Most employers cannot check credit scores

By Jamey Dunn

Those who have been having trouble making ends meet and are looking for work in the down economy may have one obstacle cleared from their paths.

Gov. Pat Quinn signed a bill today that prevents employers from looking at credit histories when deciding whom to hire, promote or fire. The law makes exceptions for certain jobs and industries.

At a Chicago news conference, Quinn acknowledged that the recent economic collapse has caused many people to fall behind on their bills. “We cannot allow folks who are doing their level best to be discriminated against with respect to getting a job or keeping a job. And unfortunately, some employers are using the credit score of an individual person to decide whether someone gets hired or someone gets retained on a job or someone gets a promotion on that job. And I don’t think that’s fair.”

Oak Park Democratic Sen. Don Harmon, a sponsor of House Bill 4658, said that if employers use credit histories when making hiring choices, people who are down on their luck face a much tougher climb to get their finances back in order. “If you lose your job and your credit is damaged as a result, and if employers use your credit to prevent you from getting a job, this is a vicious cycle that folks will never get out of. … At the same time, it provides to employers that have a legitimate need to look at an applicants credit history the ability to do so.”

Karen Kent, executive vice president of the hospitality industry union UNITE HERE Local 1, said that credit history is not relevant to job performance for most jobs. “Bad credit is often the result of life circumstances not poor character. … We don’t believe that a bartender that has been through a divorce is less likely to serve a good cocktail or that a hotel housekeeper who has medical bills is less likely to present a clean room to the guests.”

Kent said the bill would especially help out minorities who have been disproportionately impacted by foreclosure, unemployment and predatory lending. Harmon said he hopes the bill would stop some employers from “using credit scores as a convenient way to discriminate against applicants.”

The bill exempts entire industries, such as banks and insurance providers, which Harmon said “traditionally and almost universally deal with people’s confidential financial information.” The bill also makes exemptions for specific positions that might require an applicant to handle cash or have access to credit information.

Mary Lynn Fayuomi, president and chief executive officer of The Management Association of Illinois, said the legislation would not change much. “For a lot of employers, there won’t be any major changes because they were only using credit reports for people who had access to cash or where financial decisions where being made. She said her organization only recommends credit checks in such cases, and those are exempted by the bill.

Lisa Callaway, vice president and general counsel for The Management Association of Illinois, said some employers that are not included in the exceptions may have run credit checks when they found a “red flag” in a potential employee’s resume, work history or interview. However, she said that practice was not the norm.

Laura Minzer, director of policy for the Illinois Chamber of Commerce, agrees. She said that businesses are not regularly pulling credit reports on potential employees who do not handle large amounts of money or sensitive information. Minzer said many states are considering similar laws during the recession, hoping to people find jobs, but she doubts the move will make much of a difference. “I don’t think that this law speaks to that. In all fairness, it is probably not going to get more jobs on the table.”

The law takes effect January 1.