Senate bill introduced barring credit checks on job applicants

January 29, 2014 by

Law and justice concept, gavelSenator Elizabeth Warren of Massachusetts introduced the “Equal Employment for All Act” (S. 1837), on December 17, 2013 which prohibits employers from inquiring about employees’ and job applicants’ credit history.

Specifically, the bill states ‘‘a person, including a prospective employer or current employer, may not use a consumer report or investigative consumer report, or cause a consumer report or investigative consumer report to be procured, with respect to any consumer where any information contained in the report bears on the consumer’s creditworthiness, credit standing, or credit capacity.”

The bill was created on the belief that credit history is not an accurate depiction of job performance capability. In a press release, Warren stated that “a bad credit rating is far more often the result of unexpected medical costs, unemployment, economic downturns, or other bad breaks than it is a reflection on an individual’s character or abilities. It was previously thought that credit history may provide insight into an individual’s character, but research has shown that an individual’s credit rating has little to no correlation with his or her ability to be successful in the workplace.”

Those that support the bill also support the ban on credit checks due to the inaccuracies that the reports can contain. According to the Federal Trade Commission (FTC), about 21 percent of Americans have had an error on a credit report from at least one of the three major credit bureaus.

Those opposed to the bill feel a credit check is necessary for employment, especially for the positions dealing with money. Elizabeth Milito, senior executive counsel at the National Federation of Independent Business argued that “a credit check can serve an important function in certain jobs, especially in the financial services industry. A blanket prohibition would disadvantage many businesses that use credit as one component of a background check.”

One exception to the bill is for consumers who currently hold or are applying for a job that requires national security clearance; they would still be required to undergo a credit check.

Steve Larson
An experienced trial lawyer who handles both hourly and contingent fee cases, Steve has expertise in class actions, consumer cases, antitrust litigation, securities litigation, corporate disputes, intellectual property disputes, unfair competition claims, employment matters, and disputes involving family wealth. Steve regularly represents individuals and businesses in federal and state court and has obtained class-wide recovery in multiple class actions. A veteran practitioner, Steve's clients value his creative approach to resolving complex litigation matters.

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