Credit History in Employment: Massachusetts Laws & Your Rights

The Fair Credit Reporting Act (FCRA), 15 U.S.C. Section 1681 et seq., governs how employers can use consumer credit reports. Federally, employers may obtain credit reports for employment purposes if they have a permissible purpose and comply with FCRA requirements including providing written notice to the applicant or employee, obtaining written authorization, and providing adverse action notice if a credit report is used to deny employment. The FCRA applies to all employers nationwide. However, the FCRA does not explicitly prohibit credit checks for most positions—that restriction comes from state law.

FCRA enforcement is handled by the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB). Federal law provides remedies including actual damages, statutory damages up to $1,000 per violation, punitive damages if willful, and attorney fees. Many states, including Massachusetts, have enacted stricter credit check laws that go beyond federal protections by broadly prohibiting credit checks except in narrow circumstances.

Massachusetts General Laws Chapter 149, Section 24L significantly restricts employer access to credit history and is substantially stronger than federal law. The Massachusetts statute prohibits employers from requesting, obtaining, or considering a person's credit history, credit score, or credit-related information when making hiring, retention, or promotion decisions, with only limited exceptions.

The exceptions under Massachusetts law are narrow: employers may access credit information only for positions where the employee would (1) have direct access to cash, jewelry, or other items of significant value; (2) have fiduciary responsibility or authority over funds or financial accounts; or (3) where state or federal law specifically requires a credit check for that position. Examples include bank tellers, security personnel, or positions requiring bonding.

Unlike federal law, Massachusetts does not require employees to authorize credit checks for most purposes—the law simply forbids the practice except in carve-out circumstances. When a credit check is legally permitted, Massachusetts General Laws Chapter 149, Section 24M requires written notice before the check and provides employees the right to dispute inaccurate information reported to employers.

All Massachusetts employers, regardless of size, are covered by this statute. The remedies available under state law include actual damages, civil penalties of up to $500 per violation, plus attorney fees and costs. This is significantly more protective than federal law and creates an independent state cause of action separate from FCRA claims.

The primary exceptions to Massachusetts's credit check prohibition are narrow and well-defined. Employers may access credit information for positions where the employee will have direct access to cash, jewelry, or other items of substantial value—this includes bank tellers, cashiers handling large sums, and jewelry store employees. The exception also covers positions with fiduciary responsibility, such as accountants, financial advisors, or anyone managing client funds or accounts.

A third exception permits credit checks where state or federal law specifically mandates them for the position. Examples include certain positions in the financial services industry where federal banking regulations require credit history review, or positions requiring bonding where the bonding company mandates a credit check. However, the burden is on the employer to demonstrate that law specifically requires the check for that role.

Common employer defenses include demonstrating the position falls within one of these exceptions and that proper notice was provided. However, merely asserting that a position involves "responsibility" is insufficient; the exception requires direct access to valuables or fiduciary authority. Additionally, employers cannot circumvent the law by using a credit check to determine general character or reliability—the statute prohibits use of credit information even as a proxy for trustworthiness in positions not falling within the exceptions.

The statute also does not prohibit consideration of actual conduct like criminal conviction, only credit history itself. At-will employment remains the default in Massachusetts, but an employer cannot invoke at-will status as a defense to violating the credit check statute.

Step 1: Document the Credit Check Request or Use. Keep copies of any written request from your employer asking you to authorize a credit check, the authorization form itself, or any credit report obtained by the employer. Document the position title and job description. If the credit check was used to deny you the job, demotion, or termination, preserve all communications explaining the decision. Screenshot emails, save PDFs of job postings, and note dates and the names of managers involved.

Step 2: Internal Complaint and Documentation. Before filing an external claim, send a written email or letter to your employer's HR department objecting to the credit check and citing Massachusetts General Laws Chapter 149, Section 24L. State that your position does not fall within the narrow exceptions (direct cash access, fiduciary duty, or law-mandated check) and demand written explanation of why the credit check was authorized. Keep a copy of this complaint and any response. This creates a paper trail and may prompt the employer to correct the violation.

Step 3: File with the Massachusetts Attorney General or Pursue Private Action. Massachusetts does not have a dedicated state administrative agency like the EEOC for credit check violations. Instead, you have a private right of action under Chapter 149, Section 24L, meaning you can sue the employer directly in Massachusetts state court. Alternatively, you can file a complaint with the Massachusetts Attorney General's Consumer Protection Division at 617-727-8400 or via their website at mass.gov/ago. There is no filing deadline set in statute, but the general statute of limitations for tort claims in Massachusetts is 3 years from the date of violation. Prepare documentation showing: the job you applied for or held; proof the credit check was obtained (authorization form, credit report, or employer admission); the fact that your position did not fall within an exception; and any damages (lost wages, emotional distress, or harm to credit from employer inquiry).

Step 4: The Investigation and Resolution Process. If you file with the Attorney General, their Consumer Protection Division will investigate whether the employer violated the statute. This typically takes 2–6 months. The Attorney General may send a demand letter to the employer or initiate settlement negotiations. However, the AG's office may prioritize cases involving pattern violations affecting multiple employees. If pursuing a private lawsuit, you file a complaint in Massachusetts Superior Court or District Court (depending on damages sought). The employer will respond, and discovery (exchange of documents and evidence) will occur over several months. Many cases settle during this phase without trial.

Step 5: Consult an Employment Attorney. Contact a Massachusetts employment law attorney, particularly one experienced in wage-and-hour or civil rights claims. A consultation typically costs $150–300 or is free. An attorney can review your authorization form, any credit report, and communications to assess liability and damages. Under Massachusetts law, if you prevail, the employer must pay your attorney fees and costs, making it more likely an attorney will take the case on contingency (no upfront fee). An attorney can also determine whether you have an additional claim under the Fair Credit Reporting Act (federal), which may allow additional damages. File your claim within 3 years of the credit check or its use to avoid statute of limitations issues.