SHRM Contends Credit Checks a Legitmate Screening Tool

During the October 20 public hearing held by the Equal Employment Opportunity Commission (EEOC), a representative for SHRM (Society for Human Resource Management) stated that the federal government should not eliminate an employer's use of credit histories to hlep make decisions about job candidates.

The EEOC held the public hearing to determine the extent of employer use of credit reports, to determine the effectiveness of the practice, and the impact on different populations effected.

As of today, Hawaii, Illinois, Oregon and Washington have all restricted the use of credit reporting for pre-employment purposes. The states consider using the information found in a credit report as a way to asses the candidate's judgement; some argue it is discrimintory and that it represents economic segregation. "The use of credit checks has grown, and at the same time questions have emerged about the fairness of the practice, whether the results of the credit check correlate to job performance and whether there are any adverse impacts," said EEOC Chair Jacqueline Berrien at the start of the hearing.

"SHRM believes there is a compelling public interest in enabling our nation's employers - whether that employer is in the government or the private sector - to assess the skills, abilities, and work habits of potential hires," said Christine Walters, JD, SPHR, during the hearing. Walters is the sole prprietor of FiveL and the secretarty of SHRM's Maryland State Council and a former member of SHRM's Employee Releations Special Expertise Panel.

Walters argues that among other investigations of a candidates personal history - education, experience, certifications - credit history is used "to narrow that applicant pool to those that are most qualified."

Walters cited the SHRM Research Department data on the use of employer background screening:

  • Only 13% of organizations surveyed conduct credit checks on all job candidates. 47% consider them for select positions only.
  • Employers generally conduct credit checks on positions of financial or fiduciary responsibilities, senior executive positions, and those with access to confidential employee information.
  • Four out of 10 organizations do not conduct credit checks.
  • Credit history is consistently ranked the lowest on a list of criteria employers typically use when making a hiring decision.
  • Medical debt is not taken into consideriation during the hiring process.
  • Among those employers who look at credit history, 87% allow candidates in certain circumstances, the opportunity to explain the results of their report.

Walters stated that "employees already have significant federal protection for the misuse of background checks citing the Fair Credit Reporting Act of 1970 and the Civil Rights Act of 1964 as offering the proper federal protection for the candidate's.

Read the full artile on SHRM.