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