Consumer Law: A Worker’s Best Friend?

When it comes to financial products, the line between employee and consumer often becomes blurry. If your boss insists that you receive your wages on a pre-paid debit card that charges high fees to access your earnings or check your balance it’s clearly a serious employment problem. And yet consumer law may be workers’ best remedy. That’s what the Consumer Financial Protection Bureau implied yesterday, when it issued a bulletin clarifying that the Electronic Fund Transfer Act “prohibits employers from mandating that employees receive wages only on a payroll card of the employer’s choosing.”

Who knew the Electronic Fund Transfer Act was a worker justice statute? For low-wage employees coping with the impact of a $1.50 fee on a $7.25 hourly wage, it clearly is.

Employment credit checks offer another case in point. The credit report, a product developed to assist lenders, is now commonly used by employers in a misguided effort to assess job-seekers based on their ability to pay bills. The result is that a consumer statute – the Fair Credit Reporting Act (FCRA) – becomes one of the few protections job applicants and employees have when confronted with a significant new means of employment discrimination.

And yet the FCRA, already flawed in a consumer lending context, is truly inadequate to protect workers.  At best, it requires that employers get employees’ and job applicants’ permission to pull their credit report (withholding permission of course means you are no longer considered for the job) and that employees and job applicants be notified and get a chance to review their credit report for errors if the credit report played a role in the employer’s decision not to hire them (or in the case of existing employees, to fire them or deny a promotion).

Yet even these meager protections are widely flouted: many job seekers never find out that their credit was the reason they were denied a job.  And while it is technically illegal to use credit reports to screen employees in a way that has a disparate impact on people of color, women, people with disabilities or other groups protected by federal anti-discrimination law, the Equal Employment Opportunity Commission has had a very difficult time proving discrimination cases even when the impact appears evident.   

Workers can thank goodness for consumer law, and for the CFPB as a critical new enforcer (see David Callahan’s post yesterday on how the agency is helping bank customers – and may be helpful to those facing credit reporting woes as well)  but working people should not have to rely on cases where consumer statutes and workplace injustice overlap. As journalist Josh Eidelson vividly illustrates in his recent Washington Post article on how the nation’s largest employer ensures that its wages stay low, we need better labor and employment laws and more effective enforcement of the ones that exist. When your boss is mistreating you, the Electronic Fund Transfer Act shouldn’t be the only place to turn.