Bill would block credit checks by employers

[Dos Equis]

I love my state, but geeze.  They want to treat credit history like race, religion, gender, etc.   

Bill would block credit checks by employers
By Peter Boylan
Advertiser Staff Writer

While Hawai'i workers accept pay cuts and suffer job losses, state lawmakers are trying to restrict employers from reviewing a person's credit history when hiring or firing an employee.

As unemployment rises while the economy stumbles toward recovery, a bill born in the state House would establish an employer's use of an individual's credit history in hiring and termination decisions as an unlawful, discriminatory practice.

The bill will be heard by the Senate Labor Committee on Thursday.

Labor unions support the measure, saying that using credit history to evaluate an employee or job candidate's ability to do the work amounts to "economic segregation."

Given the state of the economy, deciding who to hire or fire based on credit history is unethical, said the bill's author, state Rep. Marcus Oshiro, D-39th (Wahiawa), chairman of the House Finance Committee.

Supporters of the bill say many people have unfavorable credit reports because they lost their jobs in this down economy, while others have had their identities stolen and are trying to undo the damage.

"It would be terrible for anyone to lose employment or not get hired because of these reports," Oshiro said. "By denying anyone employment (based on their credit report) you are confining them to modern-day debtors prison."

About one-third of people earning less than $45,000 had bad credit before the current economic downturn, according to a Freddie Mac study.

And more than 37 percent of respondents to a 2007 survey published by Smart Money Magazine claimed that their credit reports contained inaccuracies.

"Credit checks in hiring represent a form of economic segregation, in which job seekers are behind on their bills because they lost a job or their hours were cut ... (leaving them) unable to get a job or promotion," said Hernando R. Tan, president of Local 5, in testimony submitted to the state Senate Labor Committee.

The Local 5 union said the bill is long overdue, claiming that no evidence exists that ties credit history to job performance.

Fred Galdones, president of the International Longshore and Warehouse Union, Local 142, said, "An employee's credit history should be confidential from his employer. The employer is not loaning him money to buy a house or a car. The employer should only be concerned that the employee is able to perform his or her job satisfactorily."

The Hawai'i chapter of the Society for Human Resource Management submitted testimony opposing the bill.

"We would like to see provisions made to this bill which would allow the use of credit report information in connection with legitimate job-related consideration," said Shawn Carbrey, government and legislative affairs director for the chapter.

The Consumer Data Industry Association, a trade association that represents more than 200 consumer data companies, opposes the bill. It said theft by employees accounts for more than $15 billion a year in business losses, and that the average employee embezzlement case involves more than $125,000.

"We understand that there may be a concern regarding an employer's potential misuse of credit reports," Eric J. Ellman, the Consumer Data Industry Association's vice president for public policy and legal affairs, said in testimony submitted to the committee. "However, H.B. 31 may have the unintended consequence of discouraging employers from using a key tool that they might use to screen for possible fraud or other financial crimes."

http://www.honoluluadvertiser.com/article/20090331/NEWS02/903310311/1001

[BayGBM]

As a matter of principle, I don’t want anyone looking at my credit report.  My score should be limited to banks and other creditors.  Having said that, I have a sterling score so I would not hesitate to show it to any prospective employer.

As someone who hires people, I want to know the credit score of anyone I am serious about hiring.  If you don’t want me to see it, that is your prerogative, but you should know that you may be eclipsed by another job seeker with the same qualifications who volunteers to show me his or her (good) score/report.

Critics say no evidence exists that ties credit history to job performance.  That may (or may not) be true, but that has never been the assertion.  If you can't manage your financial obligations, any reasonable employer is going to rightly wonder if it's a sign of irresponsibility.  If you have had credit trouble, you should be given an opportunity to explain it but to have it hidden?  Um, no.

Those of you interested in this topic might also be interested in this thread. http://www.getbig.com/boards/index.php?topic=193870.0

[MRDUMPLING]

What about a recent divorce?  Then a person is going to have to explain something that they may not want to discuss.  As we have heard...divorces can ruin a credit score. 

That was just one example, but I can see where this might be seen as too much information with the job screening process.

[Hugo Chavez]

excellent!  good for them, hope other states follow.

[shootfighter1]

I didn't know employers had access to personal credit history.  I'm not sure that is necessary in the first place.  I never looked at the credit history of any of my employees.

[Dos Equis]

I didn't know employers had access to personal credit history.  I'm not sure that is necessary in the first place.  I never looked at the credit history of any of my employees.

They need the employee's consent. 

It's necessary if the employer thinks it's necessary.  Putting credit history in the same category of other protected classes is absurd IMO. 

[Dos Equis]

Ban on credit checks in hiring goes too far
 
In this sour economy, more people are struggling to meet basic expenses. They fall behind on bill payments, go into debt and see their credit history decline from good to lousy — often due to events beyond their control, such as getting laid off.

These are people that House Bill 31 seeks to protect: honest folks with poor credit, who are looking for a decent job to help them back to fiscal solvency.

