Credit checks for employment are embarrassing and unnecessary, advocates say

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By Megan Poinski
Megan@MarylandReporter.com

Credit reports could no longer factor in hiring decisions, if a bill proposed by Sen. Catherine Pugh becomes law.

The bill would prohibit employers from using credit checks to make hiring decisions, unless the employee would be working for a financial institution or an investment house. The bill also exempts jobs that require credit checks by federal or state law.

Senator Catherine Pugh

Pugh, a Baltimore City Democrat, testified on her bill at a Senate Finance Committee hearing Thursday. The House version of the same bill had a hearing Tuesday.

With many people struggling with unemployment, unpaid mortgages and medical bills, Pugh said that they have worse credit scores than they would otherwise. It is unfair, she said, for that to weigh into a hiring decision.

“Credit reports should be checked to see a person’s ability to pay, not their ability to hold a job,” Pugh said.

The bill, which carries endorsements from the Women’s Caucus and the Black Caucus, was supported by a parade of witnesses. But some business and industry representatives staunchly opposed it.

Proponents

Melissa Broome, a senior policy advocate for the Job Opportunities Task Force, said that there are 46 state organizations on board to support the legislation. Studies have shown that there is no correlation between someone’s credit report and his or her ability to do a job well or commit fraud, Broome said, but 60% of employers now conduct credit checks on job applicants. These screenings disproportionately impact low income people and minorities, she said.

Robin McKinney, director of the Maryland CASH Campaign, said that credit checks are not always reliable. McKinney’s organization teaches people financial responsibility, and she also teaches a class at the University of Maryland. Each semester, students from her class pull their own credit reports, and everyone finds at least one error.

Louis Brown, the director of social concerns from the Maryland Catholic Conference, said that the inference is completely unfair.

“Generally, I think it’s offensive to say because you lost your job, you’re more likely to steal,” Brown said. Several other witnesses said that running a criminal background check is a better way to find out if someone might be a thief.

Peter Sabonis, assistant director of advocacy for income security at Legal Aid, named specific people who did not get jobs because of poor credit. Their credit problems stemmed from major medical bills, unemployment or repossessions. The fact that low credit scores kept them from being hired is ironic, he said.

“The greatest burden the poor bear is being judged,” Sabonis said. “Why they are being judged at the doorway of their only place of economic redemption is beyond me.”

Opponents

However, wtinesses  representing employers forcefully opposed the legislation. Maryland Chamber of Commerce Vice President for Government Affairs Allyson Black said that the bill does not take into account legitimate reasons for wanting a credit check of employees, such as if they handle money or will be entering peoples’ homes.

Colleen Denston, government affairs director for the Maryland Society for Human Resource Management, said that items like medical bills or falling behind on a mortgage because of unemployment are not considered when an employer pulls a credit report. And they are not used all of the time – just when it is relevant, such as when someone is up for an executive management position. Nowadays, some peoples’ former employers are unwilling to say anything negative for fear of defamation lawsuits, Denston said.

“It drives them to obtain other legal information,” she said, indicating that a credit report can provide some of that critical background.

Senators on the committee were unconvinced. Many echoed what the proponents said, calling credit checks for employment embarrassing and intrusive.

“I bet Bernie Madoff paid all his bills,” said Sen. Anthony Muse, D-Prince George’s County.