Job applicants and credit checks

Unfair to base hiring decisions on financial information

The recession that began in late 2007 has had far-reaching consequences for too many Americans, ranging from lost homes to lost jobs to soured credit – and in many cases, all three. Recovering from the personal and economywide setbacks brought about by the recession continues to be a struggle for many, and it does not help when jobless Americans searching for employment are dinged for their diminished credit rating. A measure pending in the State Legislature would break this circular logic.

Senate Bill 3, sponsored by Sen. Morgan Carroll, D-Aurora, would prohibit potential employers from considering an applicant’s credit information when it does not pertain to the job in question.

In doing so, the measure ensures that job seekers are not put at a disadvantage in the hiring process for reasons irrelevant to their qualifications for a position.

At its core, SB 3 is one that removes discrimination from the hiring process and is an important protection to offer those attempting to recover from the recession’s effects.

The fact that credit information might be used against job applicants smacks of little more than mean-spiritedness, particularly in a time when so many are unemployed and may have had credit problems as a result of lost earnings. If that consequence then precludes employment, it is difficult to see an end to the hard times; banning the practice is appropriate.

Doing so is not, as opponents of the measure claim, limiting businesses’ ability to make hiring decisions without government intervention. It is preventing people from being needlessly kicked when they are down.

There are positions for which credit information is a relevant screen, namely those in the financial and security sectors. An investment firm looking to fill a financial advisory position, for instance, has a compelling interest in knowing candidates’ ability to manage their own finances. In that instance, credit rating and credit report information have bearing on the hire. But the scenarios in which that is the case are relatively few; for all others, credit history should not be used to winnow the field of applicants.

The merits of SB 3 are many, but that has not kept the debate over the measure from taking a negative turn. Democrats in support of the bill have accused Republicans of favoring corporations over individuals – accusations that prompted swift and vociferous condemnation from the accused and their colleagues. Nevertheless, Republicans have not offered a counter explanation for their opposition, though a viable alternative does not readily present itself.

There are, however, provisions in the measure that are worthy of debate and careful consideration, namely those that allow applicants whose credit information is used against them in a hiring decision to sue for damages. Legislatively sanctioning the litigation options available to applicants could be an unnecessarily strong step for the measure to take. But if doing so provides the incentive for employers to stop the practice, then it may be appropriate to include.

The measure has been passed out of committee in the Senate and now faces a final vote of the whole Senate. If approved, SB 3 will face a difficult trial in the House, where the measure is sponsored by Rep. Randy Fischer, D-Fort Collins. The debate thus far has been ugly – reflective of the practice the measure is intended to stop – but SB 3 has much merit in protecting Coloradans attempting to recover from the recession.