Monday, April 20, 2009

Ohio Senate seeks to ban use of credit in employment decisions

There is little doubt that the current economic crisis has caused havoc on a lot of good intentioned people’s credit scores. During the good old days , people over-extended their credit, bought houses they can no longer afford, and otherwise lived beyond their means. With the retraction of the credit market and the exponential rise in home foreclosures, many people’s credit histories and FICO scores have suffered.

Ohio Senate Bill 91, however, is a reactionary move to this crisis that simply goes too far. This bill proposes to prevent employers considering people’s credit histories when makes an employment decision:

It shall be an unlawful discriminatory practice for an employer to use a person’s credit rating or score or consumer credit history as a factor in making decisions regarding that person’s employment, including hiring, tenure, terms, conditions, or privileges of employment, or any matter directly or indirectly related to employment.

Jim Siegel, a reporter for The Columbus Dispatch, quotes Tony Fiore of the Ohio Chamber of Commerce:

Senate Bill 91 will face opposition from business groups that want flexibility in how they determine whether someone is right for a job.

“Do you want someone with a bad credit history managing the company’s money, or yours?” said Tony Fiore, a lobbyist for the Ohio Chamber of Commerce.

“The employer needs that ability because they want to make sure they’re putting the best people forward, not only to help the company, but help the people relying on the company.”

Aside from the concerns voiced by Mr. Fiore (which I wholeheartedly echo), there is also a bigger issue at play here. There already exists a federal law the gives employees significant protections in how employers use credit information. The Fair Credit Reporting Act [PDF] make it illegal for any employer to obtain or use one’s credit for making an employment decision without the individual’s written authorization. And, an employer cannot take an adverse action (such as firing, or refusing to hire) based on information contained in a credit report without first giving the individual a reasonable amount of time to dispute the accuracy of the information or otherwise offer an explanation. With these federal protections in place for employees and applicants, Ohio’s businesses do not need to be prohibited from using this important tool.

[Hat tip: employeescreenIQ Blog]

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For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or

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