Warren: Credit Checks are Discrimination

Earlier today, Sen. Elizabeth Warren (D-Mass.) and Rep. Steve Cohen (D-Tenn.) posted an op-ed piece titled “It’s Time to Stop Employer Credit Checks” on Time’s website, based on the idea that a person’s credit history “has no correlation with his or her ability to succeed in the workplace.”

For hardworking people struggling to make ends meet, the pair writes, the only way to get back on their feet is to find a good job and earn a paycheck. But even when they are able to sell their homes—often at a loss—or after they are forced to close their business’ doors or find temporary work, that bad credit history continues to haunt them.

To quote directly from the piece:

And despite the often-desperate effort to find a job, many employers are unfairly shutting the door on applicants with less-than-stellar credit. We should call this what it is: discrimination.

And, Warren and Cohen note, such discriminatory practices are why they are re-introducing the Equal Employment for All Act.

“It would help level the playing field for hardworking families who deserve a fair shake,” they write. “Our legislation would prohibit employers from requiring prospective employees to disclose their credit history as part of the job application process, unless the position requires a national security clearance or a credit report is required under state or local law. It makes sure that hiring decisions are based on an individual’s skill and experience—not on past financial struggles. The bill also would stop discrimination against African Americans, Latinos and seniors who are more likely to be hit by bad credit.”

This is an issue of basic fairness, they write. “Americans should be able to compete for jobs on their merits, not on whether they have enough money to pay all their bills. Much of America—hard-working, bill-paying America—has damaged credit. It is wrong to shut them out of the job market.”

In its coverage of the op-ed piece, the Huffington Post cites a 2012 survey conducted by the Society for Human Resource Management that found 53 percent of employers said that they did not conduct background checks on any of their job candidates, though 87 percent said that they did check the credit history of potential employees in financial positions. Forty-five percent of respondents in the survey said that they conducted credit checks to prevent theft and embezzlement.

“No one should be denied the chance to compete for a job because of a credit report that bears no relationship to job performance and that can be riddled with inaccuracies,” the pols write. “Our Equal Employment for All Act would make sure all hardworking Americans have a real shot to get back into the workforce and back on their feet.”

It’s unclear how many more working Americans would actually benefit from a ban on employers’ ability to check the credit reports of prospective candidates, but what is certain is that this issue won’t be going away any time soon, just like a bad credit report.