- The Washington Times - Sunday, November 27, 2016

The D.C. Council is considering a bill that would bar businesses from performing credit checks on job applicants. Supporters of the legislation say credit histories can be inaccurate and indicate little about workers’ character.

“This bill will abolish restrictions that unjustly exacerbate challenges faced by applicants who are already having difficulty with finding employment and making ends meet,” said council member Kenyan McDuffie, who heads the committee that has approved the bill. “As a result, we will create economic opportunities for more of our most vulnerable residents.”

The “Fair Credit History Screening Act of 2015” would restrict an employer from accessing an applicant or current employee’s credit history for any reason, barring any local or federal laws that require the check. Violators would face fines ranging from $1,000 for a first offense to $5,000 for subsequent violations.

In introducing the bill, Mr. McDuffie cited a report by the public policy think tank Demos that says a quarter of those who are unemployed said a potential employer had requested a credit check and among those 1-in-7 had been told they were not hired due to bad credit.

Mr. McDuffie said this creates barriers for those who may have fallen on tough times, especially those trying to pull themselves up from homelessness.

The Judiciary Committee unanimously approved the legislation, which is slated to be heard by the full council in December. So far, 11 states, New York City and Chicago have passed legislation limiting the use of credit checks in the hiring process. The states include California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont and Washington.

“Our research shows poor credit more often tells a story of personal misfortune far more convincingly than one of poor work habits,” says Amy Traub, a senior policy analyst at Demos.

Ilana Boivie, a senior analyst at the D.C. Fiscal Policy Institute echoed Ms. Traub, saying credit is not a measure of job worthiness.

“Being low income by itself can lead to having a low credit score,” Ms. Boivie told the committee at a hearing last week. “Low income families face regular challenges to pay their bills and can easily fall behind financially. So a lower income worker may have a poor credit score despite trying to make good financial choices.”

According to the Demos report, credit checks were never intended to be used for hiring.

“Credit reports were not designed as an employment screening tool,” the report says. “Instead, they were developed as a means for lenders to evaluate whether a would-be borrower would be a good credit risk: by looking at someone’s history of paying their debts, lenders decide whether to make a loan and on what terms.”

What’s more, credit reports often contain incorrect information that could wrongly disqualify a job candidate. A 2012 Federal Trade Commission study shows that 20 percent of surveyed consumers found an error in their reports that eventually was corrected by the credit rating agency.

Opponents of the bill say that running credit checks helps businesses determine if employees are likely to steal from the company.

A 2012 survey from the Society for Human Resource Management shows that nearly half of all employers use background checks in hiring. And nearly half of those employers say they do so to decrease their risk of theft and embezzlement.

But the reports also says that employers aren’t using credit checks as the most important criteria for hiring. About 80 percent said they have hired people whose credit reports reflected poorly on their financial situation.

Paul Pascal, president of the D.C. Association of Beverage Alcohol Wholesalers, told the committee last week that his organization supports the premise of the bill, but that there are significant ambiguities regard exceptions to the measure.

Mr. Pascal said the legislation should widen the scope of exceptions to include any position that has access to personal data, such as bank or credit card account information, proprietary information, or access to regulated products such as alcohol.

“On a daily basis, our members transport, receive and document highly valuable commodities, thus being able to employ trustworthy employees to handle such funds and inventory is of the utmost importance,” he said.

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