Thursday, October 21, 2010

EEOC Holds Public Meeting to Address Use of Credit Histories in Pre-Employment Screening

Yesterday the Equal Employment Opportunity Commission ("EEOC") held a public meeting to hear testimony from representatives of various stakeholder groups as well as social scientists and the Federal Trade Commission on the growing use of credit histories as selection criteria in employment.

From the press release on the meeting:
“High unemployment has forced an increasing number of people to enter or re-enter the job market,” said EEOC Chair Jacqueline A. Berrien. “As a result, an ever increasing number of job applicants and workers are being exposed to employment screening tools, such as credit checks, that could unfairly exclude them from job opportunities. Today’s discussion provided important input into our agency’s work to ensure that the workplace is made free of all barriers to equal opportunity.”

The Commission heard from a diverse set of experts. Chi Chi Wu of the National Consumer Law Center (NCLC) expressed grave concerns that the use of credit histories is mushrooming at the time of economic instability for many Americans, noting that the use of credit histories “create[s] a fundamental ‘Catch-22’ for job applicants,” especially during this period of high unemployment and high foreclosures, both of which have a negative impact on credit.” She observed, “You can’t re-establish your credit if you can’t get a job, and you can’t get a job if you’ve got bad credit.” This view was echoed by several of the witnesses.
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Representatives from the business community—Michael Eastman of the U.S. Chamber of Commerce, Christine V. Walters of the Society of Human Resources Management (SHRM) and Pamela Quigley Devata of the law firm Seyfarth Shaw, LLP—told the Commission that the use of credit histories is permissible by law, limited in scope, and predictive in certain situations of reliability.

Walters of SHRM said that “13 percent of organizations conduct credit checks on all job candidates … [and] another 47 percent … consider credit history … for select jobs,” but for those employers, “credit histories are but one piece of the puzzle.” It is the experience of SHRM member companies that very few utilize credit histories for every single job opening. Devata asserted that the use of credit histories is driven, in part, by the need for background information on potential employees in a current environment when it is difficult to obtain any but the most basic information in job references.
Only four states currently have specific legislation against the use of credit history in the employment context (with exceptions, of course), with Illinois becoming the newest state. Wisconsin has always been progressive with respect to employment law legislation and has proposed it in the past with no success. Perhaps a renewal is in the works?

UPDATE: The Wall Street Journal has a short article on the meeting.

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