Singletary: Give N.Y. credit for necessary new ban

Still, you got to wonder: How does the fact that you once couldn’t pay your credit card bill correlate to your job performance? Or let’s say someone is a poor money manager. Does that mean that person is more likely to commit fraud? 

We don’t really know the answers to those questions, yet many employers are allowed to screen folks on the assumption that their character is related to their credit history. As I’ve seen in my own work with people, a bad credit record can be the result of a host of problems not linked to irresponsible financial behavior. The think tank Demos and other advocates have found that many people have seen their credit brought down by periods of unemployment or medical debt. Some were the victims of predatory lending practices.

Consumer advocacy groups have long complained that there is no link between bad credit and job performance. They further argue that such checks disproportionately screen minorities out of jobs, leading to discriminatory hiring.

So what did New York do that’s so special? The city’s ban on considering an applicant’s credit history is one of the toughest laws enacted on this issue, says Amy Traub, a senior policy analyst for Demos. States and local governments can make their own laws that can further restrict employers, except in cases where a credit check is required under federal law, she said.

There are efforts in Congress to prohibit employers from requiring potential employees to disclose their credit history as part of the job application process. Currently, 11 states now limit employers’ access to or use of applicants’ credit information — California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont and Washington, according to National Conference of State Legislatures. And there are an additional 28 bills pending in statehouses across the nation. 

“New York’s law is the strongest in the country because it doesn’t include most of the unjustified exemptions found in so many other state laws,” Traub said.

Illinois’ law permits credit checks in hiring for positions where job duties include having unsupervised access to $2,500 in cash or assets. That “would include virtually any position in retail, maintenance, tech support and, likely, food service,” Traub said. “California’s law allows credit checks for any position described as ‘managerial,’ putting a ceiling on how far anyone with flawed credit might be able to advance in their career.” 

Even the exceptions in the New York law such as with law enforcement aren’t warranted, Traub argues. The implication that a police officer would be more likely to become crooked if he or she paid bills late is unfounded, she said.  

In a 2013 Demos report “Discredited: How Employment Credit Checks Keep Qualified Workers Out of a Job,” Traub makes a great case to cease using anyone’s credit as a job-screening tool. 

“Despite their prevalence, little is known about what credit checks actually reveal to employers, what the consequences are for job applicants, or employment credit checks’ overall impact on our society,” she wrote in the report. “Credit reports were not designed as an employment screening tool. Instead, they were developed as a means for lenders to evaluate whether a would-be borrower would be a good credit risk.”

I hope what’s happened in New York will create a precedent. Maybe it will inspire Congress to act so that there’s one standard. 

Even with its exceptions, the Empire City deserves a shout-out for removing an unnecessary barrier to employment. 

Michelle Singletary welcomes comments and column ideas. Reach her in care of The Washington Post, 1150 15th St. N.W., Washington, DC 20071; or singletarym@washpost.com.