Credit Checks in Job Screening Come under Fire

By MarketWatch | Tribune-Review/Pittsburgh Tribune-Review, October 24, 2010 | Go to article overview

Credit Checks in Job Screening Come under Fire


MarketWatch, Tribune-Review/Pittsburgh Tribune-Review


WASHINGTON -- With the national unemployment rate at 9.6 percent, the Equal Employment Opportunity Commission is concerned about employers using job applicants' credit histories as a screening tool.

The commission met last week to hear testimony from groups about employers' practice of checking credit reports. The meeting is part of a longer-term examination of barriers to employment.

"An ever-increasing number of job applicants and workers are being exposed to employment screening tools, such as credit checks, that could unfairly exclude them from job opportunities," said Jacqueline Berrien, chairman of the Equal Employment Opportunity Commission.

It's legal for employers to obtain personal information about job- seekers and workers, including consumer reports that measure credit worthiness. But some say using credit history as a screening tool has a disparate impact on some groups.

"Numerous studies have documented how, as a group, African- Americans and Latinos have lower credit scores than whites," said Chi Chi Wu of the National Consumer Law Center. "If credit scores are supposed to be an accurate translation of a consumer's credit report and creditworthiness, that means these groups will fare worse when credit history is considered in employment."

Democratic Rep. Luis Gutierrez of Illinois, chairman of the House Financial Services Subcommittee on Financial Institutions and Consumer Credit, said in a statement last month that there is the potential for a "subconscious bias" against those with more negative data in their reports.

"You simply cannot tell a person's character, integrity or how well they will perform their job by looking at their credit report," Gutierrez said. "The fact that someone has a credit report that is not superior to another job candidate does not make them less able to do the work at an office or a factory, nor does it make them more or less likely to steal from their employer."

The subcommittee recently held a hearing on a bill that would amend the Fair Credit Reporting Act to prohibit employers, with certain exclusions, from using a consumer report for hiring or firing if the report contains information about creditworthiness, credit standing, or credit capacity.

Worker advocates voiced concern Wednesday that consumer reports may not accurately reflect or predict whether a job seeker will succeed in the workplace. And some questioned whether credit checks should be used for workers outside of certain levels or functions.

Employers are required to let applicants know whether their credit report was used against them. …

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