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Wednesday, October 20, 2010

Credit Checks as a Screening Tool; EEOC Hold 10/21 Public Hearing on Employer Use

Seal of the United States Equal Employment Opp...Image via Wikipedia
EEOC Hold Wednesday Meeting to Discuss
the proposed Equal Employment for All Act

The use of credit checks as an determining factor in hiring has, been a conversational subject for some time. 

With many unemployed job seekers taking on an average of 4-12 months to find employment (and some 99ers more than two years); living on an limited income can impact credit scores and opportunities for employment.

On Thursday, October 21, the U.S. Equal Employment Opportunity Commission (EEOC) will hold a public meeting will hold a meeting to explore the use of credit checks as an employment screening tool by some employers.

The EEOC hearing is a follow up on an September 24, House Financial Services Committee hearing. where the proposed Equal Employment for All Act, would make it illegal to base hiring decisions on a candidate's credit history, with certain exceptions. 

Exceptions would only apply for:

"for positions that require national security or FDIC clearance; state or local jobs that otherwise require a credit check; supervisory, managerial, professional or executive positions with financial institutions; and when otherwise required by law."
Besides unemployed job seekers, another group negatively impacted by the use of credit checks in hiring are minorities or communities of color. Sarah Crawford, senior counsel with the Employment Discrimination Project of Lawyers' Committee for Civil Rights Under Law, gave the following statement on this issue during the House Financial Subcommittee Hearing.

"In light of research showing the lack of predictive value of credit information, credit checks create an unnecessary obstacle for those seeking gainful employment. Credit checks create barriers for those who apply for a job in order to support themselves and their families, to pay their bills, and to pull themselves out of debt," she said.
Ms. Crawford also recited on research that shows credit information does not predict job performance or risk of theft in the workplace.
"Contrary to the fear mongering and false promises by credit bureaus that profit from selling credit reports to employers, credit information does not predict job performance or risk of theft in the workplace. A TransUnion official recently admitted under oath, "At this point we don't have any research to show any statistical correlation between what's in somebody's credit report and their job performance or their likelihood to commit fraud," she stated.
Finally, she testified that the use of credit reports as a screening tool for potential candidates is a flawed process, not explaining the complete story on personal factors, which could have impacted the candidates credit score.
"While credit reports may show whether bills have been paid on time, they do not reflect the circumstances surrounding debts or reasons for any late payments. A credit report would not explain that a factory worker lost his job when his employer went out of business. A credit report would not explain that a man's credit was destroyed because he was the victim of identity theft or a predatory lending scam," Crawford stated.
"Additionally, credit reports are rife with errors. One study found that 79% of the consumer credit reports surveyed contained some kind of error or mistake," she stated. "This study found that 25% the reports surveyed contained serious errors such as false delinquencies or accounts that did not involve the consumer; 54% of the reports contained personal demographic information that was misspelled, long-outdated, belonged to a stranger, or was otherwise incorrect; 22% of the reports listed the same mortgage or loan twice."
Have you been impacted in your job search by a credit score? How would the passage of this bill, assist you in obtaining a new employment opportunity.

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