credit issues

Proposed federal bill bans credit checks in employment decisions

Introduced by Senator Elizabeth Warren (D-Mass) on December 17, 2013, the “Equal Employment for All Act” (S. 1837), would amend the Fair Credit Reporting Act to prohibit employers from requiring or suggesting that applicants disclose their credit history, from procuring a consumer or investigative report, and from disqualifying employees based on a poor credit rating, or information on a consumer’s creditworthiness, standing or capacity. Positions that require a national security clearance or “when otherwise required by law” are exempt from the prohibition. Ten states (California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont and Washington) already have enacted legislation that limits the use of credit reports for employment purposes.

January 17th, 2014|Employment Decisions, Legislation|

Colorado joins list of states that restrict credit report use for employment

Although the FCRA allows employers to consider credit reports for employment purposes, state laws that are more protective of employee rights trump the federal law. Eight states (California, Connecticut, Hawaii, Illinois, Maryland, Oregon, Vermont and Washington) and at least one locality, the City of Chicago, limit the employers’ consideration of credit history in personnel decisions. And Colorado was just added to this list with its   S.B. 18 that was signed into law on April 19, 2013. Aggressive legislative efforts are likely to continue. The most restrictive bill yet is pending before the New York City Council. It would prohibit employers from using credit reports in hiring except in few instances where such checks are required by law.

Illinois Employee Credit Privacy Act (096-1426)

Effective January 1, 2011, the Act will prohibit employers, in many circumstances, from inquiring about or using an employee’s or prospective employee’s credit history as a basis for employment, recruitment, discharge, or compensation. The Act also will prohibit an employer from retaliating or discriminating against a person who files a complaint under the Act, participates in an investigation, proceeding or action concerning a violation of the Act, or opposes violation of the Act. Pursuant to the Act, an employer will not:

  • Fail or refuse to hire or recruit, discharge, or otherwise discriminate against an individual with respect to employment, compensation, term, condition, or privilege of employment because of the individual’s credit history or credit report.
  • Inquire about an applicant’s or employee’s credit history.
  • Order or obtain an applicant’s or employee’s credit report from a consumer reporting agency.

Exceptions to the Act are as follows:

  • State or federal law requires bonding or other security covering the individual holding the position.
  • Duties of the position include custody of or unsupervised access to cash or marketable assets valued at $2,500 or more.
  • Duties of the position include signatory power over business assets of over $100 or more per transaction.
  • Position is managerial, and involves setting the direction or control of the business.
  • Position involves access to personal or confidential information, financial information, trade secrets, or state or federal national security information.

The Act also states that nothing in its provisions shall prohibit employers from conducting a thorough background investigation which may include obtaining a consumer report and/or investigative report without information on credit history, as permitted by the Fair Credit Reporting Act (FCRA).

The Work Number Employment Data Report

The Work Number Employment Data Report is limited to employment information, such as the name of employer, dates, position title and salary. The Work Number, which contains information from participating employers, is an employment and income verification service, not a background screening service. It is operated by TALX Corporation, which is owned by the credit reporting agency Equifax.

The Work Number will provide to the subject one free Employment Data Report every 12 months. The report can be obtained by calling TALX at (866) 604-6570 or going to

June 30th, 2010|Educational Series|

What are “specialty consumer reports?”

“Specialty consumer reports” are compiled by specialty consumer agencies for targeted users such as insurance companies, employers, and landlords. The agencies collect information from a variety of sources and may include civil and criminal records, credit history, bankruptcy filings, driving records, business relationship information with banks or insurance companies, and even medical information.

Most consumers are unaware of the existence of a “specialty consumer report” unless they have been denied a job, insurance, or housing rental. The Fair Credit Reporting Act (FCRA) imposes certain obligations on the specialty reporting agencies, the users of such reports, and those that furnish information for the reports. (See for more information.) When adverse action is taken based on the information in the report, the FCRA mandates that users of specialty consumer reports provide to the subject an “adverse action notice” along with a free copy of the report. The subject also has the right to dispute inaccurate information.

June 30th, 2010|Bankruptcy, Educational Series|
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