Give applicants credit, not credit checks, proposes Senator

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The morality of credit checking has been brought into question by US Senator Elizabeth Warren. The Senator for Massachusetts introduced legislation on Tuesday which would prevent employers from even so much as suggesting that applicants disclose their credit history. The only exemption would be for positions that require national security clearances.

In a fact sheet, the Senator accused employers of using credit reports to filter out minorities, saying that the bill would help cut down discrimination against people of color. However, in 2009 an Equal Employment Opportunity Commission (EEOC) lawsuit was dismissed after the court said there was a lack of evidence that credit checks disproportionately impact minority groups.

Do HR departments need to be concerned about the bill? Not if HR tertiary instructor Michael Haberman’s prediction turns out to be true.

“As long as the Republican Party controls the House of Representatives, a bill like that is not going to get passed,” said the vice president of Omega HR Solutions. “There’s too big of an interest for employers to make sure they’re protecting themselves by being able to do credit checks and background checks as a method of making sure they get the right employee.”

Despite uncertainty about the bill’s future, it’s important to be cautious about credit checks as long as the EEOC continues to pressure employers to rein in credit checking.

Key HR takeaways

Only use credit checks when relevant to the position A strong credit history can indicate sound financial and/or organizational skills, good planning ability and, drawing a longer bow, even self-discipline. But are any of these things really relevant to the position you’re trying to fill?

Check credit after you have already made a job offer The simplest way to prevent false accusations of discrimination is to save the check until after you’ve made a tentative offer. “That in and of itself will eliminate you misusing the credit check because you’re only going to use it on a candidate that you’re genuinely interested in,” Haberman said.

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