When someone applies for a job in the United States, employment law already places some limits on what an applicant can and can’t be asked. An employer can’t ask, for example, about someone’s marital status or national origin.
But businesses can and do check applicants’ credit rating, which puts those with poor credit histories at a severe disadvantage, even though credit ratings offer practically no useful information about a candidate’s qualifications. It’s exactly why Sen. Elizabeth Warren (D-Mass.) introduced legislation to prohibit this practice (thanks to my colleague Laura Conaway for the tip).
The Massachusetts Democrat’s measure has support from dozens of liberal consumer groups, who argue that credit history is a poor measure of character and discriminates against the economically disadvantaged. But it could face resistance from Republicans who oppose more restrictions on businesses and worry about taking away another tool in reviewing job applicants.Warren has made her career writing about the causes and consequences of personal bankruptcy and debt and has galvanized liberal Democrats around her populist agenda.
“A bad credit rating is far more often the result of unexpected medical costs, unemployment, economic downturns, or other bad breaks than it is a reflection on an individual’s character or abilities,” Warren said in a statement. “Families have not fully recovered from the 2008 financial crisis, and too many Americans are still searching for jobs. This is about basic fairness.”
The Hill reports that new legislation, called the Equal Employment for All Act, “amends the Fair Credit Reporting Act to prevent prospective employers from using consumer credit reports as a basis for making hiring decisions. It also blocks companies from using credit checks as a basis for decisions related to current employees.”
Exceptions, for what it’s worth, would be made for positions that require a national security clearance, which require a more extensive background examination.
Warren’s measure has already picked up six co-sponsors, all of whom, at least at this point, are Democrats: Sens. Richard Blumenthal (D-Conn.), Sherrod Brown (D-Ohio), Patrick Leahy (D-Vt.), Ed Markey (D-Mass.), Jeanne Shaheen (D-N.H.), and Sheldon Whitehouse (D-R.I.).
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Warren: credit history shouldn't matter in employment