Sen. Elizabeth Warren Introduces Bill Barring Employers from Using Credit History in Hiring

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U.S. Senator Elizabeth Warren (D-Mass.) today introduced the Equal Employment for All Act which would prohibit employers from requiring potential employees to disclose their credit history as part of the job application process.

“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,” Senator Warren said.  ”Families have not fully recovered from the 2008 financial crisis, and too many Americans are still searching for jobs. This is about basic fairness — let people compete on the merits, not on whether they already have enough money to pay all their bills.”

The bill is currently co-sponsored by Senators Richard Blumenthal (D-Conn.), Sherrod Brown (D-Ohio), Patrick Leahy (D-Vt.), Edward J. Markey (D-Mass.), Jeanne Shaheen (D-N.H.), and Sheldon Whitehouse (D-R.I.).

The bill, S.1837, would specifically amend the Fair Credit Reporting Act (FCRA) to “prohibit the use of consumer credit checks against prospective and current employees for the purposes of making adverse employment decisions.”

“It was previously thought that credit history may provide insight into an individual’s character, but research has shown that an individual’s credit rating has little to no correlation with his or her ability to be successful in the workplace,” said Warren.

Warren noted that a study from the Federal Trade Commission earlier this year suggested that errors in credit reports are common and, in many cases, have been difficult to correct.  ”It makes no sense to make it harder for people to get jobs because of a system of credit reporting that has no correlation with job performance and that can be riddled with inaccuracies,” Warren said in the announcement.

“Let’s be honest: This is one more way the game is rigged against the middle class,” Warren wrote on her blog. “A rich person who loses a job or gets divorced or faces a family illness is unlikely to suffer from a drop in his or her credit rating. But for millions of hard-working families, a hard personal blow translates into a hard financial blow that will show up for years in a credit report.”

In addition to the support of her Senate colleagues, Warren said that The Equal Employment for All Act has been endorsed by more than 40 organizations.

Senator Warren’s bill is based on H.R. 645, which was introduced by Congressman Steve Cohen (D-Tenn.) in 2011.

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Posted in Collection Laws and Regulations, Fair Credit Reporting Act (FCRA) .

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  • avatar Ameripay says:

    Another headline grab from the nutty professor. Sorry to tell you Senator Warren, but a blemished credit record is not the result of “bad breaks.” It is the result of a person’s poor financial discipline. Many employers feel that someone who is undisciplined with their personal finances might not show their employer a higher regard for the finances of the company. This is a legitimate risk control.

    Additionally this piece of legislation would make it impossible for governmental agencies, police departments and the like from forcing their employees to maintain clean credit records which over the long term will only lead to greater instances of public corruption.

  • avatar A.. W... says:

    Absolutey, I agree with Senator Warren. Many people have been forced to get bad credit due to this economic mess the banks created. Many have had to make choices between giving up their credit card payments or mortgage payment and put food on the table. I also think that in the application forms they need to eliminate in the ethnic background words used in each ethnic group in parenthesis (NOT OF HISPANIC ORIGIN) including where it says Two or more races. There is no ethnic group on the applications that says Mexican/Hespanic/American. Where then, does this person identify themselves? What about a person who has a white last name but is also hespanic? What gives the employer the right to determine how that person identifies themselves? It really sounds like they are trying to discriminate and keep hispanics out of the work place. Obviously, that person is just forced to make a choice and chose (caucasin) in order to not be discriminated. Also, they need to eliminate asking for birthdates and year of gradution until a person is actually hired based on experience and knowledge only. There are many middle age people not getting hired because of age discrimination. Once the employer see’s the age they don’t call them for an interview or make up some kind of lie like they were not in the catagory chosen for the position due to skills etc..etc… to avoid a lawsuit. This way by eliminating the credit scores/birthdates/graduation dates, a person can get hired without prejudice circumstances. Once hired, then they can prove they are legally here, of legal age and graduated from high school and the employer can not fire them until they have done something wrong and prove it really wrong.

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