One bill that is sitting in Congress awaiting approval is a ban on credit checks as a part of an employment screening. Specifically, H.R. 645: Equal Employment for All Act “Amends the Fair Credit Reporting Act to prohibit a current or prospective employer from using a consumer report or an investigative consumer report, or from causing one to be procured, for either employment purposes or for making an adverse action, if the report contains information that bears upon the consumer’s creditworthiness, credit standing, or credit capacity.”
Unfortunately, this type of bill, which would amend the FCRA to not allowing these types of credit checks used for employment screening is going to have a difficult time passing. While it is true that credit checks have been used in whole or in part to deny employment, a study by SHRM found that 80 percent of candidates with negative credit information are hired in spite of that information. In addition, there are a number of mandated employers, based on federal and state regulations that need to conduct credit checks for certain industries. States like California have limited the use of credit checks to particular types of employment, and 9 other states have enacted laws that are similar to California which provides reasonable exemptions where a credit report run on a candidate makes sense for the particular type of employment they are pursuing.
While this bill remains as a desire of some, it makes sense to leave the specific policies in place to be mandated by state and local laws surrounding the use of credit checks. There are instances where they are needed, and they will provide information that is important for the hiring party to consider as a part of the employment decision. Having credit checks available is a great option when it is needed, but it definitely should not be the only reason for adverse action based on an employment screening.