Ban Proposed on Credit Checks for Employment Background Screening


In an effort to promote fairness for individuals who have been hit by the 2008 financial crises, or who have otherwise committed “irrelevant” past mistakes that have left them with a bad credit score, Senator Elizabeth Warren recently proposed a federal bill intended to ban credit checks for employment background screening purposes.

The Washington Times reported on the proposal on December 17 and published this quote from the Senator Warren:

Ban Proposed on Credit Checks for Employment Background Screening

“This law is about basic fairness — let people compete on the merits, not on whether they already have enough money to pay all their bills,” Warren said. “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.”

This proposed Senate bill, titled the “Equal Employment for All Act”, is designed to alter the Fair Credit Reporting Act. It effectively prohibits employers from checking candidates’ financial histories to provide the basis for deciding whether they should be hired or not.

Following the recent 2008 to present financial collapse, Fair Isaac corporation reports that the FICO scores for about 70 million Americans have subprime credit scores below 650. It is for this reason that the bill is gathering support on both sides of the political fence; An effort to help job applicants with low credit scores, but good resumes, from facing hiring discrimination for that reason.

It should be noted, however, that this bill isn’t the first time similar legislation has been raised at any level of government. In fact, at the state level we have such legislation in California, Colorado, Hawaii, Connecticut, Maryland, Illinois, Washington, Vermont, Oregon, and Nevada, as each state has already passed similar legislation over the past several years.

In a country where the majority of the workforce has been affected by the financial crisis, a bad credit report may no longer be considered as a valid basis for a company not to hire competent applicants, with this proposed law. Therefore, companies should take great care in making sure that their assessments of a person’s qualifications draw more heavily on aspects that the prospective employee has more control over than their credit score or the content of the report.

In line with these type laws, employment screening providers will need to adapt to this new development. Notably, several trusted online employment screening companies started posting advisories to its customers about the proposed law and credit report matters.

To ensure hiring practices remain in compliance with all local, state, or federal legislation, companies are recommended to consult with reputable employment background screening service providers like “The Accu-Facts Company”. With such providers regularly on the watch for developments that may affect the hiring landscape, for employers, companies can trust that the validated background screening information they’ll receive is current and reliable, notwithstanding the current debate on the use of credit profile reports, for employment.

(Article Information and Image from Elizabeth Warren proposes federal ban on credit checks for job applicants, The Washington Times, December 17, 2013)

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