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Poor credit may cost jobs

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Indiana Lawyer Focus

During long periods of unemployment people often fall behind on bills, and evidence of those financial woes can be found in the credit histories of people who are struggling to make ends meet.

While more companies may be hiring again, if they base hiring decisions on an applicant’s personal credit history, employment may be an elusive goal for some people.

The relevance of credit histories

In the past few years, several states have introduced bills to restrict employers’ level of access to personal credit reports. Sen. Greg Taylor, D-Indianapolis, introduced a bill this year that would limit access to credit reports, except for specific occupations. That bill failed to advance beyond committee, and a similar amendment he proposed to House Bill 1001 failed a voice vote, too.

Taylor couldn’t explain why his bill didn’t make more progress in the Legislature.

“I really don’t know except that people in this body are sometimes a little less willing to do anything that hampers the employment process,” he said. “We’re very employer-friendly, if you will.”

Taylor, who is also a lawyer, said he sees no connection between credit and employability.

“Companies are beginning to hire again, but they are becoming more and more selective about who they hire,” he said. “Personally, I believe that if someone’s credit score is bad, it doesn’t have any correlation with their work ethic.”

John Hoover, founding partner of Hoover Hull, said he can understand why someone would look at credit histories when making hiring decisions.

“If you’re running a law office and confidentiality being as important as it is, if you had somebody who was in terrible financial straights, you would be concerned about their attention to detail at work … there would be a variety of things that would cause me concern about hiring someone if they had terrible financial problems,” he said.

greg taylor Taylor

“Race, age, sex and national origin are protected categories. I don’t think people that owe money to other people are a protected category,” Hoover said.

Drewry Simmons Vornehm attorney J.D. Walls, who represents employers, said he’s been fielding more questions from businesses recently about background checks.

“The issue has bubbled up more and more often over the last four or five years, particularly since the economy started going down, and what we’ve seen is just more questions about the appropriateness of using it, particularly the credit report part of it,” Walls said.

“Most employers – statistics bear this out – use credit checks on at least some employees,” he said.

The Equal Employment Opportunity Commission has taken a keen interest in this topic in recent years, Walls said. And other advocacy groups are becoming more vocal in calling for a change.

The impact of credit checks

Madeline Neighly, staff attorney for The National Employment Law Project, said the NELP opposes pre-employment credit checks.

“We believe that the use of credit reports in employment decisions has a disparate impact on persons of color and likely violates Title VII,” she said.

Title VII of the Civil Rights Act of 1964 makes it illegal to discriminate against an employee on the basis of race, color, sex, religion or national origin. But the EEOC stipulates that Title VII also prohibits employers from using neutral tests or selection procedures that disproportionately exclude people based on race, color, religion, sex, or national origin, where those tests or procedures are not “job-related and consistent with business necessity.”

Neighly said that NELP has been working with other groups on Credit Catch 22, a project that is calling on the credit reporting agency TransUnion to stop selling credit reports to businesses.

“There’s no data showing that your credit rating, your credit score, or your credit report is going to have any indication of what kind of employee you’re going to be,” Neighly said.

Taylor stopped short of calling credit checks discriminatory, but he sees them as potentially problematic for minorities.

“I think effectively what happens is you’ll find that mostly people who are poor who need jobs the most are the ones who are going to be affected negatively,” Taylor said. “As a byproduct, you’ll find that people in the minority community are going to be affected.”

In January 2012, the unemployment rate for white Americans was 7.4 percent, compared to 13.6 for black Americans.

Violations of the FCRA

Companies should be aware of the many laws – state law, common law, federal bankruptcy laws and the Fair Credit Reporting Act – that govern how credit histories may be used, Walls said.

According to the FCRA, an employer must ask for your permission before requesting a report about you from a credit reporting agency or any other company that provides background information. And if something does come up in your credit history that would cause an “adverse action” – like denial of or dismissal from employment, the employer must notify you in writing about what that information is and who provided it. But that’s not always what happens.

In Adrian Singleton, et al. v. Domino’s Pizza, No. DKC 11-1823, the U.S. District Court for the District of Maryland in January denied the pizza chain’s motion to dismiss an amended class-action complaint. In the case, two delivery drivers argued that Domino’s fired them due to their credit histories, without explaining why.

Walls said that in general, companies that provide credit histories for employers are aware of the requirements under FCRA, but they do have limitations.

“You have to be able to articulate a clear rationale as to why you’re using that report,” he said. “That’s the part that service providers aren’t going to be able to help you with.”

The good news, Walls said, is that most employers only look into credit history once they’ve finalized a list of ideal candidates for a job, so if they’re looking at your credit, you’re probably on the short list for the job.•
 

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  • credit slavery
    Sometimes a high credit rating just shows that somebody loves to buy on credit.

