Elizabeth Warren’s Bold New Crusade: Keep Employers Out of Your Credit History

December 18, 2013 | | Salon |

Decrying a “rigged” system and the long overhang of the 2008 crash, Sen. Elizabeth Warren Tuesday introduced a bill to ban mandatory pre-employment credit checks. “This act is about basic fairness,” the Massachusetts Democrat told reporters on a Tuesday call. “Let people compete for jobs on the merits, not whether they already have enough money to pay all their bills.”

Warren’s bill, the Equal Employment for All Act, would make it illegal for employers (outside national security jobs) to require that job applicants disclose their credit history. Warren’s Senate bill is co-sponsored by six Senate Democrats, including Vermont’s Patrick Leahy and Ohio’s Sherrod Brown, and is based on a bill Rep. Steve Cohen, D-Tenn., introduced in 2011 in the House. “A credit score,” Warren argued, “should not be used as a way to cut people out of the job market.” [...]

Warren spoke on a call hosted by the progressive think tank Demos, which previously released a report offering evidence credit checks “can create an untenable Catch-22 for job seekers: They are unable to secure a job because of damaged credit and unable to escape debt and improve their credit because they cannot find work.” Sen. Warren and Demos experts were joined by military veteran Emmet Pinkston, who said he had worked on a presidential security detail but was denied a job he sought at the Transportation Security Administration due to “erroneous entries” on his credit report. “My character was put into question because of an improperly managed credit report history,” said Pinkston. According to a 2012 Society of Human Resources Management study cited by Demos, 47 percent of companies employ credit checks in at least some of their hiring. [...]

Demos senior policy analyst Amy Traub rejected CDIA’s invocation of the 2008 study on several counts, noting it was limited to “government employees who filled out a specialized questionnaire”; that it involved business debts as well as personal credit; and that its authors identified it as “provisional” and said “more research is needed” to assess the effectiveness of credit history in predicting misbehavior. Traub emailed that two subsequent studies – one in the Journal of Applied Psychology  and another in the Psychologist Manager Journal – had “found no correlation between personal credit and propensity to commit theft or any other ‘counterproductive workplace behaviors.’”