NAACP Opposes The Use of Credit Reports by Employers When Making Hiring or Promotion Decisions
THE EQUAL EMPLOYMENT OPPORTUNITY ACT WOULD BAN THIS COUNTERPRODUCTIVE, DISCRIMINATORY PRACTICE
The use of credit reports by employers when making hiring decisions is creating a tragic catch-22 for the unemployed. It means that workers who have fallen behind on their bills because they are unemployed are finding it harder to get the job that would make it possible for them to pay off their bills. This is especially problematic in the African American community, where unemployment rates tend to be approximately double that of the national average. Furthermore, despite the clear lack of evidence connecting people’s credit histories to their on-the-job performance, a 2010 survey by the Society for Human Resource Management found that 60% of firms use employment credit reports prior to making hiring decisions. This is a dramatic increase from 40% less than 2 years ago.
To combat this very real – and increasingly prevalent – problem, Congressman Stephen Cohen (TN) has introduced H.R. 321 the NAACP-supported “Equal Employment for All Act”. The Equal Employment for All Act, would ban the practice of credit reports by employers when making hiring or promotion decisions (unless it is relevant to the job in question), thereby reducing employment discrimination and protecting job seekers’ privacy.
The practice of pre-employment credit reports is counterproductive; studies have shown that an individual’s credit report in no way indicates or predicts the type of employee he or she may be. Sadly, many experts also question the racial integrity of credit reports. Therefore, using an individual’s credit report when making hiring or promotion decisions is not only misleading but it also discriminates against the long-term unemployed, and it can have a disparate impact on African Americans and racial and ethnic minorities and discriminatory, but also a growing trend.
Using of a potential employee’s credit history as part of the hiring process is just one more tool in the arsenal of discrimination which is keeping too many racial and ethnic minorities from gainful employment.
The NAACP strongly opposes the use of credit reports by employers when making hiring or promotion decisions, and thus we strongly support H.R. 321, the Equal Employment for All Act, which bans this counterproductive and discriminatory practice.