HB657 Alabama 2011 Session

Summary

Primary Sponsor

Laura HallRepresentative

Democrat

Session

Regular Session 2011

Title

Employment, use of credit report or credit history of an employee or employment applicant by an employer, complaints filed with Commissioner of Labor, investigation of complaints, civil penalties, exemptions, Job Fairness Act

Summary

HB657 would restrict how employers can use credit history in hiring and employment, create a complaint process with penalties through the Alabama Commissioner of Labor, and establish certain exemptions.

What This Bill Does

It generally bans using an applicant's or employee's credit report or history to deny employment, fire someone, or set pay and job terms, unless there is a bona fide, substantially job-related reason disclosed in writing. It allows certain uses (e.g., after a job offer) and defines which positions may qualify for a bona fide purpose. It sets up a process where employees or applicants can file complaints with the Commissioner of Labor, who would investigate and can impose civil penalties, with options for an administrative hearing and enforcement in court if penalties are not paid. It also lists exemptions for specific types of employers and allows routine background checks under the Fair Credit Reporting Act that do not involve credit information.

Who It Affects

• Applicants and current employees: protected from most uses of credit history in hiring and employment decisions; may file complaints if an employer violates the law and could receive penalties.
• Employers: must comply with the credit-history limits, disclose bona fide reasons when appropriate, may face penalties and hearings, and could be subject to enforcement actions for violations.
• The Commissioner of Labor and staff: responsible for receiving complaints, conducting investigations, issuing penalties and final orders, and scheduling hearings when required.
• Certain employers (exemptions): financial institutions insured by a federal agency, credit unions, investment advisers registered with the SEC, and employers required to inquire about credit history by law are exempt from these provisions.

Key Provisions

• General prohibition: Employers may not use an applicant's or employee's credit report/history to deny employment, discharge, or set compensation or employment terms, with specified exceptions.
• Bona fide exceptions: An employer may use credit information if the applicant has an offer of employment or if the use is for a purpose substantially related to the job and disclosed in writing, including positions such as managerial roles, roles with access to personal or financial information, fiduciary duties, or roles with access to confidential information.
• Complaint and investigation process: An employee or applicant may file a written complaint with the Commissioner of Labor; the commissioner must investigate promptly and may resolve informally or proceed to formal actions.
• Civil penalties and enforcement: If violations are found, penalties can be up to $500 for an initial violation and up to $2,500 for repeat violations; an order to pay can be issued to both parties, with a de novo administrative hearing available within 30 days; final orders can be enforced in circuit court if unpaid.
• Background checks and exceptions: The act does not prohibit employment-related background checks that use non-credit consumer reports and comply with the Fair Credit Reporting Act; the act does not apply to certain federally or state-mandated cases and specified financial and investment entities.
• Effective date: The act becomes law on the first day of the third month after it passes and is approved.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Employment