    The information on credit reports is really detailed. I think people have a legitimate privacy interest in the information. Why should every employer have access to all this information especially about where all the employees spend their money? Store cards tell a lot. At a minimum there should be specific written consent for employers to run a credit check. Come to think of it, why shouldn't all commercial entities have to get permission to run a check? Why should banks be able to just pull it whenever they feel like sending an offer? Thats even more intrusive and non-voluntary than employer checks.

    The whole credit-debt usury system in this country is a fiasco, it's broke, it doesn't work for regular people to accumulate wealth, it encourages spendthrift, it punishes thrift, it shackes those ill able to afford to dig out of youthful mistakes overusing credit with bonds of interest. The whole mess is brought on us by too much capitalist and liberterian claptrap which has been sponsored in academia by big banks.

    After seeing what the banks did during the TARP I swore off ever donating or volunteering or voting for a republican again. Unfortunately the banks have bought off the dems, too.

    There will be a niche in this country for any politician who is ready willing and able to take on banks. Its half the reason why Ron Paul polls so well contrary to expectations.
  • Questions
    Anonymous:

    Why don't you ask multi-millionaire personal finance guru/talk show host Dave Ramsey what he thinks about credit scores (as well as his opinion on the use of credit scores for employment purposes)?

    I wonder how many of those Wall Street and corporate fat cats who stole money had HIGH credit scores? Probably all of them, and they still stole other peoples' money.

    When you have $200,000 in medical bills for an unforeseen medical problem, are stuck in a $9.50/hour job, get your hours cut to 32 hours per week, and cannot find any other employment no matter how hard you try (and your wages still get garnished), what are you supposed to do?
  • Credit History is Imporant
    I respectfully disagree with those who are of the mindset that one's credit score has no bearing on any legitimate employment concerns.

    I understand that there are always exceptions to the rule, where someone could be hard-working, responsible, and conscientious when it came to paying all of their bills on time and spending within their means and saving what they could, and then something just absolutely financially catastrophic that could in no way be anticipated or planned for happens. But, realistically, how many people with low credit scores can honestly say that their situation couldn't have been avoided through reasonable measures?

    Credit scores reflect a number of things, including maturity, responsibility, attention to detail, foresight, ability to properly prioritize and make rational decisions, whether someone has a baseless sense of self-entitlement, likelihood of honoring promises and commitments and deadlines, likelihood of promptly rectifying mistakes vs. just giving up and letting the cards fall where they may, likelihood of bringing unnecessary drama into the workplace (whether it be merely lamenting one's financial troubles to coworker-friends, to using paid work time to handle personal affairs with creditors, to having to have the payroll department spend unnecessary time processing garnishment requests/demands), and likelihood of stealing products/time/money from the company out of desperation.

    By the way, this is coming from someone who is not wealthy by any stretch of the imagination.
  • Unfair credit-based hiring practices
    I'm sure this comment will be deleted. The reason Senator Taylor's amendment to HB 1001 failed the voice vote is because the majority of the Senate members are wealthy off the government's policies and have a vested interest in ensuring as many people are unemployable as possible. Heaven forbid you lose your job and can't pay medical bills, then you are denied employment due to having a poor credit score. How in the h--- are you supposed to ever pay what you owe if you can't get employment. In Indiana, you can even be jailed in some cases if you fail to pay a civil judgment (resulting in more kickbacks to state and local politicians from the correctional-industrial complex). It seems like our General Assembly WANTS people to stay in poverty.

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  1. Applause, applause, applause ..... but, is this duty to serve the constitutional order not much more incumbent upon the State, whose only aim is to be pure and unadulterated justice, than defense counsel, who is also charged with gaining a result for a client? I agree both are responsible, but it seems to me that the government attorneys bear a burden much heavier than defense counsel .... "“I note, much as we did in Mechling v. State, 16 N.E.3d 1015 (Ind. Ct. App. 2014), trans. denied, that the attorneys representing the State and the defendant are both officers of the court and have a responsibility to correct any obvious errors at the time they are committed."

  2. Do I have to hire an attorney to get co-guardianship of my brother? My father has guardianship and my older sister was his co-guardian until this Dec 2014 when she passed and my father was me to go on as the co-guardian, but funds are limit and we need to get this process taken care of quickly as our fathers health isn't the greatest. So please advise me if there is anyway to do this our self or if it requires a lawyer? Thank you

  3. I have been on this program while on parole from 2011-2013. No person should be forced mentally to share private details of their personal life with total strangers. Also giving permission for a mental therapist to report to your parole agent that your not participating in group therapy because you don't have the financial mean to be in the group therapy. I was personally singled out and sent back three times for not having money and also sent back within the six month when you aren't to be sent according to state law. I will work to het this INSOMM's removed from this state. I also had twelve or thirteen parole agents with a fifteen month period. Thanks for your time.

