Queens Chronicle: Should Employers Check Your Credit?

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By Kaycia Sailsman

A bill that aims to “prohibit discrimination based on one’s consumer credit history” by banning employers from doing credit checks on job applicants will be the subject of a City Council hearing set for 10 a.m. Sept. 12 at City Hall.

The main sponsor of the bill, which was introduced in April and is being debated in the Civic Rights Committee, is Councilman Brad Lander (D-Brooklyn). The legislation has 38 co-sponsors who have signed onto it; among them are several members of the Queens delegation: Daniel Dromm (D-Jackson Heights), Jimmy Van Bramer (D-Sunnyside), Costa Constantinides (D-Astoria), Peter Koo (D-Flushing), Elizabeth Crowley (D-Glendale), Donovan Richards (D-Laurelton), Ruben Wills (D-South Jamaica) and Daneek Miller (D-St.Albans).

“Credit history gives no indication of a person’s ability to work,” Richards said in a statement. “When we no longer allow companies to check the credit history of applicants, we greatly aid millions of people rebuilding their credit, especially recent graduates who needed loans. As a co-sponsor of this bill, I am proud to fight to eliminate the discriminatory use of credit checks by employers.”

Wills supports the bill because he said people are often turned away from jobs they are qualified for simply because of bad credit.

“Their standing credit does not have to do with the jobs they are applying for,” Wills argued.

He said that these are not big-time financial jobs but everyday jobs that everyone can get. If the bill gets passed supporters say it will be able to uplift the economy even more because more people will contribute to the economy and make it stronger.

“If this bill helps 1,000 people then this bill works. There would be a lot of people contributing money to the economy, which would help the city in a tremendous way,” Wills said.

A rally was held in support of the measure at Queens College on July 23.

According to an article by Amy Traub titled “Discredited: How Employment Credit Checks Keep Qualified Workers Out of a Job,” the practice of checking credit on prospective employees is legal under federal law.

The article says The Fair Credit Reporting Act makes it legal for employers to ask applicants for their credit information on their job application as well as any current employer. In order to check credit, the employer must obtain written information from whose ever credit they wish to see. Also, employers must notify individuals before taking any “adverse action,” such as promotion, failure to hire, or retain current and prospective employees.

Although the practice is legal, it is difficult for future employees to opt out because employers have the right to reject their job application if the person refuses to consent to have a credit check.

Supporters of banning the practice say credit checks affect newly matriculated college students, people who are seeking employment and various minority groups who are more likely to have bad or little credit. They argue the issue puts people in a catch-22 situation because people in debt need income from a job to improve their credit — a job they cannot get due to their credit.

“It is time to draw a line in the sand by banning this practice, which traps job seekers in a vicious cycle of debt and unemployment,” said Tashi Lhewa, staff attorney in the Queens office of the Legal Aid Society.

Joby Thoyalil is the Campaign Organizer for the New Economy Project and a supporter of this bill. He is hopeful that the outcome will be positive.

Thoyalil mentioned Dromm and Constantinides as “extremely supportive who attended press conferences in the past to speak out and support the bill.” He added that Mayor de Blasio is in full support of the bill and that this issue was a part of his 2013 campaign platform.

“The fact that employers are using a credit check as a punishment in effect to deprive people who need employment [of] employment is unacceptable … I agree entirely with the efforts to ban the practice of [these] background checks being used in any kind of employment or hiring practice,” de Blasio has said on the subject.

A potential negative of this bill, according to the article by Traub, is that it would limit employers’ eligibility standards. These kinds of checks also include potential criminal information as well, so not having credit checks could put the company at a serious risk.

According to an article in insidebusiness360.com, the reasons businesses do credit checks is to prevent resume fraud, negligent lawsuits and discover bad work record. However, the article states that “credit checks only mirror a person’s payment history but can be misinterpreted by employers who perceive that someone who is a late payer may be a tardy worker, or someone with debt may be dishonest.”