Equal Employment for All Act Would Prohibit Employers from Using Credit Report Checks when Hiring

Congressman Steve Cohen (D-Tennessee-09) has introduced legislation in the U.S. House of Representatives – H.R. 645, the ‘Equal Employment for All Act’ – that would amend the Fair Credit Reporting Act (FCRA) to prohibit employers from using credit report checks and bankruptcy filings when hiring or making adverse employment decisions. Under H.R. 645, some exceptions allowing the use of credit reports would include jobs requiring security clearance, state or local government jobs, or certain individuals working in the financial industry. The full text of ‘the ‘Equal Employment for All Act’ is available at http://www.gpo.gov/fdsys/pkg/BILLS-113hr645ih/pdf/BILLS-113hr645ih.pdf.

“Using a job applicant’s credit history to deny employment is not fair because personal credit history is not an accurate predictor of job performance. We should be doing everything in our power to help people find jobs during these tough economic times – not hinder them,” Congressman Cohen stated in a press release available on his website at http://cohen.house.gov/press-release/cohen-introduces-bill-prevent-employers-using-credit-checks-hire-or-fire-employees-0.

The Equal Employment for All Act would amend the FCRA – a federal law that regulates the collection, dissemination, and use of consumer information such as credit reports – to prohibit the use of credit checks against job applicants and current employees for the purposes of making adverse employment decisions. The legislation would also provide several exceptions to permit a consumer credit report:

  • When the consumer applies for or currently holds employment that requires national security or Federal Deposit Insurance Corporation (FDIC) clearance;
  • When the consumer applies for, or currently holds, employment with a state or local government agency which otherwise requires use of a consumer report;
  • When the consumer applies for, or currently holds, a supervisory, managerial, professional or executive position at a financial institution;
  • Where otherwise required by law.

As reported earlier on the ESR News blog in February 2013, a Federal Trade Commission (FTC) study of accuracy in the U.S. credit reporting industry found that one in five consumers had an error on at least one of their three major credit reports while five percent had significant errors on one of their credit reports that could result in less favorable terms for auto loans and insurance. The full text of the FTC report is available at http://www.ftc.gov/os/2013/02/130211factareport.pdf.

Employment Screening Resources® (ESR), a nationwide background check provider accredited by the National Association of Professional Background Screeners (NAPBS), has long advised employers to approach credit reports with caution and to use only them if there is a clear nexus to the job while keeping in mind the possibility of such errors.

To help consumers better understand credit checks, ESR founder and CEO Attorney Lester Rosen co-authored a white paper titled ‘The Use of Credit Reports in Employment Background Screening – An Overview for Job Applicants’ that shows the many protections job applicants have when it comes to credit reports. The white paper also points out the fact that an ‘Employment Credit Report’ differs from the standard credit report in several ways and does NOT contain three-digit credit scores. The complimentary white paper is available at http://www.esrcheck.com/Download/.

ESR also offers information about ‘U.S. States with Laws Regulating Credit Reports for Employment’ for employers considering using credit checks. Currently, eight states – California, Connecticut, Hawaii, Illinois, Maryland, Oregon, Vermont, and Washington – limit or prohibit the use of employment credit checks by employers. For summaries of the laws and links to the actual text, visit http://www.esrcheck.com/States-with-Laws-Regulating-Credit-Reports-for-Employment.php.

In addition, the updated 2nd edition of ‘The Safe Hiring Manual – The Complete Guide to Employment Screening Background Checks for Employers, Recruiters, and Jobseekers’ (Facts on Demand Press / 736 Pages) by Lester Rosen that was published in October 2012 contains an entire chapter on the use and misuse of credit reports for employment purposes. For more information about the book, visit http://www.esrcheck.com/SafeHiringManual.php.

Employment Screening Resources® (ESR) – ‘The Background Check Authority®’ – is a nationwide background screening provider accredited by The National Association of Professional Background Screeners (NAPBS®). For more information about background checks from ESR, please visit http://www.esrcheck.com, call Toll Free 888.999.4474, or email clientsupport@esrcheck.com.

Sources:

http://www.gpo.gov/fdsys/pkg/BILLS-113hr645ih/pdf/BILLS-113hr645ih.pdf

http://cohen.house.gov/press-release/cohen-introduces-bill-prevent-employers-using-credit-checks-hire-or-fire-employees-0

http://www.esrcheck.com/wordpress/2013/02/11/ftc-study-on-credit-report-accuracy-finds-one-in-five-consumers-has-error-on-their-credit-reports/

About Employment Screening Resources® (ESR):

Founded by safe hiring expert Attorney Les Rosen in 1997, Employment Screening Resources® (ESR) – ‘The Background Check Authority®’– provides accurate and actionable information that empowers employers to make informed hiring decisions for the benefit of their organizations, employees, and the public. CEO Rosen literally wrote the book on background checks with “The Safe Hiring Manual” and ESR is accredited by The National Association of Professional Background Screeners (NAPBS®), a distinction held by a small percent of screening firms. Employers choosing ESR know they have selected an agency meeting the highest industry standards. To learn more about ESR, visit http://www.esrcheck.com or call toll free 888.999.4474.

About ESR News:

The Employment Screening Resources (ESR®) News blog – ESR News – provides employment screening information for employers, recruiters, and jobseekers on a variety of topics including credit reports, criminal records, data privacy, discrimination, E-Verify, jobs reports, legal updates, negligent hiring, workplace violence, and use of search engines and social network sites for background checks. For more information about ESR News or to send comments or questions, please email ESR News Editor Thomas Ahearn at tahearn@esrcheck.com. To subscribe to the ESR News Blog Feed, visit http://www.esrcheck.com/wordpress/feed/. To subscribe to the complimentary ESRcheck Report monthly newsletter, please visit http://www.esrcheck.com/Newsletter/.