  4. Our nation produces very few jurists of the caliber of Justice DOUGLAS and his peers these days. Here is that great civil libertarian, who recognized government as both a blessing and, when corrupted by ideological interests, a curse: "Once the investigator has only the conscience of government as a guide, the conscience can become ‘ravenous,’ as Cromwell, bent on destroying Thomas More, said in Bolt, A Man For All Seasons (1960), p. 120. The First Amendment mirrors many episodes where men, harried and harassed by government, sought refuge in their conscience, as these lines of Thomas More show: ‘MORE: And when we stand before God, and you are sent to Paradise for doing according to your conscience, *575 and I am damned for not doing according to mine, will you come with me, for fellowship? ‘CRANMER: So those of us whose names are there are damned, Sir Thomas? ‘MORE: I don't know, Your Grace. I have no window to look into another man's conscience. I condemn no one. ‘CRANMER: Then the matter is capable of question? ‘MORE: Certainly. ‘CRANMER: But that you owe obedience to your King is not capable of question. So weigh a doubt against a certainty—and sign. ‘MORE: Some men think the Earth is round, others think it flat; it is a matter capable of question. But if it is flat, will the King's command make it round? And if it is round, will the King's command flatten it? No, I will not sign.’ Id., pp. 132—133. DOUGLAS THEN WROTE: Where government is the Big Brother,11 privacy gives way to surveillance. **909 But our commitment is otherwise. *576 By the First Amendment we have staked our security on freedom to promote a multiplicity of ideas, to associate at will with kindred spirits, and to defy governmental intrusion into these precincts" Gibson v. Florida Legislative Investigation Comm., 372 U.S. 539, 574-76, 83 S. Ct. 889, 908-09, 9 L. Ed. 2d 929 (1963) Mr. Justice DOUGLAS, concurring. I write: Happy Memorial Day to all -- God please bless our fallen who lived and died to preserve constitutional governance in our wonderful series of Republics. And God open the eyes of those government officials who denounce the constitutions of these Republics by arbitrary actions arising out capricious motives.

  5. From back in the day before secularism got a stranglehold on Hoosier jurists comes this great excerpt via Indiana federal court judge Allan Sharp, dedicated to those many Indiana government attorneys (with whom I have dealt) who count the law as a mere tool, an optional tool that is not to be used when political correctness compels a more acceptable result than merely following the path that the law directs: ALLEN SHARP, District Judge. I. In a scene following a visit by Henry VIII to the home of Sir Thomas More, playwriter Robert Bolt puts the following words into the mouths of his characters: Margaret: Father, that man's bad. MORE: There is no law against that. ROPER: There is! God's law! MORE: Then God can arrest him. ROPER: Sophistication upon sophistication! MORE: No, sheer simplicity. The law, Roper, the law. I know what's legal not what's right. And I'll stick to what's legal. ROPER: Then you set man's law above God's! MORE: No, far below; but let me draw your attention to a fact I'm not God. The currents and eddies of right and wrong, which you find such plain sailing, I can't navigate. I'm no voyager. But in the thickets of law, oh, there I'm a forester. I doubt if there's a man alive who could follow me there, thank God... ALICE: (Exasperated, pointing after Rich) While you talk, he's gone! MORE: And go he should, if he was the Devil himself, until he broke the law! ROPER: So now you'd give the Devil benefit of law! MORE: Yes. What would you do? Cut a great road through the law to get after the Devil? ROPER: I'd cut down every law in England to do that! MORE: (Roused and excited) Oh? (Advances on Roper) And when the last law was down, and the Devil turned round on you where would you hide, Roper, the laws being flat? (He leaves *1257 him) This country's planted thick with laws from coast to coast man's laws, not God's and if you cut them down and you're just the man to do it d'you really think you would stand upright in the winds that would blow then? (Quietly) Yes, I'd give the Devil benefit of law, for my own safety's sake. ROPER: I have long suspected this; this is the golden calf; the law's your god. MORE: (Wearily) Oh, Roper, you're a fool, God's my god... (Rather bitterly) But I find him rather too (Very bitterly) subtle... I don't know where he is nor what he wants. ROPER: My God wants service, to the end and unremitting; nothing else! MORE: (Dryly) Are you sure that's God! He sounds like Moloch. But indeed it may be God And whoever hunts for me, Roper, God or Devil, will find me hiding in the thickets of the law! And I'll hide my daughter with me! Not hoist her up the mainmast of your seagoing principles! They put about too nimbly! (Exit More. They all look after him). Pgs. 65-67, A MAN FOR ALL SEASONS A Play in Two Acts, Robert Bolt, Random House, New York, 1960. Linley E. Pearson, Atty. Gen. of Indiana, Indianapolis, for defendants. Childs v. Duckworth, 509 F. Supp. 1254, 1256 (N.D. Ind. 1981) aff'd, 705 F.2d 915 (7th Cir. 1983)

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