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Employment Law Alert: New Workplace Credit Check Ban Enacted By Oregon Legislature

Senate Bill 1045, adopted by the Oregon Legislature during the
February 2010 special legislative session, will prohibit, with limited
exceptions, the use of credit histories by employers in making
employment-related decisions. Once the law becomes effective,
Oregon will be one of three states (along with Washington and
Hawaii) that ban work-related credit inquiries.

The new law becomes effective July 1, 2010, and makes it “an
unlawful employment practice for an employer to obtain or use
for employment purposes information contained in the credit
history of an applicant for employment or an employee, or to
refuse to hire, discharge, demote, suspend, retaliate or otherwise
discriminate against an applicant or an employee with regard to
promotion, compensation or the terms, conditions or privileges
of employment based on information in the credit history.”

Importantly, employers may still conduct criminal background
checks and investigate a job applicant’s employment history.

In a significant departure from the Fair Credit Reporting Act
(FCRA), which allows an employer to make employment-related
decisions based on credit history (provided proper notice,
disclosures, consent and other requirements are met), the new
Oregon law will establish an outright ban on the use of credit
history in employment-related decisions.

Four types of employers or job categories are exempt from the
new law:

1. Federally insured bank and credit unions;

2. Employers required by state and/or federal law to use
credit histories for employment purposes;

3. Public safety officer positions; and

4. Positions for which an employer can demonstrate that an applicant or
employee’s credit history is “substantially job-related.” To use this
exception, employers must provide written disclosure to the applicant/employee
of the reasons for the credit check.

The statute does not define what “substantially job-related” means, and the Oregon Bureau of Labor
and Industries (BOLI) has not yet adopted administrative rules to provide guidance on how this law
will be interpreted and applied.

Employers that want to continue using credit checks after July 1, 2010 should consult legal counsel
to determine whether they fi t into one of the statute’s exceptions. If it is clear that you will be unable

to meet one of the statute’s exceptions, you should develop and implement an alternate procedure
by July 1, 2010, to avoid civil liability and potential BOLI penalties.

As with other unlawful employment practices under ORS 659A, an aggrieved individual may fi le a
complaint with BOLI, as well as a civil lawsuit for injunctive relief, reinstatement or back pay, and
attorney’s fees.

Employer to-do list:

• Refrain from obtaining or using credit information for applicants and employees on or after
July 1, 2010 unless you clearly fi t within one of the exceptions listed above.

• Develop alternate policies for inquiries into employment history if you do not clearly fi t within
one of the exceptions and ensure that your human resources professionals are up to speed on the
new law prior to July 1, 2010.

• Consult with your legal advisor before concluding that use of credit information is “substantially

If you would like further information regarding this new law, or how the law may apply to you, please
do not hesitate to contact one of our labor and employment attorneys.


1001 SW Fifth Avenue
16th Floor
Portland, OR 97204-1116
Phone: (503) 242-0000
(800) 315-4172
Fax: (503) 241-1458

360 E. 10th Avenue
Suite 300
Eugene, OR 97401-3273
Phone: (541) 485-0220
(800) 315-4172
Fax: (541) 686-6564

333 High Street, N.E.
Suite 200
Salem, OR 97301-3614
Phone: (503) 371-3330
(800) 315-4172
Fax: (503) 371-5336

Nothing in this communication creates or is intended to create an attorney-client relationship with you, constitutes the provision of legal advice, or creates any legal duty to you. If you are seeking legal advice, you should first contact a member of the Labor and Employment Team with the understanding that any attorney-client relationship would be subsequently established by a specific written agreement with Harrang Long Gary Rudnick P.C. To maintain confidentiality, you should not forward any unsolicited information you deem to be confidential until after an attorney-client relationship has been

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