Cohen Introduces Bill to Prevent Employers from Using Credit Checks to Hire or Fire Employees

WASHINGTON, D.C. – Congressman Steve Cohen (TN-9) recently introduced legislation that would prohibit employers from using credit checks as part of the hiring process.

“Using a job applicant’s credit history to deny employment is not fair because personal credit history is not an accurate predictor of job performance,” said Congressman Cohen. “We should be doing everything in our power to help people find jobs during these tough economic times – not hinder them.”

Congressman Cohen authored the Equal Employment for All Act (H.R. 321) to prohibit employers from using credit checks as part of the hiring process unless the position sought involves national security, FDIC clearance or tremendous financial responsibility.

According to Society for Human Resource Management, the number of U.S. employers conducting pre-employment credit checks is on the rise, up from 36 percent to 43 percent. However, unless the job position involves significant financial responsibility, a perspective employee’s credit score has not proven to be an accurate predictor of future job performance.

The Equal Employment Opportunity Commission (EEOC) has repeatedly acknowledged that the use of credit checks to screen out job applicants may disproportionately impact women and minorities, and therefore could be evidence of workplace bias.

This practice also poses a significant barrier to finding employment during tough economic times. In recent months, more than one million Americans have lost their jobs and now are struggling to pay their bills on time. Now, they're caught in a vicious cycle: To pay down their debt they need a job, but they can't get hired because of their debt.

The Equal Employment for All Act would amend the Fair Credit Reporting Act to prohibit the use of consumer credit checks against prospective and current employees for the purposes of making adverse employment decisions.

The legislation would provide several exceptions to permit a consumer credit report: (1) when the consumer applies for or currently holds employment that requires national security or FDIC clearance; (2) when the consumer applies for, or currently holds, employment with a state or local government agency which otherwise requires use of a consumer report; (3) when the consumer applies for, or currently holds, a supervisory, managerial, professional or executive position at a financial institution; (4) where otherwise required by law.

The measure is supported by more than 25 organizations, including the NAACP, NAACP Legal Defense and Educational Fund, National Organization for Women, National Consumer Law Center, Leadership Conference on Civil Rights, National Fair Housing Alliance, Consumer Action, National Association of Consumer Advocates, Unite Here, National Employment Law Project, U.S. Public Interest Research Group, Legal Action Center, National H.I.R.E. Network, Community Legal Services of Philadelphia, Center for Economic Justice, Asian American Justice Center, Communication Workers of America, AFL-CIO, Lawyers’ Committee for Civil Rights Under Law, International Union, United Automobile, Aerospace & Agricultural Implement Workers of America, National Employment Lawyers Association, National Partnership for Women and Families, National Women’s Law Center and Women Employed.