Civil Rights Groups Decry Credit Checks on Job Candidates

Oct 26, 2011 - LegalZoom News Sources
Civil rights groups want credit reporting agency TransUnion to stop selling reports to businesses that use them to screen job applicants.

On October 10, California Governor Jerry Brown signed AB 22, a law preventing employers from running credit checks on most prospective workers. Advocates of the law argued that it would prevent discriminatory hiring practices against unemployed people whose credit suffered while they did not have a job.

Since the California law was passed, civil rights and labor groups have petitioned one of the nation's three major credit reporting agencies, TransUnion, to stop selling credit reports to employers. The groups - including the AFL-CIO and the National Council of La Raza - say black and Latino applicants are apt to be unduly punished by the practice.

According to the groups' website,, African Americans' credit scores are on average 10 to 35 percent lower than white workers', and Latinos' scores are 5 to 25 percent lower. In their letter to TransUnion, the groups stated the Equal Employment Opportunity Commission has said employer credit checks might violate the Civil Rights Act.

A TransUnion spokesperson told Bloomberg News that employers understand the relationship between credit history and employment history, and use the company's reports to assess "whether an individual acted prudently while he or she was employed."

A 2010 Society for Human Resource Management survey found 13 percent of employers run credit checks on selected job candidates and 40 percent run checks on all candidates.