Maryland Targets Credit Reports After DOGE Federal Layoffs
Maryland lawmakers introduce House Bill 1557 to protect affected workers from financial fallout, proposing measures like credit reporting freezes and limits on evictions. However, the bill’s vague language has raised compliance concerns among employers and consumer reporting agencies.
The U.S. hasn’t seen a spike in job losses like this since the early days of the pandemic. In March 2025 alone, more than 275,000 jobs were cut—over 216,000 of them from the federal government—due to sweeping agency eliminations orchestrated by the Department of Government Efficiency (DOGE). The agency has moved aggressively to eliminate what it deems bureaucratic waste, shuttering federal agencies and slashing public-sector jobs at an unprecedented pace.
In response to this surge in federal unemployment, lawmakers in Maryland have introduced House Bill 1557, an emergency bill designed to protect furloughed or unemployed workers from cascading financial harm. The legislation—titled the Program to Protect Individuals Unemployed or Furloughed Due to Federal Actions—would extend far-reaching consumer protections to those affected by DOGE’s actions, including a temporary freeze on adverse credit reporting and limitations on evictions, foreclosures, and utility shutoffs.
At the time of writing, HB 1557 remains under consideration in the Maryland General Assembly. While the bill is intended to create a safety net for displaced federal workers, ambiguities in its language have triggered compliance concerns—especially for employers and consumer reporting agencies conducting background checks.
A Legislative Response to DOGE’s Fallout
HB 1557 reflects Maryland’s ongoing commitment to targeted consumer protections, especially during periods of federal instability. The bill would establish a program administered by the Maryland Department of Labor to identify and certify “Qualified Individuals”—workers unemployed or furloughed due to federal government actions occurring after January 20, 2025.
The protections afforded to these individuals are substantial:
Credit reporting agencies (CRAs) must implement an “adverse information freeze,” preventing the addition of new negative data to affected consumers’ credit reports.
Mortgage lenders, landlords, and utility providers must accept partial payments and are barred from imposing late fees or disconnecting essential services.
Courts must stay eviction and foreclosure proceedings where the tenant or borrower has verified eligibility under the program.
These safeguards are intended to last for the duration of an individual’s eligibility—up to one year from certification—followed by the availability of a two-year, interest-free repayment plan.
What It Means for Employers and Background Screening
For employers, the most consequential provision of HB 1557 lies in its proposed restriction on credit reporting. Specifically, the bill would amend Maryland’s Commercial Law to prohibit consumer reporting agencies from including “adverse credit information” in consumer reports about Qualified Individuals. This is particularly impactful for employers who use credit checks to evaluate applicants for roles involving financial responsibilities, data security, or high-level decision-making authority.
While the federal Fair Credit Reporting Act (FCRA) permits the use of credit reports for employment purposes, Maryland’s proposed restrictions could impose additional limits within the state’s jurisdiction. Employers conducting background checks in Maryland should be aware that reports for certain applicants could be incomplete or missing key credit-related data.
This may have operational and risk implications, particularly in regulated industries such as banking, defense contracting, or healthcare, where creditworthiness is often viewed as a proxy for financial reliability or ethical conduct.
Drafting Ambiguity: “Adverse Credit Information” vs. “Adverse Information”
While the bill’s intent is clear—protecting the financial integrity of displaced federal workers—the statutory language introduces ambiguity that could create compliance uncertainty for CRAs and employers alike.
In Section 14–1203(c) of Maryland’s Commercial Law, the bill clearly prohibits CRAs from reporting
“adverse credit information” about Qualified Individuals. This includes defaults, delinquencies, and other negative financial items.
However, in Section 14–1212.4, which details the mechanics of the “Adverse Information Freeze,” the bill broadens the restriction to “adverse information”—a term left undefined.
This inconsistency raises a critical question: Does the freeze apply only to credit data, or does it also include criminal history, eviction records, or other negative public records?
A plain reading of the earlier sections—and the bill’s stated purpose of addressing financial harm—suggests that the legislature intended to limit the restriction to credit-related data. Yet without a statutory definition of “adverse information,” the broader phrasing in the later section could be interpreted to prohibit the reporting of any negative data, including criminal background information, which is commonly used in employment screening.
If left unaddressed, this ambiguity could lead to over-compliance, underreporting, or litigation risk—particularly where criminal history checks are essential to an employer’s screening process.
Navigating the Gray Area
Until regulators or legislators clarify the scope of the “adverse information” restriction, CRAs and employers operating in Maryland should:
Review background screening policies to determine which reports include credit data and whether those are used in employment decisions.
Coordinate with consumer reporting agencies to ensure appropriate suppression of credit-related data for Qualified Individuals, as verified by the Department of Labor.
Avoid blanket suppression of non-credit data unless further guidance is issued or unless there is a high litigation or regulatory risk.
As a best practice, document all interpretive decisions—particularly where the language of the law remains unclear.
Parting Thoughts
Maryland’s House Bill 1557 is a product of its political moment: a rapid, sweeping response to the economic instability caused by DOGE-led federal layoffs. While its consumer protection goals are laudable, its imprecise drafting introduces ambiguity that employers and background screening providers must now navigate.
As more states consider ways to protect vulnerable populations during periods of federal disruption, HB 1557 serves as a case study in the importance of clear legislative drafting—especially when compliance hinges on the meaning of a single word.
Release Date: April 10, 2025
Alonzo Martinez
Alonzo Martinez is Associate General Counsel at HireRight, where he supports the company’s compliance, legal research, and thought leadership initiatives in the background screening industry. As a senior contributor at Forbes, Alonzo writes on employment legislation, criminal history reform, pay equity, AI discrimination laws, and the impact of legalized cannabis on employers. Recognized as an industry influencer, he shares insights through his weekly video updates, media appearances, podcasts, and HireRight's compliance webinar series. Alonzo's commitment to advancing industry knowledge ensures HireRight remains at the forefront of creating actionable compliance content.