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Have credit checks become a form of discrimination in hiring?


A credit report can help determine the creditworthiness of an individual. Throughout the United States, including New York, credit card companies routinely use credit reports from independent credit rating agencies to figure out if someone applying for a credit card has the ability to repay the person's debt.

Nowadays, many employers are also reported to be using credit reports during employment applications to gauge the worthiness of potential employees.

For many employees and job applicants in New York City, however, this looks like a form of employment discrimination. One New York City council member recently asserted that using credit checks as part of the hiring process prevents people with bad credit reports from getting good jobs even if they have excellent credentials or job histories. This kind of employment practice may be harmful to college graduates, for example, who more frequently graduate now with enormous debts. Keeping job seekers from work because of bad credit ratings is unreasonable, she says.

Research seems to back this up. Almost half of all employers admit to using credit checks to screen job applicants. This means that bad credit ratings may be keeping qualified workers from being hired. One 2013 study suggested that credit checks have a discriminatory effect on individuals of certain races because their credit ratings may have been damaged by predatory lenders or by system errors.

Members of the NYC Coalition to Stop Credit Checks in Employment is introducing a bill that would bar employers from using credit reports. If the legislation passes, New York City would join 10 states that have implemented laws regarding credit checks and workplace discrimination.

Proposals that could fight hiring and employment discrimination may benefit many employees in New York. Fighting workplace discrimination not only empowers employees but also extends their rights against unfair labor practices.

Source: The Huffington Post, "Will New York City Lead the Fight Against Employment Discrimination?" Amy Traub, April 11, 2014

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