Maryland Bankruptcy and Employment

Will bankruptcy affect my employment or prevent me from getting hired? Many people considering bankruptcy ponder this question. Here is a summary of the federal and state (Maryland) laws related to bankruptcy and employment.

If an employer intends to order a copy of an applicant’s or current employee’s credit report, the employer must abide by the rules of the Federal Credit Reporting Act. The FCRA mandates that:

  1. Employers must notify the applicant or employee before pulling the credit report and get permission to do so.
  2. Employers must give an official notice to the applicant or employee if the findings of the credit report are going to adversely affect employment and/or hiring decisions.

There are many states that have also passed laws that tend to cover the issues of credit and employment as well. Maryland is one of those states. The state laws will typically take precedence over the federal FCRA. The Maryland legislature passed the Job Applicant Fairness Act in 2011 and it has provisions that limit employers from using a job applicant’s or current employee’s credit report in various situations. The Act generally prevents employers from using findings of credit reports to determine their employee hiring and termination decisions. Also, the Act prevents employers from basing pay or related employment conditions off of credit history findings. It should be noted, as with most things, there are exceptions. The law typically excludes employers such as:

  1. Financial institutions who accept FDIC insured deposits- most banks and publicly insured credit unions,
  2. Credit unions who are privately insured,
  3. Employers who are required by state or federal law to consider credit history and report for applicants and employees
  4. Employers who are registered as financial advisors with the SEC 

Even if they are covered under the law, employers must still provide notice to employees or applicants if they are using their credit report for any job related purpose. Typical job positions where an employer covered under the law may decide to evaluate credit reports are: 

  1. Positions where employees have access to sensitive or  confidential data (personal or financial)
  2. Positions where employees have access to confidential information related to business practices, methods, or trade secrets that are of economic value to the employer and the employer requires non-disclosure on. 
  3. Positions where the employee has access to an expense or corporate account.
  4. Managerial positions where the employee is in charge of a division or unit of the business
  5. Positions where the employee has the ability to transfer funds, make payments, manage revenue accounts, or collect payments.

 

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