Lawmakers: Employers Should Not Use Credit Histories as a Hiring Factor

Employers who use a person’s credit report as a factor in hiring are discriminating against potential hires and unfairly targeting people who may have fallen on hard financial times, according to Democratic lawmakers who want to ban this practice.
Sen. Elizabeth Warren, D-Mass., and Rep. Steve Cohen, D-Tenn., want to halt the ability of employers to check the credit history of prospective employees.

In an op-ed published on Tuesday, the two lawmakers said that an employee’s credit report has nothing to do with his or her ability to do their job. They also said that the 2008 financial crisis had cost many people their homes and given them debt that they are still resolving.
Both Warren and Cohen have reintroduced the Equal Employment for All Act, which would ban employers from checking the credit reports of potential employees with a few exceptions.
Even when people are “able to sell their homes—often at a loss—or after they are forced to close their business’ doors or find temporary work, that bad credit history continues to haunt them,” Warren and Cohen wrote. “And despite the often-desperate effort to find a job, many employers are unfairly shutting the door on applicants with less-than-stellar credit. We should call this what it is: discrimination.”
If given permission by a prospective employee, an employer can retrieve the applicant’s credit history and look for outstanding debts. In a 2012 survey conducted by the Society for Human Resource Management, 53 percent of employers said that they did not conduct background checks on any of their job candidates; however, 87 percent said that they did check the credit history of potential employees in financial positions. Forty-five percent of respondents in the survey said that they conducted credit checks to prevent theft and embezzlement.
“Credit reporting companies that sell Americans’ personal data to potential employers have pushed the narrative that a credit history somehow provides insight into someone’s character,” Warren and Cohen wrote. “But, as even a representative from the TransUnion credit bureau admitted, they ‘don’t have any research to show any statistical correlation between what’s in somebody’s credit report and their job performance.’ “

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