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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. Yes diversity is so very important. With justice Rucker off ... the court is too white. Still too male. No Hispanic justice. No LGBT justice. And there are other checkboxes missing as well. This will not do. I say hold the seat until a physically handicapped Black Lesbian of Hispanic heritage and eastern religious creed with bipolar issues can be located. Perhaps an international search, with a preference for third world candidates, is indicated. A non English speaker would surely increase our diversity quotient!!!

  2. First, I want to thank Justice Rucker for his many years of public service, not just at the appellate court level for over 25 years, but also when he served the people of Lake County as a Deputy Prosecutor, City Attorney for Gary, IN, and in private practice in a smaller, highly diverse community with a history of serious economic challenges, ethnic tensions, and recently publicized but apparently long-standing environmental health risks to some of its poorest residents. Congratulations for having the dedication & courage to practice law in areas many in our state might have considered too dangerous or too poor at different points in time. It was also courageous to step into a prominent and highly visible position of public service & respect in the early 1990's, remaining in a position that left you open to state-wide public scrutiny (without any glitches) for over 25 years. Yes, Hoosiers of all backgrounds can take pride in your many years of public service. But people of color who watched your ascent to the highest levels of state government no doubt felt even more as you transcended some real & perhaps some perceived social, economic, academic and professional barriers. You were living proof that, with hard work, dedication & a spirit of public service, a person who shared their same skin tone or came from the same county they grew up in could achieve great success. At the same time, perhaps unknowingly, you helped fellow members of the judiciary, court staff, litigants and the public better understand that differences that are only skin-deep neither define nor limit a person's character, abilities or prospects in life. You also helped others appreciate that people of different races & backgrounds can live and work together peacefully & productively for the greater good of all. Those are truths that didn't have to be written down in court opinions. Anyone paying attention could see that truth lived out every day you devoted to public service. I believe you have been a "trailblazer" in Indiana's legal community and its judiciary. I also embrace your belief that society's needs can be better served when people in positions of governmental power reflect the many complexions of the population that they serve. Whether through greater understanding across the existing racial spectrum or through the removal of some real and some perceived color-based, hope-crushing barriers to life opportunities & success, movement toward a more reflective representation of the population being governed will lead to greater and uninterrupted respect for laws designed to protect all peoples' rights to life, liberty & the pursuit of happiness. Thanks again for a job well-done & for the inevitable positive impact your service has had - and will continue to have - on countless Hoosiers of all backgrounds & colors.

  3. Diversity is important, but with some limitations. For instance, diversity of experience is a great thing that can be very helpful in certain jobs or roles. Diversity of skin color is never important, ever, under any circumstance. To think that skin color changes one single thing about a person is patently racist and offensive. Likewise, diversity of values is useless. Some values are better than others. In the case of a supreme court justice, I actually think diversity is unimportant. The justices are not to impose their own beliefs on rulings, but need to apply the law to the facts in an objective manner.

  4. Have been seeing this wonderful physician for a few years and was one of his patients who told him about what we were being told at CVS. Multiple ones. This was a witch hunt and they shold be ashamed of how patients were treated. Most of all, CVS should be ashamed for what they put this physician through. So thankful he fought back. His office is no "pill mill'. He does drug testing multiple times a year and sees patients a minimum of four times a year.

  5. Brian W, I fear I have not been sufficiently entertaining to bring you back. Here is a real laugh track that just might do it. When one is grabbed by the scruff of his worldview and made to choose between his Confession and his profession ... it is a not a hard choice, given the Confession affects eternity. But then comes the hardship in this world. Imagine how often I hear taunts like yours ... "what, you could not even pass character and fitness after they let you sit and pass their bar exam ... dude, there must really be something wrong with you!" Even one of the Bishop's foremost courtiers said that, when explaining why the RCC refused to stand with me. You want entertaining? How about watching your personal economy crash while you have a wife and five kids to clothe and feed. And you can't because you cannot work, because those demanding you cast off your Confession to be allowed into "their" profession have all the control. And you know that they are wrong, dead wrong, and that even the professional code itself allows your Faithful stand, to wit: "A lawyer may refuse to comply with an obligation imposed by law upon a good faith belief that no valid obligation exists. The provisions of Rule 1.2(d) concerning a good faith challenge to the validity, scope, meaning or application of the law apply to challenges of legal regulation of the practice of law." YET YOU ARE A NONPERSON before the BLE, and will not be heard on your rights or their duties to the law -- you are under tyranny, not law. And so they win in this world, you lose, and you lose even your belief in the rule of law, and demoralization joins poverty, and very troubling thoughts impeaching self worth rush in to fill the void where your career once lived. Thoughts you did not think possible. You find yourself a failure ... in your profession, in your support of your family, in the mirror. And there is little to keep hope alive, because tyranny rules so firmly and none, not the church, not the NGO's, none truly give a damn. Not even a new court, who pay such lip service to justice and ancient role models. You want entertainment? Well if you are on the side of the courtiers running the system that has crushed me, as I suspect you are, then Orwell must be a real riot: "There will be no curiosity, no enjoyment of the process of life. All competing pleasures will be destroyed. But always — do not forget this, Winston — always there will be the intoxication of power, constantly increasing and constantly growing subtler. Always, at every moment, there will be the thrill of victory, the sensation of trampling on an enemy who is helpless. If you want a picture of the future, imagine a boot stamping on a human face — forever." I never thought they would win, I always thought that at the end of the day the rule of law would prevail. Yes, the rule of man's law. Instead power prevailed, so many rules broken by the system to break me. It took years, but, finally, the end that Dr Bowman predicted is upon me, the end that she advised the BLE to take to break me. Ironically, that is the one thing in her far left of center report that the BLE (after stamping, in red ink, on Jan 22) is uninterested in, as that the BLE and ADA office that used the federal statute as a sword now refuses to even dialogue on her dire prediction as to my fate. "C'est la vie" Entertaining enough for you, status quo defender?

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