Legislators Push For Ban On Employer Checks Of Worker Credit Ratings

Date: September 16, 2015

Warren, Cohen Allege Credit Checks Are Discriminatory

Sen. Elizabeth Warren (D-MA) and Rep. Steve Cohen (D-TN) have reintroduced their Equal Employment for All Act in Congress. The measure, first proposed in 2013, would bar employers from checking the credit histories of their workers. The duo allege the practice “is a form of discrimination” that “unfairly targets people,” the Huffington Post reported. The Post noted that currently, with a prospective employee’s permission, potential employers “can pull their credit history and look for outstanding debts that the person has not attempted to resolve.” Though a 2012 survey by the Society for Human Resource Management found that 53% of employers didn’t conduct background checks for any job candidates, but this varied by job title. For applicants looking to hold financial positions, 87% of employers said they did check credit history. In a recent op-ed, both Warren and Cohen argued that many Americans “have bad credit through no fault of their own” due to unforseen illness, unemployment, divorce, or death. Furthermore, they argued that the 2008 financial crisis left many in the US faced with financial burdens like unemployment, mortgage payments that couldn’t be refinanced, or other issues.

What Happens Next

The Equal Employment for All Act was reintroduced in Congress last month, read twice, and referred to the Senate Committee on Health, Education, Labor, and Pensions, where its passage is uncertain. Action on the measure before 2016 is unlikely, but the issue will be up for discussion.

What This Means For Small Businesses

Small business owners need the tools to determine whether their employees are the right people for the job. Small businesses should have the right to make the judgment call on whether or not to examine potential employees’ credit ratings. Additional federal oversight and regulation over small businesses would complicate individual labor decisions, and is anti-business.

Additional Reading

NFIB has previously examined the issue of whether or not small businesses should perform credit checks.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

Related Content: Small Business News | Labor

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