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.
December 22nd, 2010 at 12:15 pm
As someone whose credit score has taken a roller coaster ride (i.e., someone who has a huge amount of student loan debt, other obligations, and a spotted credit history), I welcome this change. I’ve often wondered if my credit score has kept me from receiving interviews with some employers. I’ve often wondered what statistical correllations companies (and the score providers) used to justfify their use of the score. I have a solid employment history and a very good reputation along the way. We’ve had some credit ups and downs, but we’ve always made good on everything. People apply for jobs because they want to earn their keep. If already employed, they might be looking for a better gig so as to improve their financial situation.
To me, using credit scores to screen job applicants always seemed like a soup kitchen that would deny meals to people because they looked too hungry.
December 23rd, 2010 at 10:14 pm
In survey after survey, including a recent MSNBC survey, more than 90 percent of Americans say that workplace discrimination based upon someone’s personal credit report is wrong and should be illegal. ZERO statistical evidence exists to tie bad credit reports to fraud! It’s already illegal in 3 states and HR3149: The Equal Employment for All Act would make it illegal in every state, but most Americans don’t even know the legislation exists. Please support the overwhelming will of the people and the rights of highly qualified American workers to compete on a level playing field during this horrible economic disaster. Join our FB PAG at: http://groups.to/h.r.3149 or shoot us an e-mail at hr3149@hotmail.com with”sign me up” in the subject line.
January 4th, 2011 at 12:51 am
didnt anyone notice that it was the federal government, here in cleveland, ohio, that used workers’ credit reports to terminate their employment from DFAS (defense finance) including but not limited to a worker who had ‘new’ debt due to a serious family illness (cancer)! that concept simply blew my mind, to see workers terminated from positions they held for years based on a credit report or score. its a good thing to know that DFAS is an employer to be wary of, especially if one’s credit report is looking a bit tattered after a long spell of unemployment (with or without u.e. payments). congressman kucinich addressed the matter publicly, but word on the street is that the feds (as a potential employer) need to be looked at a bit more closely!!