The bill has good intentions, but as currently written, it goes too far. It bans as discriminatory an employer's use of a person's credit history or credit report in hiring or firing decisions, except for a job that "directly relates to a bona fide occupational qualification" under state law.

This seems too restrictive; it's likely few jobs would qualify for such an exception. And there are indirect, but perfectly valid reasons for an employer to check such a history — a position in which an employee has access to the assets of the employer or customers, for instance. Hiring someone for such a job who is heavily in debt, with a record of poor financial management, could raise red flags that a prudent employer would be irresponsible to ignore.

Of course, the employer must abide by privacy safeguards of the Fair Credit Reporting Act, which requires an employer to get a person's permission before obtaining his credit report.

It's important to keep in mind that a credit history is only one measure of an employee's value, and an often unreliable one at that. Credit reports can be inaccurate or incomplete. A person's credit status may have no bearing on his or her ability to do a good job. More important, routine screening of credit reports could disproportionately affect poorer, minority populations — a key factor in establishing discriminatory practices.

HB 31 needs to be revised to add reasonable exceptions. It should also provide clearer guidance on how credit reports may — and may not — be used, with the goal of making the process fairer for those caught in today's economic vise.

http://www.honoluluadvertiser.com/article/20090406/OPINION01/904060307/1105

[Andy Griffin]

I have often stated that, for better or for worse, credit checks would come under fire because someone would call them discriminatory (or racist) and either a legislature or court would attempt to limit their use.

[Dos Equis]

I don't get it, as I'm seeing it, a company hiring for a finance potition would be able to get their credit report while say a trucking company hiring a driver would not.  Sounds right to me.

It puts credit history in the same category with race, gender, religion, national origin, disability, etc.  Not only does it demean those "protected classes," it's just flat unnecessary.  I think it will actually hurt employees, because it will prevent employers from discussing the reason why an applicant has bad credit (divorce, illness, etc.) during the interview. 

I also think fiscal responsibility is arguably relevant to every job. 

[Andy Griffin]

non of those being the reasons mentioned.

Right.  I just stated what I had always thought would happen.  Sorry for the confusion.

[BayGBM]

What about a recent divorce?  Then a person is going to have to explain something that they may not want to discuss.  As we have heard...divorces can ruin a credit score. 

That was just one example, but I can see where this might be seen as too much information with the job screening process.

What about divorce?  It’s funny you should ask that because when I raised the issue of credit score and dating in this thread http://www.getbig.com/boards/index.php?topic=193870.0 a few people mocked it as an unreasonable criteria.  One person even called the concern “ridiculous.”  The reality is scores matter.  They are going to be used so you might as well have a good one.  They can pass laws banning the use of the official credit score, but that will only lead to the use of things like proxy scores, your insurance risk score, the Amex purchase matrix, conjunctive history, etc.  Having a general idea of how someone handles their personal finances is a reasonable thing for an employer to want to know for many kinds of jobs.

Have you applied for a job lately?  Read the fine print on your application; buried in that print is your promise that every thing in your application is true to the best of your knowledge as well as your consent to let the employer check your references, check your credit, etc.  Of course, you can refuse to sign but that just means your application will get tossed.

Like I said, your score (or some version of it) is going to be used whether you like it or not so you might as well do everything you can to have an excellent score and make sure it stays that way.

[Dos Equis]

Now the law courtesy of a veto override.   

[MM2K]

It bothers me that some employers look at credit histories of prospective employees. The way that someone treats his finances at home is not indicative of the way he will treat finances at the office.

However, I think employers should have a right to do it if they so chooose. It is thier money and thier resources, and they have a right to make sure those resources will be used wisely.

[Hereford]

It bothers me that some employers look at credit histories of prospective employees. The way that someone treats his finances at home is not indicative of the way he will treat finances at the office. However, I think employers should have a right to do it if they so chooose. It is thier money and thier resources, and they have a right to make sure those resources will be used wisely.

Really?  If a person can't handle their own checkbook, do you really want them handling yours?

[JOCKTHEGLIDE]

It bothers me that some employers look at credit histories of prospective employees. The way that someone treats his finances at home is not indicative of the way he will treat finances at the office.

However, I think employers should have a right to do it if they so chooose. It is thier money and thier resources, and they have a right to make sure those resources will be used wisely.

in accounting thats a true fact that you dont want a bad credit person working in accounting vs lets say construction last time I checked credit score higher does not equal,,,better construction in fact its actuall opposite person with bad credit score loves doing construction to try to pay bills

[MM2K]

Really?  If a person can't handle their own checkbook, do you really want them handling yours?

Well I guess I can see where they are coming from. Thats why I think they should have the right to do it. Its just that a lot of people act completley different in their  personal life than they do in thier professional life. I just hope that employers also take that into consideration. But as jocktheglide said, it probably depends a lot on what type of work your'e doing.

[JOCKTHEGLIDE]

What about a recent divorce?  Then a person is going to have to explain something that they may not want to discuss.  As we have heard...divorces can ruin a credit score. 

