Bill to Restrict Use of Credit Checks by Employers Passed by House Financial Services Committee

Credit Reports

Written By ESR News Blog Editor Thomas Ahearn

On July 11, 2019, the U.S. House Committee on Financial Services – which oversees the nation’s housing and financial services sectors – passed “H.R. 3614, the Restricting Use of Credit Checks for Employment Decisions Act” which will ban the use of credit information for most employment decisions except when required by law or for a national security clearance, according to a press release from the Committee.

The bill – which was introduced by Representative Al Lawson (D-FL) – passed by a vote of 32-26 and will prohibit employers from asking questions about the credit history of job applicants during job interviews or on job applications. The legislation is part of a markup of ten bills that will reform the credit reporting industry introduced by Representative Maxine Waters (D-CA), who is Chairwoman of the Committee.

A March 2013 report titled ‘‘Discredited: How Employment Credit Checks Keep Out Qualified Workers Out of a Job’’ found that one in four unemployed survey participants said a potential employer had requested to check their credit report as part of a job application. Among applicants with bad credit histories in the survey, one in seven were told they were not being hired because of their credit history.

As of July 2019, eleven states – California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, and Washington – and the District of Columbia (D.C.) have passed laws that restrict the use of the credit reports by employers for employment purposes. The cities of Chicago, New York City, and Philadelphia have also passed similar laws regarding credit checks by employers.

Employment Screening Resources® (ESR) offers employers a white paper titled “States with Laws Regulating Credit Reports for Employment” to help them understand restrictions on credit checks. ESR also provides credit checks that comply with federal, state, and local restrictions on the use of credit reports by employers. To learn more, visit www.esrcheck.com/Background-Checks/Identity-Credit/.

NOTE: Employment Screening Resources® (ESR) does not provide or offer legal services or legal advice of any kind or nature. Any information on this website is for educational purposes only.

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