Vermont Restricts The Use Of Credit Reports For Employment Purposes

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Vermont State Seal resized 600Vermont Governor Peter Shumlin has signed Senate Bill 95 into law, generally restricting an employer’s right to inquire, obtain, and utilize credit history information for employment decisions effective July 1, 2012. Importantly, the new law does exempt Vermont employers from the new provisions if one or more of the following conditions are applicable


  • The information is required by state or federal law or regulation.
  • The position of employment involves access to confidential financial information.
  • The employer is a financial institution as defined in 8 V.S.A. § 11101(32) or a credit union as defined in 8 V.S.A. § 30101(5).
  • The position of employment is that of a law enforcement officer as defined in 20 V.S.A. § 2358, emergency medical personnel as defined in 24 V.S.A. § 2651(6), or a firefighter as defined in 20 V.S.A. § 3151(3).
  • The position of employment requires a financial fiduciary responsibility to the employer or a client of the employer, including the authority to issue payments, collect debts, transfer money, or enter into contracts.
  • The employer can demonstrate that the information is a valid and reliable predictor of employee performance in the specific position of employment.
  • The position of employment involves access to an employer’s payroll information. 

Still, the law states an employer “may not use an employee’s or applicant’s credit report or history as the sole factor in decisions regarding employment, compensation, or a term, condition, or privilege of employment” even in situations when one or more of the exemption conditions listed above are applicable. 

According to the text from the new law, the General Assembly of the State of Vermont cites certain studies, employer surveys, and social science research “reinforces the fact that credit reports do not provide meaningful insight into a candidate’s character, responsibility, or prospective job performance.”

Vermont is the eighth state to implement a law prohibiting or restricting an employer from utilizing credit history information for employment decisions. The other seven states are California, Connecticut, Hawaii, Illinois, Maryland, Oregon, and Washington.

PLEASE NOTE:
Employers subject to these new provisions should contact their legal counsel for guidance immediately and revise their policies accordingly.  All information contained herein is provided by Employment Background Investigations solely for the convenience of its readers. EBI is not providing legal advice or counsel and nothing provided within should be deemed as legal guidance or advice.  Readers should consult with their own legal counsel to determine their legal responsibilities or if they have questions on any information provided by EBI.

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