As the US labor market comes under pressure, two senior figures in Washington are pushing to end a practice that prevents large swaths of US workers from obtaining jobs.
A bill reintroduced today by Elizabeth Warren, the senator from Massachusetts, and Steve Cohen, the representative from Tennessee, bans employers from using credit checks to vet potential hires.
Denying jobs based on a candidate’s financial history “makes no sense”, the prominent Democrats argue. It also disproportionately affects minorities.
The bill would amend the Fair Credit Reporting Act to stop employers from requiring job applicants to disclose their credit history, or suggesting they should, and from procuring consumer or investigative reports on applicants. It also would prohibit credit reporting agencies from providing reports to employers, and prevent employers from disqualifying job applicants based on credit information.
“Nobody should be discriminated against and miss out on a job opportunity because of their financial history,” Warren said in a statement to the Guardian. “While the Trump administration tanks the labor market, our bill prohibits employers from using credit scores in their hiring process so that everyone can have a fair chance.”
Versions of the legislation have been proposed since the aftermath of the 2008-09 economic recession, when Americans’ consumer and credit debt swelled.
Credit reports in the hiring process are “disproportionately used to disqualify
people of color from open positions”, according to Warren’s office, which said that women are also more likely to have poor credit.
About half of employers use information from credit reports in their hiring processes, according to a report published last year by the Urban Institute.
One in 10 respondents to a 2012 Demos survey said they had been denied a job due to information in their credit report, despite a lack of correlation between credit history and job performance. Poor credit is most often associated with medical debt, or periods of unemployment.
“Using a job applicant’s credit history to deny employment is not just unfair, it also makes no sense. Credit scores are an inaccurate way to predict future job performance or ability,” said Cohen in a statement. “We should be making the job application process fairer so people can succeed with good jobs, not adding obstacles to prevent them from being hired.”
Several states, including California, Colorado, Hawaii, Illinois, Nevada, Oregon and Washington, and municipalities have already enacted local laws that ban employers from using credit reports in hiring, albeit with some exemptions, such as national security roles or positions in financial services. New York City banned the practice in 2015, and state legislators are currently pursuing a statewide ban.
