On October 20, 2010, the Equal Employment Opportunity Commission (EEOC) held a public hearing on the use of credit reports by employers as a basis for making hiring and other employment decisions. At the hearing, employee-rights groups voiced concerns that poor credit history could become a barrier to obtaining and maintaining a job. Such groups also argued that the use of credit checks could have a discriminatory impact on hiring and cited studies showing that African-Americans and Latinos tend to have lower credit scores. Advocates for employers and businesses explained that, in compliance with the Fair Credit Reporting Act (FCRA), employers use credit reports to evaluate candidates and protect against fraud. The EEOC’s press release can be found at http://www.eeoc.gov/eeoc/newsroom/release/10-20-10b.cfm.
Similarly, in January 2010, a Bill entitled “An Act Eliminating Credit Reports As A Basis for Employment Decisions” was proposed in the Connecticut General Assembly. The Bill would prohibit employers from requiring employees or prospective employees to consent to the use or generation of a credit report, except when the credit report is: (1) substantially related to the job; (2) required by law; or (3) used because the employer reasonably believes that the employee has engaged in a violation of the law, such a fraud or theft. The Bill also specifically defines circumstances where an employer may use or request a credit report based upon the justification that it is “substantially related to a job.” Such narrow circumstances involve situations where: (1) the employee is in a managerial position; (2) the job involves access to customers', employees' or employers’ personal or financial information other than information customarily provided in a retail transaction; (3) the job requires a fiduciary responsibility to the employer, including, but not limited to, the authority to issue payments, transfer money or enter into contracts; or (4) the employer provides access to an employer’s expense account.
If passed, the Connecticut Bill would provide for civil penalties and authorizes the Connecticut Department of Labor to investigate complaints regarding the unauthorized use of credit reports. The full text of the Bill can be found here: http://www.cga.ct.gov/2010/TOB/H/2010HB-05061-R00-HB.htm. Although the Assembly did not vote on this Bill, there is discussion among State lawmakers that it will resurface during the new term in light of the EEOC’s recent public hearing on the use of credit reports. Notably, the Bill has received much criticism from the Connecticut Commission on Human Rights and Opportunities, the Connecticut Business and Industry Association, the Connecticut Department Public Safety, and the Connecticut Division of Criminal Justice.