In the process of looking into a job applicant’s criminal background, many employers will also run a routine check of that person’s credit record. Especially for jobs involving finance planning or the handling of a business’s money, knowing whether or not a person is good with handling their own money can be of pivotal importance to an employer. Just as employers have a right to know whether or not they are hiring a convicted criminal, many in the background check industry have argued that employers also have a right to know a prospective employee’s history with credit and money.
Elizabeth Warren, a United States senator from Massachusetts, disagrees with that argument. In fact, Warren is so vehemently against pre-employment credit checks that she has introduced legislation that could signal the death knell for credit checks in the employment screening process. The bill, called “the Equal Employment for All Act,” argues that credit history consideration in the employment screening process is a way for hiring managers to discriminate against the poor, not a way for employers to determine who is and who is not responsible with money.
Warren and her democratic coalition in the Senate believe that, far from just being a sign of irresponsibility, bad credit can have a range of causes. The Massachusetts senator pointed out that, while bad credit can be caused by someone making impulse purchases or living beyond his or her means, it can also come as a result of “unexpected medical costs, unemployment, economic downturns, or other bad breaks.” The Equal Employment for All Act was written with the goal of preventing job searchers who have suffered from such occurrences from being discriminated against by hiring managers.
The new bill certainly has a deep well of support to draw from: since the 2008 economic downturn, poor credit scores have become increasingly more frequent. Now, Warren argues that someone with bad credit and no job can easily find himself or herself in a frustrating catch 22. The kind of person Warren’s bill is trying to help is someone who can’t pay his bills because he doesn’t have a job, but can’t find employment because he can’t pay his bills and therefore has poor credit history. The solution? For Warren, it’s to ban credit checks in the workplace.
Still, even as the Equal Employment for All Act gathers bipartisan support, it is likely that certain employers – especially those that recruit for financially sensitive positions – will oppose the bill. Credit reports, like those offered through backgroundchecks.com, can offer insight into applicant’s debts, bad financial decisions, and other financial red flags, all of which can influence a hiring decision.