The Equal Employment For All Act

In March 2010 I blogged about the HR 3149 Equal Employment For All Act. Under this bill, if it became law, the bill would limit an employers use of an applicant's credit report when screening that person for a job.

January 19th of this year, Rep. Steve Cohen (D-TN) reintroduced HR 3149 as HR 321, The Equal Employment For All Act. Again the aim is to "amend the Fair Credit Reporting Act to prohibit the use of consumer credit checks against prospective and current employees for purposes of making adverse employment decisions."

There are concerns about fairness in the use of credit reports. Since a percentage of minority group members in the U.S. with poor credit ratings is significantly greater than that of non-minorities, the EEOC has advised, and courts have held, that consideration of credit histories in making employment decisions can disproportionately affect minority applicants. As such, there is a violation of Title VII of the Civil Rights Act.

Under the bill, the use of credit reports in the hiring process would make exceptions and allow credit histories to be considered for jobs that require national security clearance, state or local government jobs, and certain jobs in the financial industry.

The question begs to be asked. Is poor credit an indicator of a person's character or ability to do a job well? People have been hit hard by the recession and have ended up with poor credit. In June the unemployment rate stood at 8.2%. Not having a job and money to pay bills can lead to bad credit as much as not paying your bills on time, even if you have money. It's a vicious cycle. People have credit that has been damaged by layoffs, company closures, medical bills or other factors beyond their control.

Some states are taking the initiative to limit the use of credit reports in the hiring process. Effective January 1, The Employment Credit Privacy Act went into effect in the state of Illinois. Signed into law by Illinois Gov. Pat Quinn, the law prohibits employers from using a person's credit history when it comes to getting a job. Washington, Hawaii and Oregon all have statutory requirements related to employer use of credit history.