Proposed Bill Would Limit The Availability Of Credit Checks

March 10, 2020
The House Committee on Financial Services approved a bill that would prohibit employers from running credit reports in most scenarios.
Backgrounds Online | March 10, 2020


The House Committee on Financial Services approved a bill that would prohibit employers from running credit reports in most scenarios.

About The Legislation

House Bill 3614 (HB3614) would prohibit employers from running credit checks on most job seekers. The bill, known as the “Restricting Credit Checks for Employment Decisions Act” seeks to update current law which states: “A person may use a consumer report with respect to any consumer in which any information contained in the report bears on the consumer’s creditworthiness, credit standing, or credit capacity…” by adding the following stipulations:
- The person is required to obtain the report by a federal, state, or local law.
- The information contained in the report is being used with respect to a national security investigation.

This bill also states that the costs involved in procuring a credit report may not be passed on to the consumer. Information contained in a report may not be shared with any individual unless doing so is required to "comply with any applicable federal, state, or local equal employment opportunity law or regulation."

Read the bill.

Are Credit Checks Detrimental?

Representative Maxine Waters supports HB3614. She believes the use of credit checks can cause qualified people to be denied employment because of a financial hardship they endured in the past. Waters also thinks a person’s credit history has no bearing on their ability to succeed at a job.

She commented: "People who have been unemployed for an extended period of time, and whose credit standing has been damaged because they were unable to pay their bills, cannot secure a new job to end their financial distress because prospective employers conduct credit checks as part of an application process."

Opposition To The Bill

Groups such as the Society for Human Resource Management (SHRM) and the Professional Background Screening Association (PBSA) are opposed to HB3614 because they feel its context is too broad. Both the President/CEO of SHRM and the Executive Director of the PBSA gave statements which suggested credit history policies should be designed to meet the needs of individual organizations when they are hiring for financial positions.

Neil Bradley, Executive Vice President and Chief Policy Officer for the U.S. Chamber of Commerce also chimed in on this subject. He said: “This legislation would make it more difficult for employers to review the backgrounds of prospective employees, which would make it more difficult to hire for sensitive positions or would otherwise delay the hiring process.”

Credit checks are typically run on candidates who are applying for positions that would include access to company or partner funds or involve financial transactions with consumers. In this capacity, credit reports are a valuable tool that help employers make informed decisions about individuals who might have access to money or consumer credit information. Before running a credit check, an employer must be vetted to determine if they are qualified and have a permissible purpose.

What Employers Should Know

Currently, several states have restrictions on the use of credit reports for employment. If HB3614 is signed into law, employers should be aware that strong, nationwide restrictions will be implemented. Backgrounds Online will keep up with the status of this bill and provide relevant updates as they occur.

You may not need to check an applicant’s credit history, but when you are bringing on employees, contractors or volunteers it is essential to run comprehensive background checks. The team at Backgrounds Online can help you build custom screening packages for any position. Contact us for expert assistance Monday through Friday from 5am to 6pm PT.