By Edwin S. Hopson
The U.S. Equal Employment Opportunity Commission (EEOC) held a public Commission meeting on October 20, 2010, to take testimony from various stakeholders, social scientists and the Federal Trade Commission regarding the growing use of credit histories by employers in making hiring decisions.
As stated in the EEOC’s press release, “High unemployment has forced an increasing number of people to enter or re-enter the job market,” said EEOC Chair Jacqueline A. Berrien. “As a result, an ever increasing number of job applicants and workers are being exposed to employment screening tools, such as credit checks, that could unfairly exclude them from job opportunities. Today’s discussion provided important input into our agency’s work to ensure that the workplace is made free of all barriers to equal opportunity.”
The EEOC heard from Chi Chi Wu of the National Consumer Law Center who expressed much concern that the use of credit histories by employers is significantly increasing at the time of economic adversity for persons applying for work, particularly those facing foreclosure and other economic hardships. Wu commented that, “You can’t re-establish your credit if you can’t get a job, and you can’t get a job if you’ve got bad credit.”
Sarah Crawford of the Lawyers’ Committee for Civil Rights Under Law and Dr. Avis Jones-DeWeever from the National Council of Negro Women, stated their belief that using credit histories as a factor in the hiring decision has a disparate impact on a range of protected groups, including people of color, women, and persons with disabilities. Crawford also contended that the use of credit checks as employment screens was a poor predictor of job performance. Finally, Crawford maintained that many credit reports were riddled with errors or incomplete information, a belief held also by Wu.
Speaking for the business community, Michael Eastman of the U.S. Chamber of Commerce, Christine V. Walters of the Society of Human Resources Management (SHRM) and Pamela Quigley Devata of the law firm Seyfarth Shaw, LLP, advised the EEOC that the use of credit histories is permissible by current law, was limited in scope, and predictive in certain situations of reliability.
SHRM;s representative stated that “13 percent of organizations conduct credit checks on all job candidates … [and] another 47 percent … consider credit history … for select jobs,” but for those employers, “credit histories are but one piece of the puzzle.” She also stated that SHRM member companies very rarely utilize credit histories for every single job opening. Devata claimed that the use of credit histories has been driven, in part, by the need for background information on potential employees in a current environment when it is difficult to obtain any but the most basic information in job references.
Certainly banks and other such institutions and companies who are hiring persons to handle money are more likely to do credit checks as part of an overall background review of an applicant.
Dr. Michael Aamodt, an industrial psychologist, stated that there is little research exploring the implications of using credit checks as a hiring criteriat. He concluded that it would be wise to use an applicant’s credit history only within the context of a thorough background check.
This meeting was one of several throughout the year that will examine barriers to employment and their potential adverse impact on protected groups. The full statements of all the panelists can be found on the EEOC’s website at http://www.eeoc.gov/eeoc/meetings/10-20-10/index.cfm.