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In town hall briefing, Rep. Gutierrez pledges to pass bill through committee restricting employers’ use of credit checks

Speaking at a Congressional briefing/town hall meeting, Rep. Luis Gutierrez (D-Ill), Chairman of the House Financial Services Subcommittee on Financial Institutions and Consumer Credit, and a cosponsor of the Equal Opportunity for All Act (H.R. 3149), pledged he would move the bill out of the House Financial Services Committee when he returns to Washington this month. The pending legislation, introduced by Rep. Steve Cohen (D-Tenn), would ban the use of credit checks in employment, with few exceptions. The briefing came just three weeks after Illinois Governor Pat Quinn signed a bill prohibiting the practice in that state. Monday’s hearing was poised to launch a national legislative campaign to take credit histories out of the employment process.

“At a time when Americans’ credit histories are being wrecked by job loss, foreclosures and medical debt, more and more employers are using credit checks as a way to screen out job applicants,” Gutierrez said. “Civil rights and consumer groups contend that credit checks result in discrimination against African Americans and Latinos, while also placing job seekers in a `Catch-22’ — unable to pay their bills because they don’t have a job, and unable to get a job because they can’t pay their bills.”

H.R. 3149 would amend the Fair Credit Reporting Act to prohibit the use of consumer credit checks of current and prospective employees for purposes of making employment decisions. Employers would also be prohibited from asking applicants to voluntarily submit to credit checks. The bill would establish exceptions for positions that require national security or FDIC clearance; state or local governmental agencies that require a consumer report; an employee or applicant applies for, or currently holds, a supervisory, managerial, professional, or executive position at a financial institution; or otherwise required by law. The measure is endorsed by over 25 civil rights groups, unions, and other organizations.

The amount of negative information on credit reports has increased dramatically in recent years, according to Gutierrez. Federal Reserve data show that, since the beginning of 2010, the number of people with foreclosures on their reports is up 8.7 percent and the number of reported bankruptcies has risen 34 percent. And it’s not just the recent recession to blame: the number of people who have collections on their credit reports has doubled over the last ten years. Today, 14 percent of all consumers have a collection on their report. At the same time, as the economy has worsened and employers have a larger applicant pool to choose from, they are increasingly using credit reports in making hiring decisions. A recent survey by the Society for Human Resource Management (SHRM) indicated that 60 percent of employers now run credit checks on job applicants, and 76 percent of employers run a check after applicants are hired.

“Credit reports can in no way tell an employer how well you can do a job nor can they give an adequate idea of how likely you’d be to steal from someone or some company,” Gutierrez contends. “How do you think Bernie Madoff’s credit report looked? What about Ken Lay, the executive who destroyed Enron? You cannot tell the character of a person by their credit report and it should not be one of the determining factors of whether you get hired. Just because someone has built up debt or missed a few payments because of the illness of a loved one or because they’ve been a victim of a predatory mortgage does not make them less able to do the work at an office or a factory, nor does it make them more likely to steal from their employer.”

“Congress must do everything that we can to eliminate one more stumbling block for the unemployed to get the jobs they need to take care of their families,” added Gutierrez. He added that when Congress returns, he would work with bill supporters to advance the measure.