The federal government has made no secret of its distaste for credit checks in the employment process, and now they’re taking out the big guns to fight the practice.
It’s bad enough that many of you have had to search for work for months, deplete your savings, and maybe miss a few bill payments, or lose your home or car; but then some employers would deny you a job because your credit was lousy. That’s just adding insult to injury. And, in some cases, such background checks can be discriminatory, impacting one group or groups who may have more problems with credit than others. It’s gotten many job seekers I’ve spoken with hot under the job-hunting collar.
Well, those folks have a friend at the U.S. Equal Employment Opportunity Commission, Jacqueline Berrien. She became chair of the agency in April and she told me a while back that one of her top priorities was to smackdown such bogus background checks. Yesterday she took her first major shot.
The EEOC filed a lawsuit against Kaplan Higher Education Corp. charging their practice of doing credit checks on job seekers adversely impacted black job seekers.
“Since at least 2008, Kaplan Higher Education has rejected job applicants based on their credit history. This practice has an unlawful discriminatory impact because of race and is neither job-related nor justified by business necessity,” the suit alleged.
About 60 percent of companies do credit checks on job candidates, according to the Society of Human Resource Management (SHRM). Many employers argue they are an important screening tool. While checking an applicant’s financial history was standard practice when it came to jobs in banking, for example, hiring managers in many industries now see credit checks as a way to find out more about the people they are considering hiring.
“Employers reviewing a credit report want to see that the applicant is financially stable, not overextended, and meeting his or her obligations in a responsible manner,” says Sam Davidson, customer service manager with Bills.com.
But in today’s economic environment, and the continuing crummy job market, such credit checks seem somewhat cruel, no? Many people beyond the EEOC regulators seem to think so and a handful of states have already outlawed the practice. Hopefully the EEOC’s recent actions will spark a national outcry.
An EEOC spokeswoman Christine Nazer would not comment on how many workers were part of the lawsuit; but this litigation sends a pretty serious message to companies — watch your credit-screening backs.