In a word, yes. This is unfortunate, for the applicant and potentially for the employer as well. Several states, including Kentucky, have tried to abolish this practice, but not many have been successful. In 2011, House Bill 144 was introduced. It would have amended the state’s discrimination laws to include those with less-than-stellar credit ratings. Here is the proposed language:
(d) To fail or refuse to hire, to discharge, or otherwise disadvantage any individual with respect to compensation, terms, or conditions of employment based on the individual’s credit history or credit score, unless the individual’s credit history or credit score is directly, materially, and substantially related to the duties and performance of the employee or the overall operation of the employer’s business.
For people who have been unemployed or forced to take lower-paying jobs because of the economy, this change could have been very helpful. People who are already struggling to make ends meet certainly do not need to be denied employment because they are having a hard time paying their bills. Other situations that might negatively affect someone’s credit score include divorce, the death of a family member, or medical bills. All of these scenarios are essentially out of a person’s control, and should not reflect poorly on them when it comes to potential job performance.
But employers are not willing to give up this screening tool. They think a person’s credit speaks to their level of responsibility. This is not always the case. Someone who has simply fallen on hard times can still be a reliable, responsible employee. Employers point to the fact that a person can protect their privacy by refusing to give their permission to have a credit check done. But that would most likely raise a red flag and have the same effect as a low credit score, and the person would still be denied the job.
There are certain situations in which an applicant’s credit report should be checked. For instance, someone looking to work for a bank or other financial institution should probably be able to handle their personal finances before being entrusted with someone else’s. But in many jobs, employees do not have any contact with money at all, so how they handle their finances is a moot point.
Nebraska is currently trying to pass a bill that would prevent employers from using credit checks during job interviews, except in situations where the applicants would be handling money. Proponents for the bill are running into the same arguments that those in Kentucky most likely did. There are very few states that have successfully passed laws banning pre-employment credit checks, including Hawaii and Oregon. Potential employers may still request this information in these states in the hopes that the applicants are not aware that it is illegal.
The Kentucky employment law attorneys at Charles W. Miller & Associates hope that one day this unfair practice will become illegal in Kentucky. In the meantime, they continue to help Kentucky and Indiana employees that are unfairly discriminated against and those who have been wrongfully terminated.
Bill would prevent job discrimination based on credit history; McCook Daily Gazette; Joseph Moore; February 12, 2013