That was just one example, but I can see where this might be seen as too much information with the job screening process.

you can sue,,,

[JOCKTHEGLIDE]

. Its just that a lot of people act completley different in their  personal life than they do in thier professional life. I just hope that employers also take that into consideration.

this is where employers can cross the line and should not,,,I know many of my friends smoke weed on the job, drink, etc,,outside of work also I mean if want get technical and not just credit reports mind as well ask them how do they have sex such as favorite position,,etc because it might happen at work 

[240 is Back]

If I ran a bank, I'd only want to hire ppl with good credit.

If I ran a construction company, I would care less.

[grab an umbrella]

You hit the nail on the head 240.  It honestly depends on the job.  Plus, what if someone got themselves into debt at a young age and is working to rectify the situation as they get older!

[240 is Back]

In the end, employers are going to hire the people who can make them the most money.

Trump probably had some pretty bad credit a decade or two ago when he was a billion in debt.  Even if personal credit was good, the dude was a cool Bil in debt.

I think I'd prefer hiring Trump to some 18-year old goofball with a clean credit record.

[JOCKTHEGLIDE]

In the end, employers are going to hire the people who can make them the most money.

Trump probably had some pretty bad credit a decade or two ago when he was a billion in debt.  Even if personal credit was good, the dude was a cool Bil in debt.

I think I'd prefer hiring Trump to some 18-year old goofball with a clean credit record.

axactly 240,,,believe it or not the movies stars that people look up to such as baygm,,,they dont have good credit scores at all,,im not gonna lie I know personally J LO has a score of 550 and no one would give her credit cards unless she threw down lots of money on the card which she did since she does not carry millions of dollars in her hand bag  Tom cruise has the american express black card all jacked up,,,but they love him and keep him and he has bad credit score also of course you mentioned trump though he went backrupt and it started over

[BayGBM]

Trapped: It's hard to get a job if your credit is bad
If you're unemployed, falling behind on bills can make it tougher to find work
By Tiffany Hsu

Dan Denton is stuck in a vicious cycle: He's behind on his bills after losing his job. But lousy credit is spoiling his chances of finding new employment.

Recruiters from a St. Louis-based investment company recently rescinded an offer after looking at his credit history, which has been mauled by overdue card payments and an impending foreclosure on his Inland Empire house. He and his wife, Dana, filed for bankruptcy protection this month to try to hang on to their home.

"Of course your credit's going to look bad when you've been unemployed for months," said Denton, 60, a former fundraiser for the Crystal Cathedral in Garden Grove. "But what relevance does that have on your performance?"

The credit report is becoming the latest hurdle for unemployed workers in a dismal U.S. job market. Up to half of employers use credit screening to weed out potentially troublesome hires, though estimates vary, and the practice is on the rise.

Money woes could signal disorder in an individual's personal life that could translate into slipshod work habits, some staffing experts said. Companies lose billions annually to employee theft. A sterling credit history, they said, points to a worker who is more likely to be disciplined, trustworthy and reliable.

Mary M. Massad, managing director of screening services for personnel management company Administaff Inc., said credit checks help companies hire "the highest-quality individuals.

"It's . . . about being proactive in order to avoid trouble down the line," she said. "Companies . . . want an insight into how an individual conducts their own life, because that's typically how they're going to conduct business inside your business."

Screening employment prospects this way is legal in California and most of the country as long as it is disclosed to applicants, who must give permission for a credit check to be run.

But some experts said that there's no clear link between credit history and job performance and that the reports don't paint a complete picture, omitting details about divorces, medical bills or even identity theft . . ."

http://www.latimes.com/business/la-fi-cover-badcredit7-2009jun07,0,108282,full.story

[BayGBM]

You hit the nail on the head 240.  It honestly depends on the job.  Plus, what if someone got themselves into debt at a young age and is working to rectify the situation as they get older!

Then that someone will lose out to the other applicants who didn’t get themselves into debt at a young age.  In the current climate (and even in normal times) dozens of people apply for any given job.  As an employer or hiring manager, all other things being equal, (assuming you have access to it) you are going to pick the person with a good credit history.

By the way, having manageable debt isn’t the problem; having debts that are unmanageable or failing to make payments on your obligations in a consistent and timely manner is the problem.  If that problem shows up on your credit history then your application will be discarded in favor of someone who doesn’t have a checkered past.  No amount of complaining or excuses is ever going to change that.

[BayGBM]

In the end, employers are going to hire the people who can make them the most money.

Trump probably had some pretty bad credit a decade or two ago when he was a billion in debt.  Even if personal credit was good, the dude was a cool Bil in debt.

I think I'd prefer hiring Trump to some 18-year old goofball with a clean credit record.

That’s a silly comparison don’t you think?  How often is an employer in a position to choose between a billionaire having financial trouble and an 18 year old (who, by the way, wouldn’t have much a credit history to speak of—good or bad)?

As I have said before, your score (or some version of it) is going to be used whether you like it or not so young people might as well do everything they can to have an excellent score and make sure it stays that way.