Friday, August 7, 2009

Major Change Possible in Employment Law

Guest Blog Contributed by Kristina Duncan

I’m referring to last month’s U.S. House bill dubbed, “Equal Employment for All Act”. Employment law specialists will already be familiar with its language.

Here is a short summary, if you have not yet seen the bill.

This bill, H.R. 3149, proposes to amend the Fair Credit Reporting Act to prohibit the use of consumer credit checks against prospective and current employees for the purposes of making adverse employment decisions. In other words, if you apply for a job, credit history could no longer be part of a hiring decision. If you are already employed, credit history could not be used against you in any adverse employment action.

The bill carves out exceptions for positions with national security or FDIC clearance requirements, positions with state or local government that require such reports, certain positions at financial institutions, and as otherwise required by law.

The bill also contains an interesting clause that says, in effect, that applicants and employees cannot consent to or authorize use of credit reports (§2(b)(2)).

The bill strikes me as a significant change in this aspect of employment law. I’d be interested to see legal opinion on this. I’m impressed for two reasons. First, when one sees a proposed law in this stark form, “You have been doing X, and now you shall no longer do X”, one is on pretty solid ground inferring the existence of horror stories, many of which have likely resulted in court proceedings.

Second, when the proposed law eliminates any ability to authorize use, it’s a good bet that coercion resulting from unequal power positions lurks behind many of the horror stories.

I would be interested to hear what Lawffice Space readers have to say, both about the situations, and about the significant case law associated with this area of employment practice.

3 comments:

  1. Thanks for this post Kristina! This is an interesting development indeed! Would this matriculate into other areas such as applying for an apartment or buying a car?

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  2. Hmmm...I would think not. Getting an apartment or a car is based on your ability to pay for such items. I could understand a car dealer wanting to know if you have the ability to pay for the car or are you likely to default because you say have a 10 year history of defaulting on loans. I would think that your credit history would not be a reflection of your ability to do the job and thus shouldn't be a criteria for getting the job.

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  3. It's a form of hiring discrimination that employees can look up your credit history to determine if they don't want you to work for them. There are also personality tests that ask too much information that makes people feel uncomfortable and violated.

    I hope this is done away with because the unemployment rate is ridiculous and I think it's because of fair credit reports and personality tests.

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