On May 23, 2013, Nevada became the tenth state to enact legislation restricting the use of credit background checks by employers. The new Nevada law goes into effect on October 1, 2013.

Under the terms of the new Nevada law, it is unlawful for an employer to:

  • directly or indirectly require, request, suggest, or cause any applicant or employee to submit a consumer credit report or other credit information as a condition of employment;
  • use, accept, refer to, or inquire about a consumer credit report or other credit information;
  • take any adverse action (or threaten adverse action) against an applicant or employee:
    1. on the basis of the results of a consumer credit report or other credit information, o
    2. due to the applicant’s or employee’s refusal or failure to provide a consumer credit report or other credit information; or
  • take any adverse action against an applicant or employee who has:
    • filed a complaint or instituted (or caused to be instituted) a legal proceeding pursuant to the new Nevada law;
    • testified or may testify in a legal proceeding instituted pursuant to the new Nevada law; or
    • exercised his or her rights or the rights of another under the terms of the new Nevada law.

However, the new Nevada statute does provide a number of exemptions to these very broad prohibitions on the use or solicitation of credit background information in the employment context. Specifically, employers may consider consumer credit reports or other credit information for employment purposes if:

  • the employer is required or authorized to do so under state or federal law;
  • the employer reasonably believes that the applicant or employee has engaged in a specific activity which may constitute a violation of state or federal law; or
  • the information in the consumer credit report or the other credit information is reasonably related to the position in question.

A consumer credit report or other credit information is reasonably related to a position if the duties of the position involve:

  • the care, custody, and handling of, or responsibility for, money, financial accounts, corporate credit or debit cards, or other assets;
  • access to trade secrets or other proprietary or confidential information;
  • managerial or supervisory responsibility;
  • the direct exercise of law enforcement authority as an employee of a state or local law enforcement agency;
  • the care, custody, and handling of, or responsibility for, the personal information of another person;
  • access to the personal financial information of another person;
  • employment with a financial institution chartered under state or federal law; or
  • employment with a licensed gaming establishment (e.g., a casino, etc.).

Unfortunately, the term “managerial or supervisory responsibility” is not defined in the new statute.

There are a number of ways in which the new Nevada law may be enforced:

  • The Nevada Labor Commissioner may impose administrative fines of up to $9,000 for each violation of the law and may bring a civil action to restrain any violations, seek injunctive relief, or request the payment of lost wages or benefits.
  • Individuals may bring a private civil action against employers for violations under the law, seeking equitable relief (including employment, reinstatement, or promotion of an employee), as well as the payment of lost wages and benefits, legal costs, and attorneys’ fees. Importantly, the new law authorizes class action lawsuits brought on behalf of similarly situated applicants or employees.

Employers with employees working in Nevada and/or with applicants or employees who reside in Nevada should ensure they are in compliance with the new Nevada requirements by October 1, 2013. State credit background check requirements, including these Nevada requirements and requirements from other states, are summarized in the firm’s O-D Comply: Background Checks subscription materials, which are updated and provided to O-D Comply subscribers as the law changes.