Credit Checks May Expose Employers to Unwanted EEOC Discrimination Claims, By Mona Stone

By Mona M. Stone

This Emerging Issues Analysis by attorney Mona Stone explores the issue of credit checks and discrimination.

“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),” writes Mona M. Stone. “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.”

“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,” explains the author. “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,” Stone predicts. “Though it conducts thousands of investigations annually, the EEOC is relatively conservative in terms of the number of discrimination lawsuits it litigates. It generally only pursues litigation either when it believes serious abuse has occurred or when it attempts to create new legal precedent. In its last fiscal year, for instance, the EEOC filed only 250 lawsuits out of the more than 99,000 charges reported to the agency. The EEOC's recent focus on the use of credit checks during hiring is seen as part of a heightened yet controversial effort to eliminate allegedly ‘arbitrary barriers’ to employment for minorities by the EEOC, which is governed by five Commissioners, three of whom have been appointed by President Obama.”

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Mona M. Stone has represented both public and private entities throughout the country, ranging from individuals and small businesses to multibillion-dollar companies. She has wide-ranging experience in complex commercial litigation and labor and employment matters. Mona is a published author and frequent speaker, having written and presented on many topics involving best practices for employers, contract drafting and enforcement, legal career management topics, and diversity issues. Mona advises corporations, partnerships and limited liability companies on regulatory compliance and commercial agreements. She has drafted, interpreted, and litigated various corporate and service contracts, and she has counseled clients on developments in the law affecting their operations and business practices. She has defended clients in SEC investigations and represented a client seeking to recover nearly $40 million stolen from escrow accounts. She also supervised a team of over 75 attorneys in representation of a major payment card network in complex antitrust litigation involving billions of dollars in damages claims.

Mona regularly handles labor disputes and represents corporate and individual clients at administrative hearings, arbitrations and mediations. She drafts and updates company policy manuals and suggests proactive measures employers may take to avoid problems down the road. Mona also advises clients on employment agreements, including non-compete and non-disclosure terms. She has handled complex insurance defense and counseling matters and has concluded settlements where hundreds of millions of dollars of potential liability were resolved. Mona has handled insurance defense cases involving discrimination, property damage, product liability, negligence, and personal injury claims.

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