Nearly half of all employers check an applicant’s credit before offering a job or an employee’s credit prior to a promotion. Employer credit checks are currently legal under the Fair Credit Reporting Act (FCRA) and are conducted from minimum wage, entry level jobs all the way up to senior management positions. According to a recent report, at least one in ten Americans without a job has been denied a job for which they were qualified due to a credit check. This credit checking practice tends to exacerbate an already vicious cycle for unemployed Americans—someone loses their job, has trouble paying bills, falls into debt, cannot get a job because of poor credit, therefore their financial situation and credit gets worse, and so on. This begs the question: What is the solution for these struggling unemployed Americans?
The Equal Employment for All Act of 2013
Senator Elizabeth Warren (D-Mass) and six other senators have introduced a bill that would help solve the credit problem for job applicants. These senators reason that there has been no causal connection between poor credit rating and poor job performance. In fact, poor credit ratings are often due to unexpected medical bills, errors on the part of the credit reporting agencies, or other factors beyond the job applicant’s control. Therefore, credit ratings may have very little bearing on a person’s character, ability, or dependability. An employer may ultimately miss out on hiring the most qualified and talented applicant because of a credit rating.
The bill aims to do the following:
-Amend the FCRA to prohibit employers from suggesting or requiring that applicants disclose their credit information and keep employers from obtaining consumer credit reports;
-Keep employers from making adverse hiring or employment decisions based on a poor credit rating or other information regarding creditworthiness.
-Allow for exemptions for employers hiring for positions requiring national security clearance.
If passed, the bill would allow many unemployed Americans to secure jobs regardless of debt load or other negative marks on a credit report. The bill would especially impact minorities, women, seniors, and students, as credit checks unfairly affect and discriminate against these groups. For example, single or divorced mothers often struggle financially, but also need jobs to survive and raise their children. Additionally, many employers have been suspected of using credit checks to try to screen out applicants who are part of a minority.
Many civil rights advocacy groups have shown support for the bill, including the NAACP and the Leadership Conference on Civil and Human Rights. Representatives for these organizations have stated that employer credit checks are bad for job seekers, employers, and the American economy in general.
If you have any questions regarding employer credit checks or any other employment law, do not hesitate to contact HKM Employment Attorneys today to schedule a consultation.