U.S. Senate Considering Ban on (Nearly) All Credit Checks

I just read that the U.S. Senate, via Senator Elizabeth Warren, is introducing a bill to ban the use of pre-employment credit checks altogether.  The proposed bill is here.

The bill (as introduced) simply would amend the Fair Credit Reporting Act to make it illegal for employers to rely on credit reports to take adverse actions.  Employees would no longer be able to consent to disclosure.

Any exceptions?  Certainly.  For example, credit checks will still be allowed when the position involves national security.  Wait a minute there.  How could credit checks possibly be relevant to national security?  Could it be that an applicant's credit report has something to do with integrity?  Well, Senators, maybe that's why employers find credit checks relevant to employer security.  Another exception - when credit checks are required by law.  Why would credit checks be required by law?  The EEOC says credit checks are discriminatory.  How could something discriminatory be required by law?

Anyway, that's it for exceptions. As written, this bill does not expressly create any exception for positions involving cash handling, banking, etc.  If this bill is passed, unless the job is one of "national security" or unless a credit check is "required by law," the rest of you employers will be out of luck.

Employers may desire to run investigative consumer reports, credit reports and criminal background checks in part to verify information that applicants provide on their applications.  Application fraud appears to be a big problem, according to surveys discussed here, and here, and here.  Hey - perhaps the Senate will also introduce a bill making it illegal for applicants to lie on their employment applications!  Fat chance.

This bill may not make it through either house, or it could be amended.  But the trend among state and local governments is to get rid of credit checks, criminal background checks, and other pre-employment tools that help employers determine who is a financial or other risk.   So, employers should keep abreast of this trend, and make plans to alter hiring practices as the law evolves.

Enjoy your holidays!  Humbug.