Huffpost Business
Arthur Delaney Headshot

Civil Rights, Labor Advocates Demand End To Employment Credit Checks

Posted: Updated:
Print Article
UNEMPLOYMENT
AP

WASHINGTON -- A coalition of 25 civil rights and labor advocacy groups petitioned one of the nation's largest credit-monitoring firms on Tuesday to quit selling consumer credit info to employers.

Using credit histories to screen job applicants, the groups said, can trap the jobless and disproportionately burden black and Latino candidates. They want TransUnion, one of the Big Three credit companies alongside Equifax and Experian, to stop making credit reports available.

"As the only privately-held company of the big three, TransUnion has the ability to stop this practice overnight without worrying about stockholder reaction," said UniteHere spokeswoman Anne Marie Strassel.

Roughly 60 percent of companies factor credit information into hiring decisions, according to a 2010 survey by the Society of Human Resource Management, which supports the practice. The rate of employment credit checks increased from 35 percent in 2003 and 19 percent in 1996.

"Employers understand that individuals, who have been unemployed as a result of these difficult times, may have also had difficulty keeping up with their financial obligations," TransUnion spokeswoman Colleen Tunney-Ryan said in a statement. "What employers are interested in, is whether an individual acted prudently while he or she was employed. A pre-employment report is one tool to help them assess that."

There is no data reflecting how frequently job applicants are passed over because of bad credit.

HuffPost readers: Turned down for a job or a promotion because of crappy credit? Tell us about it -- email arthur@huffingtonpost.com. Please include your phone number if you're willing to do an interview.

On Monday, California Gov. Jerry Brown (D) signed a bill banning most businesses in the state from using credit checks to screen potential workers, making California the seventh state to restrict the practice. TransUnion has lobbied against state efforts to curtail its business.

The Equal Employment Opportunity Commission, which is currently suing two companies for reasons related to credit checks, held hearings on the practice last year. "The EEOC is concerned that not hiring people with poor credit may exclude qualified job seekers and some minority groups, and therefore may be discriminatory under civil rights law," EEOC spokeswoman Christine Nazer said in a statement to HuffPost.

"Employers need to show that the use of credit records is job-related and consistent with business necessity," Nazer said. "Moreover, credit history screening is an area where job seekers may not even know why they didn't get a job, and we are interested in looking closely at whether there may be possible discrimination because of a disparate impact on certain protected groups."

The coalition of groups opposed to employment credit checks says credit scores for black and Latino workers are 5 to 35 percent lower than scores for white workers. They also say credit checks are an unfair criteria for the unemployed because people without jobs to pay the bills are more likely to have negative items on their credit reports. (Some employers simply won't consider jobless applicants at all, a form of discrimination President Obama wants to ban.)

"We believe these barriers are a contributing factor to the drastic unemployment numbers we see for people of color," said Barbara Arnwine, director of the Lawyers' Committee for Civil Rights Under Law. "These credit checks are often used as disguises for other kinds of racial bias."

The businesses surveyed by SHRM said they were most likely to check credit histories for potential employees whose jobs would include financial responsibilities. Outstanding liens and judgments were the credit problems most likely to cause an applicant to be turned away. A business can't run an applicant's credit history without his or her permission.

Arthur Delaney is the author of "A People's History of the Great Recession," HuffPost's first e-book.

Around the Web

AnnualCreditReport

Should Companies Use Credit Checks to Screen Job Applicants?

Governor Brown signs bill limiting use of credit reports by California employers