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Consumer advocates urge ban on employer use of credit reports in hiring
Summary
A senior attorney from the National Consumer Law Center told the committee that S.1286 would restrict employers from considering applicants' credit reports because credit histories are often inaccurate and correlate with racial disparities.
A senior attorney from the National Consumer Law Center told the Joint Committee on Labor and Workforce Development that using credit reports for hiring is harmful and unfair and that S.1286 would restrict employer use of credit histories in employment decisions.
Chi Chi Wu testified that credit reports can create a "catch-22" for jobseekers who fall behind on bills after losing work and that there is no reliable evidence that credit history predicts job performance, turnover or fraud. She cited Federal Trade Commission findings and translated them into state-scale estimates: the FTC has found a verified error rate of about 21 percent in credit reports; witnesses said that would translate to over one million Massachusetts residents with report errors and roughly 663,000 with lower scores because of errors.
Wu also told the committee that credit histories disproportionately disadvantage Black and Latino applicants because of historical wealth and credit disparities. S.1286, as described by the witness, would forbid employers from considering an applicant's credit report for hiring and employment decisions, while permitting use in limited cases such as where federal or state law requires a national security clearance or a self-regulatory financial organization requires checks.
Committee members asked no follow-up questions at the hearing; the witness urged a favorable report.
