April 16, 2024

Massachusetts legislators intend to pass legislation prohibiting employers from using credit reports for employment. As such, the Massachusetts House of Representatives recently passed a bill to amend the state’s consumer protection law. The bill is called “An Act Reducing Barriers to Employment Through Credit Discrimination” (H.1434) and will soon undergo review by the Senate. 

If passed into law, H.1434 would address employers’ requests for and acquired reports from consumer reporting agencies. In most cases, it would bar employers from obtaining a report with any bearing on an individual’s “credit worthiness, credit standing or credit capacity.” H.1434 includes background check providers and credit bureaus as consumer reporting agencies. In addition, employers cannot ask applicants or employees any questions about a report’s contents that could involve the above characteristics.

  1. 1434 would also bar employers from using credit information for “employment purposes.” This ban includes considering applicants for employment and determining an individual’s suitability for retention, reassignment, or promotion. State law would consider violating these regulations as an unfair trade practice. As such, aggrieved individuals could qualify to recover attorney’s fees, costs, and double damages due to a willful or knowing violation.

The bill also provides some limited carve-outs for certain employers. For example, an employer may request and use a credit report for employment purposes after meeting either of the following conditions:

  • Federal or state law, regulation, or the rules of a self-regulatory organization (as defined in 15 U.S.C. 78c(a)(26)) requires an individual to use a consumer report for employment purposes; or
  • The position held or applied for by the employee or applicant requires national security clearance.

H.1434 also contains an anti-discrimination provision. This section bars employers from taking adverse action against a person. The bill specified protections for those who have or intend to:

  • File a complaint against a violation of the new regulations;
  • Testify, assist, give evidence, or participate in an investigation of a violation; or
  • Otherwise, oppose a violation of the regulations.

Should the state Senate and governor approve and sign it, H. 1434 may take effect as early as January 1, 2025. The legislation would become the most restrictive provision in the U.S. for credit reports concerning employment purposes. Employers should note that the regulations still allow them to use consumer reports. It applies only to “true credit reports.” For example, the bill does not prevent them from running criminal background checks or motor vehicle record searches.


Information provided here is for educational and informational purposes only and should not constitute as legal advice. We recommend you contact your own legal counsel for any questions regarding your specific practices and compliance with applicable laws.