Sixty percent of employers recently surveyed by the Society for Human Resources Management said they run credit checks on at least some job applicants, compared with 42 percent in a somewhat similar survey in 2006.
Employers say such checks give them valuable information about an applicant’s honesty and sense of responsibility. But lawmakers in at least 16 states from South Carolina to Oregon have proposed outlawing most credit checks, saying the practice traps people in debt because past financial problems prevent them from finding work.
Most of the bills being proposed this year resemble laws in Washington and Hawaii that prevent employers from using credit reports when hiring for most positions. The laws contain exceptions in cases where such information could be relevant to the job — for example, if the person is applying to work in a bank or an accounts-payable office.
According to the Web site of the law firm Davis, Wright Tremaine, Washington law “limits credit-related inquiries to those where the credit information is ‘substantially related to the individual’s current or potential job.’ (A previous law had no limit; employers could require credit checks for every employee or applicant.) Employers must also disclose in writing the reasons for obtaining the credit report.”
Wisconsin state Rep. Kim Hixson drafted a bill in his state shortly after hearing from Terry Becker, an auto mechanic who struggled to find work.
Becker said it all started with medical bills that piled up when his now 10-year-old son began having seizures as a toddler. In the first year alone, Becker ran up $25,000 in medical debt.
Over 41/2 months, he was turned down for at least eight positions for which he had authorized the employer to conduct a credit check, Becker said. He said one potential employer told him, “If your credit is bad, then you’ll steal from me.”
Hixson calls what happened to Becker discrimination and said his bill would ban it. Under federal law, prospective employers must get written permission from applicants to run a credit check on them. But consumer advocates say most job applicants do not feel they are in a position to say no.
Even though more companies are using credit checks, only 13 percent perform them on all potential hires, according to the Society for Human Resources Management’s most recent survey.