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NEVADA ENACTS NEW RESTRICTIONS ON USE OF CREDIT REPORTS IN EMPLOYMENT DECISIONS

 

credit_report_magnifying_glass1For many years it has been common practice for employers to use credit reports as a factor in determining whether to hire, promote or retain an employee.  In fact, under the federal Fair Credit Reporting Act (FCRA), an employer may deny employment based on the content of a credit report.  However, the employer must first obtain the employee’s authorization and provide notice.

  In an attempt to establish additional protections to employees, Nevada has enacted Senate Bill 127, which amends Chapter 613 of the Nevada Revised Statutes.  This new law follows closely on the heels of similar legislation enacted by Colorado in April.  Effective October 1, 2013, employers in Nevada will be prohibited from:  1.) Requiring, requesting, suggesting or causing a prospective new employee to submit a consumer credit report or other credit information as a condition of employment; 2.) Making inquiries about a consumer credit report or other credit information; or 3.) Denying employment to an applicant who refuses, fails or declines to submit a consumer credit report or other credit information, or on the basis of such a report or information.

 In the event that an employer violates this law, the Nevada Labor Commissioner may impose a penalty of not more than $9,000 for each violation and/or file a civil lawsuit.  Additionally, an employee may bring a legal action to recover remedies and damages for violation of the valium for dogs statute, including granting employment, reinstatement, promotion, and payment of lost wages and benefits.

 Despite these new protections, the law also provides exceptions for employers to proceed with a credit check of a current or prospective employee.  Specifically, a Nevada employer may request or consider a consumer credit report or other credit information for the purpose of making employment decisions if:  1.) such action is authorized under state or federal law; 2.) the employer reasonably believes the employee or prospective employee has violated the law; 3.) the information contained in the credit report is “reasonably related” to the position for which they are being evaluated (i.e. licensed gaming establishment, financial institution, etc.); 4.) the position involves the handling of money or other assets; 5.) the position involves access to trade secrets or confidential information; 6.) the position involves managerial or supervisory responsibility; and/or 7.) the position involves access to personal financial information.

 Nevada businesses should implement a comprehensive review their human resources policies and procedures to ensure compliance with this new legislation.  Moreover, businesses should evaluate the exceptions to the new law to determine whether their particular industry (or a group of employees within the company) is exempt.  Above all, education and training will ensure that businesses comply with both federal and Nevada employment laws regarding the proper use of credit reports in making employment decisions.

Kevin Hernandez, Esq.

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