Elizabeth Warren Introduces Bill to Curb Employer Abuses of Credit Reports


There are certain things in your personal life your employer (or a perspective employer) has no businesses sticking their nose into, and one of them is your personal credit history. Yet, too often, prospective employers use credit reports to deny employment opportunities to people who are already victims of adverse circumstances: personal credit is most often damaged by medical bills, economic downturns, and, of course, unemployment.

The current system often goes like this: you lose your job and therefore the income needed to pay your bills, your credit rating goes south, and then that is used to deny you future jobs. Umm, what? Exactly. The current system, whether by intention or not but certainly by design, makes employment harder to obtain as a result of unemployment, even when one becomes unemployed through no fault of their own.

Thankfully, Sen. Elizabeth Warren has decided to live up to her reputation as the consummate consumer advocate and introduced the Equal Employment for All Act, a bill to ban employers from using credit reports to deny employment to applicants.
The legislation would prohibit employers from requiring potential employees to disclose their credit history as part of the job application process. 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.

"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."
Sen. Warren is joined 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.).

This is a badly needed piece of reform as we continue the economic recovery under President Obama. With the job market still shaky and understandably an employer's market, corporations are abusing that power, and not simply by suppressing wages. Corporate bosses are shunning and blacklisting the unemployed, the poor, and even veterans.

At the very least, the use of credit reports in the case of employment, with certain exceptions included in Warren's bill, nearly always amounts to employer (or prospective employer) coerced financial decision making. No one should be required to forego repairing a hole in their roof because their job depends on their employer obtaining a pristine credit report every quarter where all their credit card bills are paid on time. At worst, it creates a glass ceiling the economically disadvantaged can never break - you need a good job to improve your credit rating, but you can't get a good job without stellar credit.

As Warren's fact sheet points out, the use of credit reports in the hiring process affects minorities and women disproportionately (so of course Republicans are against doing anything about it), as well as on people who have been foreclosed on. Add to that the fact that errors occur often on credit reports (hence, every financial adviser asks you to keep an eye on your credit report - which, by the way, is also more difficult to do for people who have to hold down multiple jobs just to pay the rent) through no fault of the consumer.

Simply put, one's creditworthiness has little to do with one's worth as an employee. Judging an employee by their creditworthiness is part and parcel of a national system that has legalized institutionalized racism, sexism, and discrimination against the economically disadvantaged. Warren's bill is just one step in addressing these institutional biases, but it's a damn good step.

I urge everyone to take a moment and sign Sen. Warren's petition to become a citizen cosponsor of the Equal Employment for All Act.