A bill that would limit the use of credit checks of job applicants in employment screening has been reintroduced into Congress by U.S. Rep. Steve Cohen (D-TN).

As originally written, the ‘Equal Employment for All Act’ would amend the Fair Credit Reporting Act (FCRA) to prohibit the use of consumer credit checks against prospective employees and existing employees as a means of making adverse employment decisions, with an exception for employers seeking applicants in national security or positions with major financial responsibilities.

Congressman Cohen – who wrote the same bill in the last Congress but it was never voted on – noted in a news report that the recession has led some job applicants into debt and credit checks can keep them unemployed. He also noted the Equal Employment Opportunity Commission (EEOC) has suggested such use of credit checks may affect women and minorities disproportionately.

A 2010 survey from the Society for Human Resource Management (SHRM) on the use of credit reports for employment screening revealed that:

  • 13 percent of employers surveyed conducted credit checks on all job candidates.
  • 40 percent of employers did not conduct any credit checks on job candidates.
  • 47 percent of employers considered credit checks for candidates of selected jobs.
  • 60 percent of employers overall ran credit checks on at least some applicants.

Credit checks for employment purposes have become a very controversial subject. Job applicants looking for work in a tough economy are caught in a classic “Catch-22” situation where they have bad credit because they cannot get a job but cannot get a job because they have bad credit.

Employment Screening Resources (ESR), a leading provider of background checks accredited by the National Association of Professional Background Screeners (NAPBS), believes credit checks are just one of many factors – including education, experience, references, and past criminal history – that employers use to find qualified job applicants, employers should approach with caution when using them for employment screening, and articulate a clear rationale as to why a credit check is related to a particular job. Employers should also be aware of the potential for errors in credit reports.

The question of whether use of credit checks in employment screening is discriminatory is so controversial that the use of credit reports for employment screening is the number one background screening trend for 2011 as chosen by Employment Screening Resources founder and President Lester Rosen. For a list of all trends in ESR’s ‘Top Ten Trends in Employment Screening’ for 2011, visit: https://www.esrcheck.com/Top-Ten-Trends-In-Background-Screening-2011.php.

For more information about credit background checks, visit Employment Screening Resources (ESR) at https://www.esrcheck.com.

Founded in 1996 in the San Francisco area, Employment Screening Resources (ESR) wrote the book on background checks with ‘The Safe Hiring Manual’ by ESR founder and President Lester Rosen and is accredited by The National Association of Professional Background Screeners (NAPBS®) . To learn more about Employment Screening Resources, visit https://www.esrcheck.com or contact Jared Callahan, ESR Director of Client Relations, at 415.898.0044 or [email protected].