Credit History in Employment: Washington Laws & Your Rights

The Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681, is the primary federal law governing employment credit checks. The FCRA requires employers to provide clear written notice that a credit report may be obtained and to obtain the applicant's written consent before requesting a consumer report for employment purposes. The FCRA applies to all employers who use credit reports in hiring, firing, or other employment decisions.

The FCRA does not prohibit employers from checking credit reports—it regulates how they do so. Employers must comply with adverse action procedures: if an employer plans to take an adverse action based (in whole or in part) on the credit report, they must provide the applicant a copy of the report and a written summary of rights under the FCRA before denying employment. The applicant has the right to dispute inaccurate information with the credit reporting agency.

Federal law is enforced by the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB). Remedies under the FCRA include actual damages, statutory damages up to $1,000 per violation, punitive damages, and attorney fees for willful violations. Violations are also enforceable by state attorneys general. However, the FCRA does not restrict employer discretion to use accurate credit information—it only requires procedural compliance.

Washington law is substantially stronger than federal law in restricting employer use of credit information. Washington RCW 19.86.140 prohibits employers from ordering, requesting, or using consumer credit reports or credit histories as a factor in making employment decisions, including hiring, firing, promotion, or compensation decisions. This is a direct prohibition on use, not merely a procedural requirement.

Washington's statute applies to all employers operating in the state, with no size threshold. The law contains narrow exceptions: employers may use credit information only for positions that involve direct access to cash or financial information in aggregate amounts exceeding $2,500, or positions requiring security clearances or involving access to trade secrets or confidential business information. Even in these excepted positions, the employer must document in writing why credit history is job-related and necessary, and the credit information must be substantially job-related to the position in question.

Under Washington RCW 49.44.110, employers must obtain written consent from an applicant or employee before obtaining a consumer report (including a credit report) for employment purposes. The written consent must be clear, conspicuous, and separate from any other authorization. This requirement applies to all consumer reports, not just credit reports. Violation of RCW 49.44.110 is enforceable as a violation of the Washington Consumer Protection Act under RCW 19.86.140.

Washington law provides broader remedies than federal law. An employee or applicant who is denied employment or suffers other adverse employment action due to violation of the credit discrimination law may recover actual damages, statutory damages, civil penalties up to $2,000 per violation, and attorney fees and costs. Violations are considered unfair or deceptive practices, triggering automatic statutory damages. Washington also does not require the applicant to show that the employer's decision was based solely on credit information—showing that credit information was a factor in an adverse employment decision is sufficient. The Washington Attorney General and local prosecutors can also bring enforcement actions.

Washington law contains narrow carve-outs but requires strict compliance. An employer may use credit history only for positions directly involving access to cash or financial information in aggregate amounts exceeding $2,500, or positions requiring security clearances or access to trade secrets or confidential business information. For these positions, the employer must document in writing why credit history is job-related and show a substantial business relationship between the credit information and the position.

However, the exception is applied very narrowly. General supervisory authority or the ability to influence business decisions does not qualify. Washington courts interpret the exceptions strictly in favor of workers. For example, a front-line manager with indirect budget responsibility typically would not qualify unless the position involves direct access to cash or financial information and the aggregate exposure exceeds $2,500. Administrative staff, sales staff, and customer service roles generally do not qualify for the exception, even if the employee has some access to financial systems.

Another important edge case: even if a position qualifies for the exception, the employer must still obtain written consent under RCW 49.44.110 before checking the credit report. Failure to obtain written consent is itself a violation, separate from whether credit history may be used. Additionally, some local jurisdictions in Washington (such as Seattle) have enacted additional restrictions on credit checks; local law applies if it is stricter than state law. Finally, federal law (the FCRA) still applies—employers must follow federal adverse action notice procedures even if Washington law permits the check.

Step 1: Document the Discrimination

Keep records of all communications related to the employment decision. If an employer asks for authorization to check your credit report, save the written consent form they provide. If they check your credit without written consent, note the date, who requested it, and how you learned about it. Request a copy of any credit report obtained about you by contacting the credit reporting agency directly (Equifax, Experian, TransUnion). Document the timing: when you applied, when you learned they checked your credit, and when you were denied employment or received an adverse action. Save any email communications, rejection letters, or statements from the employer indicating credit history played a role in the decision.

Step 2: Internal Complaint Process

If you are still employed, file a formal complaint with your employer's human resources department in writing. State clearly that you believe the employer violated Washington's credit discrimination laws by checking your credit without written consent or by using credit information as a factor in an employment decision. Request a written response explaining the business justification, if any. Keep copies of your complaint and any responses. This creates a record and sometimes triggers internal review. However, Washington law does not require you to exhaust internal remedies before filing with an agency or pursuing a lawsuit, so you can skip this step and proceed directly to filing a complaint if you prefer.

Step 3: File with the Washington Attorney General or Federal Trade Commission

You have two options. First, file a consumer complaint with the Washington Attorney General's Consumer Protection Division at www.atg.wa.gov/consumer or by calling 1-800-551-4636. Provide details of when the employer checked your credit, whether they obtained written consent, and what adverse employment action resulted. The Attorney General can investigate and pursue enforcement on behalf of consumers.

Second, file a complaint with the Federal Trade Commission (FTC) at www.reportfraud.ftc.gov. The FTC enforces the Fair Credit Reporting Act. You can also file a complaint directly with the Consumer Financial Protection Bureau at www.consumerfinance.gov if the violation involves credit reporting procedures. Unlike the Attorney General, these federal agencies do not typically pursue individual cases, but they compile complaints and may take action against patterns of violations.

Step 4: Bring a Private Lawsuit

Washington law allows you to sue the employer directly in civil court. You do not need to file with a government agency first. File a lawsuit in Washington Superior Court (district court for smaller claims under $10,000; superior court for larger claims or if seeking attorney fees and injunctive relief) alleging violation of RCW 19.86.140 (Washington Consumer Protection Act) and/or RCW 49.44.110 (unlawful credit report use). In your complaint, allege that the employer checked your credit without written consent and/or used credit information as a factor in an adverse employment decision.

Step 5: Investigation and Timeline

If the Attorney General opens an investigation, it typically takes 2-6 months for initial review and 6-12 months for a full investigation, depending on complexity. However, you can proceed with your own lawsuit simultaneously. If you file a private lawsuit, discovery typically takes 6-12 months. The defendant employer will respond to your complaint within 20 days. Litigation can take 1-2 years before trial, though many cases settle during discovery.

Step 6: Consult an Attorney

Contact an employment law attorney who handles consumer protection cases in Washington. Many attorneys take credit discrimination cases on contingency, meaning they take a percentage of your recovery rather than an upfront fee. An attorney can review whether the exception applied, determine if the employer obtained written consent, calculate damages, and handle the litigation. Look for an attorney licensed in Washington with experience in RCW 19.86.140 (Consumer Protection Act) cases or employment discrimination. Initial consultations are often free.