Senate Democrats Introduce Bill to Bar Employers From Using Credit Checks

December 18, 2013
Washington Post 

Senate Democrats on Tuesday introduced the Equal Employment for All Act, which would block companies from performing credit checks on job applicants. Lawmakers say the practice contributes to unemployment and disproportionately affects women and minorities, who suffered the greatest credit damage during the financial crisis.

“No one should be denied the chance to compete for a job because of a credit report that bears no relationship to job performance,” declared Sen. Elizabeth Warren (D-Mass.), one of seven bill co-sponsors. The proposal provides an exemption for jobs that require a national security clearance. Otherwise, it is an effort to stop employers from disqualifying would-be hires based on poor credit.

The Fair Credit Reporting Act allows companies to check a credit history with a job applicant’s consent. A 2012 survey by the Society for Human Resource Management found that 47 percent of employers use credit checks in their hiring decisions. Some companies use credit reports to decide if applicants who would be dealing with finances can manage their own money, said Elizabeth Milito, senior executive counsel at the National Federation of Independent Business. Many other jobs, however, require credit checks that, advocates and lawmakers argue, provide no indication of a worker's ability to, for example, deliver packages or manage a stockroom. Advocates also point out that credit reports often contain inaccuracies. The proposed bill has no GOP support, and so it is uncertain whether it will make it to the Senate floor.

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