On March 14, 2024, the Massachusetts House of Representatives passed legislation that would add a new provision to the Massachusetts Consumer Protection law and would bar the use of true credit reports for employment purposes, i.e., for the purpose of evaluating an individual for employment, promotion, reassignment, or retention as an employee.  The legislation, entitled An Act Reducing Barriers to Employment Through Credit Discrimination (H.1434), is expected to be adopted by the Massachusetts Senate and promptly signed into law by Governor Maura Healy.  Once adopted, the new law would take effect on January 1, 2025, and would be the most restrictive of its kind in the United States.¹

The law would bar an employer from requesting from a consumer reporting agency (background check company or credit bureau) a consumer report that bears on an individual’s “credit worthiness, credit standing or credit capacity.”  The law would prohibit the use of any such information as a factor in establishing an individual’s eligibility for employment, promotion, reassignment, or retention.  Further, the law would forbid an employer from requiring an individual to answer questions about the contents of a consumer report or the information contained in it regarding credit worthiness, credit standing or credit capacity.  Note that the new law would apply only to true credit reports and would not affect employers’ ability to obtain other background checks (e.g., criminal record checks, driving record checks, education or employment verifications, etc.).²

Violations of the new statute would constitute unfair trade practices under the Massachusetts Consumer Protection law, Chapter 93A, which allows for awards of attorneys’ fees, costs, and, when a violation is willful or knowing, double damages.

In contrast with credit reporting laws in other states, some of which broadly allow credit checks for jobs involving proprietary or confidential information (e.g., California), the bill passed by the Massachusetts House contains very narrow exemptions.  The only exemptions are for employers (such as registered securities associations) required by federal or state law to conduct credit checks, for employees or applicants who hold positions requiring a national security clearance, and for employees working at financial institutions.

The bill contains an anti-retaliation and anti-discrimination provision that prohibits employers from taking adverse action against an individual because they have or intend to:

• file a complaint alleging a violation of Chapter 93A or the new law;
• participate, assist, give evidence, or testify in a proceeding or an action concerning a violation of the new law; or
• oppose a violation of the new law.

Finally, waivers of the law would be void and employers could not require or request that employees or applicants waive their rights under the law. 

Action Steps for Employers

If the bill is enacted, before January 1, 2025, employers operating in Massachusetts that use consumer credit reports for employment purposes should assess whether they can continue to do so.  Most private sector employers will no longer have access to such reports.  

Employers should evaluate the contents of the documents they use in conjunction with their screening procedures and modify the paperwork as needed to reference the new law.  While there is no additional notice provision in the language of the bill, employers may want to proactively notify employees and applicants that no consumer reports concerning their credit worthiness, credit standing, or credit capacity will be requested or used for employment purposes.