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Lawyers' Committee Applauds Reintroduction of Equal Employment for All Act

February 13, 2013

 

The Lawyers' Committee for Civil Rights Under Law (Lawyers’ Committee) commends Representative Steve Cohen's (D-TN) introduction of the 2013 Equal Employment for All Act in the House of Representatives today.  With a few exceptions, this critical act would prohibit employers from requesting or using credit reports for employment purposes.  The Lawyers’ Committee continues to work with a coalition of civil rights partners in the civil rights community to advocate for the passage of the Act.

Minority applicants increasingly face employment discrimination as the result of information obtained from their credit histories. Approximately 47 percent of employers conduct credit checks as part of background investigations of potential hires, according to the Society for Human Resource Management.

“The Lawyers’ Committee was pleased to hear the President, during his State of the Union Address, once again urge Congress to move forward on creating economic opportunities for all Americans and agree that barriers exist for many workers,” said Public Policy Director Tanya Clay House.  “Barriers such as the misuse of credit and criminal background checks particularly affect communities of color.”

The use of credit histories to screen out job applicants has a discriminatory impact on minorities and exacerbates the already bleak economic outlook for people of color. For example, in February, the unemployment rate for Whites was 7.0 percent, while the rates for Blacks and Hispanics were 13.8 and 9.7 percent respectively. “Unemployed workers who have fallen behind on their bills because they are unemployed face a difficult dilemma - it is harder to get a job that would make it possible to pay off their bills because of their credit record,” notes Jane Dolkart, senior counsel, Employment Discrimination Project of the Lawyers’ Committee.

Various studies have documented a racial gap in credit scores. Many of the factors contributing to these racial disparities are outside the control of individual consumers. In addition to high unemployment, predatory lending schemes target communities of color. During the housing boom borrowers of color were frequently steered to subprime loans even when they qualified for a prime loan. As a result, since the housing crash, minority households have lost more than 50 percent of their family wealth – the very assets workers sometimes draw upon during emergencies to avoid additional debt.

The most common reason employers cite for conducting credit checks is the concern that employees who are behind on their bills will be more  likely to embezzle funds. However, there is virtually no evidence that credit history predicts job performance or trustworthiness. Indeed, in 2010, Eric Rosenberg, director of State Government Relations for TransUnion, one of the largest credit reporting companies, told Oregon legislators “At this point we don’t have any research to show any statistical correlation between what’s in somebody’s credit report and their job performance or their likelihood to commit fraud.”

Eight states have passed legislation restricting the use of credit reports in employment decisions and other states have legislation pending. These states have recognized that many Americans suffered damage to their credit during the recession due to bankruptcies, foreclosures, and late payments.  An individual’s ability to recover economically should not be stalled because of the unjustified use of credit history to deny employment to an otherwise qualified applicant.

About the Lawyers' Committee
The Lawyers’ Committee for Civil Rights Under Law (Lawyers’ Committee), a nonpartisan, nonprofit organization, was formed in 1963 at the request of President John F. Kennedy to involve the private bar in providing legal services to address racial discrimination. We are celebrating our 50th anniversary in 2013 as we continue our quest of “Moving America Toward Justice.” The principal mission of the Lawyers' Committee is to secure, through the rule of law, equal justice under law, particularly in the areas of fair housing and fair lending, community development, employment; voting; education and environmental justice.  For more information about the LCCRUL, visit www.lawyerscommittee.org.

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