Human Resources News & Insights

What would this new bill do to background checks?

A new law, if passed, might eliminate background checks entirely from the employment process.  

The “Equal Employment for All Act” was introduced in the Senate by Elizabeth Warren (D-Mass.) on Dec. 17, 2013.

The bill would prohibit the use of consumer credit checks against prospective and current employees for the purposes of making adverse employment decisions.

It would also bar employers from requiring employees and potential employees to disclose their credit history for employment purposes — even if the employee or applicant OKs it.

Senator Warren said in a press release that “a bad credit rating is far more often the result of unexpected medical costs, unemployment, economic downturns, or other bad breaks than it is a reflection on an individual’s character or abilities. It was previously thought that credit history may provide insight into an individual’s character, but research has shown that an individual’s credit rating has little to no correlation with his or her ability to be successful in the workplace.”

A little background

As you’ll recall, in early 2012 the EEOC released guidance stating that criminal background checks could have a disparate impact on minorities, and that the agency would be keeping a close eye on firms that made those checks part of their hiring process.

Since then, the agency hasn’t been afraid to go after companies for their policies — and companies (and judges) haven’t been afraid to voice their disapproval.

Then nine states’ Attorneys General sent a complaint letter to the EEOC. And the entire state of Texas has filed suit against the agency, claiming that the EEOC’s stance unlawfully limits the ability of employers to exclude convicted felons from the workforce.

It’ll be interesting to see how far the proposed bill gets. We’ll keep you informed.

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