Employers Beware: Credit Checks May Expose You to Unwanted Discrimination Claims

Employers Beware: Credit Checks May Expose You to Unwanted Discrimination Claims

Can an employer be sued based on its use of credit checks during hiring? Yes, at least according to the Equal Employment Opportunity Commission (EEOC). There appears to be a new enforcement direction from the EEOC, as evidenced by certain recent court filings. Over the past several months, the agency has filed complaints on behalf of classes of workers, claiming that their employers participated in patterns or practices of illegal discrimination when refusing to hire a protected class or classes of job applicants based on credit histories.

EEOC Enforcement Initiatives

The EEOC appears to be cracking down on employers who it accuses of rejecting job candidates based on their credit history. Notably, the EEOC asserts that an employer's alleged consideration of candidates' credit histories during the hiring process results in violations of the Civil Rights Act of 1964. The agency contends that some employers are rejecting job applicants solely based on their credit history, a practice that allegedly has an unlawful discriminatory impact because of gender or race and is neither job-related nor justified by business necessity.

In pursuing enforcement in these recent cases, the EEOC is seeking injunctive relief against employers' use of job applicants' credit history, as well as lost wages and benefits, and offers of employment for people who the employers opted not to hire. If successful, these damages could be significant and very costly to employers.

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This GT Alert was written by  Mona M. Stone -Questions about this information can be directed to your  Greenberg Traurig  attorney. ©2010 Greenberg Traurig, LLP. All rights reserved. This Greenberg Traurig Alert is issued for informational purposes only and is not intended to be construed or used as general legal advice.

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