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Editorial: Credit check compromise

After a year of trying to find the right balance, the General Assembly is on a good course with compromise legislation that would limit businesses’ use of credit reports and histories in hiring employees.

SB 132 cleared the Senate Finance Committee by a 7-4 vote last week and won preliminary approval by the full Senate on Wednesday. With the support of legislative leaders in both houses, it seems likely to pass.

The original intent of the sponsors — to protect workers whose credit scores have suffered due to foreclosures and bankruptcies caused by job losses and the economic downturn — was a good one.

The challenge was to provide reasonable protection to those workers while also allowing businesses to continue to use credit checks in the hiring process when appropriate.

The compromise legislation would allow the use of credit checks in the hiring process by federally insured financial institutions, investment advisors, companies hiring for managerial jobs and jobs that have expense accounts or corporate credit cards, and for positions that have fiduciary responsibilities or access to trade secrets or personal information.

The compromise, reached by worker advocates and business interests, would also lessen penalties to a $500 fine for the first violation and $5,000 fines for subsequent violations.

The penalty provision had been a major key sticking point. The original legislation would have allowed people to take employers to court if the employers improperly used their credit histories.

The fees in the compromise, which would be paid to the person whose credit history was misused, would be eligible for an administrative appeal.

“I have no problem with [the bill] now,” said Jeff Zelmer, a Maryland Retailers Association lobbyist.

The Maryland Chamber of Commerce seems to be largely onboard. Its lobbyist, who participated in the negotiations, said the changes make the bill “less onerous” but that the chamber still wants more latitude for businesses to use credit reports.

“The bill has some teeth, but we’re not trying to bankrupt anybody. It’s not crippling,” said Jason Perkins-Cohen, executive director of the Job Opportunities Task Force. “We wanted to make sure front-line workers weren’t going through credit checks in the HR process.”

The goal is laudable. We urge both sides to continue their work to find a way to provide these protections while still giving businesses the ability to use credit checks when appropriate.