The New York Times reports on an issue we’ve discussed before: the use of credit checks in evaluations of job applicants. (A new law in Oregon protects job applicants’ privacy when it comes to their credit reports. Washington, D.C. is considering banning employers from checking the credit of job applicants, with some exceptions.)
With millions of Americans nursing damaged credit reports after a bruising recession, some lawmakers are seeking to limit the use of credit reports as a factor in hiring.
Legislators in more than a dozen states have introduced bills to curb the use of credit checks during the hiring process, and three states have passed such laws.
At the federal level, Representative Steve Cohen, Democrat of Tennessee, is pursuing his own legislation that would prohibit employers nationwide from using credit checks to discriminate in hiring.
Supporters of such laws say they are necessary because an increasing number of employers are doing credit checks even though there is no proof that bad credit is a marker of risky employees.
Furthermore, they say the practice unfairly tars the huge pool of people whose credit was damaged by layoffs, medical bills or other factors beyond their control. They also say it disproportionately screens out minorities. […]
Jerry K. Palmer, a psychology professor at Eastern Kentucky University, said his studies, though relatively small, found no correlation between the quality of an employee’s credit report and that worker’s job performance or likelihood to quit. […]
Even so, the industry that sells credit checks has remained firm, mounting a counterattack against legislation with some success.
Bills introduced in California, Maryland and Connecticut, for example, have been stalled amid opposition from credit bureaus and other businesses.