Friday, August 7, 2009

HR 3149 Aims to end the use of Credit Reports in Hiring

At the Centennial Convention of the NAACP, the delegates unanimously passed a resolution opposing the use of Credit Reports in Employment and calling for all NAACP units to partner with like-minded organizations to bring an end to this practice.

Resolution: Use of Credit History in Employment
Therefore be it resolved, that the NAACP stands opposed to the use of credit reports in hiring as a form of economic discrimination, and will partner with allied organizations to conduct educational forums as well as working through the local, State, and Federal legislative process to make sure that such practices are prohibited.

House Bill 3149; the Equal Employment for All Act (HR3149) would amend the Fair Credit Reporting Act to generally prohibit the use of consumer credit checks in employment/hiring decisions.

Under the bill, employers would be prohibited from using information in a consumer report or investigative consumer report pertaining to an employee or applicant’s creditworthiness, credit standing, or credit capacity when making hiring determinations or taking adverse employment actions as defined by the Fair Credit Reporting Act. Notably, this prohibition would apply even if the employee or applicant consents to such use. The bill would establish exceptions when: (1) the employee or applicant applies for, or currently holds, employment that requires national security or FDIC clearance; (2) the employee or applicant applies for, or currently holds, employment with a state or local government agency that otherwise requires use of a consumer report; (3) the employee or applicant applies for, or currently holds, a supervisory, managerial, professional, or executive position at a financial institution; or (4) otherwise required by law.

The law is necessary because disaggregated credit data shows graduated disparities in credit scoring between racial and socio-economic groups. The use of credit checks for the purposes of making employment decisions would have a disparate impact on minorities and those from lower socio-economic classes, who are statistically likely to have lower credit scores than their more affluent counterparts. Furthermore, there is no reliable data that indicates that Credit History is any indicator of future job performance.

"There is no social science to support the assumption that credit histories reliably predict success on the job…this law would help to stop the vicious cycle of those who seek new job opportunities to pay their creditors but cannot obtain work because they lost a job and have been unable to pay their creditors," said Audrey Wiggins, director of the Lawyers' Committee for Civil Rights Under Law's Employment Discrimination.

The Bill is currently in the House Committee on Financial Services.

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