Yesterday, I discussed some pending federal legislation that would expand the FMLA to cover
part-time employees. Now, I hear that another bill introduced in the U.S.
House of Representatives, known as the Equal Employment for All Act, would
amend the Fair Credit
Reporting Act to prohibit the use of consumer credit checks against
prospective and current employees for the purposes of making adverse employment
You can download a copy of the Equal Employment for All
This legislation comes as a shot to business groups, many
of whom regard credit checks as a safeguard against hiring people who may have
trouble with money for positions of trust that involving the handling of money.
According to a 2012
SHRM survey, among organizations that initiate credit background checks, 87
percent do so for positions with financial responsibilities.
Although critics of credit checks tout misuse, that risk
is mitigated by protections already built into the FCRA. That is, if an
employer takes an adverse employment action based on information in a consumer
report, it must notify the applicant or employee, as well as advise of the
right to see information being reported and to correct inaccurate information.
Further, anti-discrimination laws also provide another
potential avenue for employees who believe that employers are misusing credit
checks to pursue redress. And some states have already passed laws forbidding
the use of credit checks in employment decisions.
Moreover, credit checks are rarely used in the early
phases of the interview process. Rather, they generally enter into the hiring
equation near the end. According to the 2012
SHRM survey, among organizations that initiate credit background checks, 58
percent do so after making a contingent job offer and 33 percent after the job
interview. Thus, very few applicants for a particular opening are
Although fewer employers than in previous years utilize
credit reports as a hiring tool, proponents can cite enough pros and safeguards
to outweigh the cons.
I suspect that the Equal Employment for All Act will not
This article was originally published on Eric B. Meyer's blog, The Employer
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