EEOC Files Discrimination Lawsuit Based on Credit History Background Check

Some employment law attorneys have cautioned employers against using credit history as part of employment screening background checks since credit problems don’t have much bearing on job success and screening people out of employment offers due to credit may have a discriminatory impact.

For example, during a May 20, 2010 webinar, Reid Bowman, Esq., general counsel for ELT, commented, “[With the current infusion of dollars into the EEOC budget], the Equal Employment Opportunity Commission (EEOC) is more energized with investigations and investigators with a renewed focus on systemic issues such as increased EEOC scrutiny on company background screening processes, for example – arrest and conviction records and credit cards – since they may have an adverse impact on certain population groups.”

The cautioning by attorneys to their clients has been warranted. On December 21, 2010, EEOC filed a nationwide hiring discrimination lawsuit against Kaplan Higher Education Corporation, citing that the company’s use of job applicants’ credit history discriminates because of race, according to an EEOC statement.

The EEOC statement said in part, “Since at least 2008, Kaplan Higher Education has rejected job applicants based on their credit history. This practice has an unlawful discriminatory impact because of race and is neither job-related nor justified by business necessity.”

These practices have resulted in the company violating Title VII of the Civil Rights Act of 1964, according to the lawsuit (Civil Action No. 1:10-cv-02882) filed by the Cleveland Field Office of the EEOC in U.S. District Court for the Northern District of Ohio. According to the EEOC statement, “It is a violation of Title VII to use hiring practices that have a discriminatory impact because of race and that are not job-related and justified by business necessity.”

Regional Attorney Debra Lawrence of the EEOC’s Philadelphia District Office, said, “Title VII of the Civil Rights Act of 1964 was intended to eliminate practices that serve as arbitrary barriers to employment because of a job applicant’s race. Employers need to be mindful that any hiring practice be job-related and not screen out groups of people, even it if does so unintentionally.” Employers that use credit history as an employment-screening tool should track the final outcome of this case.

Not so sure credit checks will be a part of your screening process.  NO problem, but at a minimum you must conduct a criminal record check.  Contact Info Quest and we can help you with all your screening needs, including credit checks.


One Response

  1. I think that consumers and employers should be aware that credit screening is a tool that is widely used as a tool in screening applicants. The company I work for has an interesting article on credit checks that may add some additional information that could be helpful.

    hope you find it useful.

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