EEOC Holds Hearing on Credit Checks and Employment

By Teresa Anderson

Whether they find it is good corporate practice or not, some companies are required to conduct background checks that include credit reports. Christine V. Walters, owner of FiveL Company in Westminster, Maryland, who testified on behalf of the Society for Human Resource Management noted that state and local statutes often require companies to conduct credit checks on employees in certain positions. Licensed healthcare professionals, day care providers, teachers and athletic coaches, and police officers and firefighters are just a few of the positions requiring a credit check, according to Walters.

Industry standards also factor in to screening decisions, Walters noted. She cited the Payment Card Industry’s Data Security Standards, otherwise known as PCI Compliance as an example. Under the standard, companies that process consumer credit card data must conduct credit checks on employees who handle the data directly or have access to computer networks were information is stored.

Maneesha Mithal, associate director for the division of privacy and identity protection for the Federal Trade Commission testified that the federal Fair Credit Reporting Act already places requirements on employers who use credit history in making hiring decisions. And existing EEOC guidelines caution employers to examine hiring practices to avoid a disparate impact on minority applicants.

The EEOC plans to hold more hearings on the issue before taking any action. In her testimony, Crawford urged the EEOC to issue guidance. While some issues have been addressed in other documents, such as the EEOC’s Guide to Pre-Employment Inquiries, comprehensive guidance for the use of credit history in preemployment screening is necessary.

Congress has also been looking at the issue. Before they adjourned earlier this month, lawmakers considered legislation (H.R. 3149) that would have limited the use of credit checks in employment decisions. Hearings were held on the issue but the measure failed to progress out of committee, and further action is unlikely even if Congress returns after the election

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