Some of the most important, yet challenging, aspects of human resources functions are those related to compliance. Even a minor misstep in interviewing, screening and hiring processes can put companies in violation of federal laws and regulations – and quickly lead to costly fines and penalties.
Compliance can be a complicated landscape to navigate, especially when policies and laws are always changing. Staying up to date on industry trends is imperative to minimize employer risk. More, it’s critical to know not only what shifts are happening – but how they may affect businesses’ HR practices.
Let’s take a look at one of the major legislative changes employers should be aware of moving forward.
Don’t ask candidates for credit information
The Council for the District of Columbia has recently passed an amendment to the Human Rights Act of 1977 – The Fair Credit in Employment Amendment Act of 2016. This law prohibits employers and employment agencies from inquiring about the credit information of current and potential employees, whether it be through written or verbal communication. This includes running a credit check or requesting, suggesting or demanding the individual to submit this information. Additionally, under this provision, employers are barred from accepting the information, or using it in any way.
“Employers must stay updated on compliance changes to avoid discrimination claims.”
There are some exceptions where employers may be permitted to request an applicant or employee’s credit history. For example, where this information is required, such as for police officers and other law enforcement positions, those who legally need a security clearance, working with the Office of the Chief Financial Officer of D.C. and some financial institutions.
The purpose of this jurisdiction is to prevent employers from unlawfully discriminating against individuals based on their credit history.
Companies that are investigated by the D.C. Office of Human Rights and found to be guilty of violation face fines between $1,000 and $5,000.
What does this mean for employers?
As Seyfarth Shaw explained, this legislation means it’s of utmost importance that D.C. employers review their current practices to ensure they maintain compliance with the new regulations. An internal audit should be conducted to determine whether any of their employment and HR practices ask about credit information, whether it is a direct or indirect request. Furthermore, businesses should take inventory of all employee and HR-related documents and materials to make sure there is no mention of credit information being requested or used.
D.C. employers are not the only ones who should be acknowledging this legislation and responding to it, though. The aforementioned measures are also important for employers in multi-state jurisdictions.
Complying with change
This legislation is just one recent example of the many policy changes that directly impact employers’ hiring practices. Businesses that fall both in and outside the D.C. jurisdiction should constantly aware of the shifts unfolding across the nation, as they can signal the direction their own state legislation may be heading in. Keeping a finger on the pulse of employment-related trends helps employers maintain a forward-thinking mindset that better positions them to prepare for any changes that may be coming their way.
For example, as of July 1, 2018, it will be illegal for employers in Massachusetts to ask applicants about salary history until after an offer, with compensation, has been made – a law that aims to prevent unlawful discrimination based on gender, among other things.
These events also serve as a reminder of how important it is to periodically evaluate human resources management and ensure there are no aspects of the talent selection, assessment or acquisition processes that may lead to a discrimination claim or lawsuit.
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