EEOC Warns That Use of Credit Checks May Be Discriminatory

The Equal Employment Opportunity Commission has just published an informal legal advisory letter regarding the use of credit checks in making hiring decisions.  Noting that the employment discrimination laws do not directly prohibit discrimination based on credit information, the EEOC warns that an employer’s use of credit information to screen applicants for jobs may violate such anti-discrimination laws if women and minorities are disproportionately screened out, unless the practice is a job-related business necessity.  The EEOC does not believe that credit checks are a valid measure of job performance; however, the agency acknowledges that credit checks may be appropriate for certain positions, such as bank positions in which employees routinely handle large amounts of cash.

This legal advisory letter is another indication that the EEOC is closely scrutinizing employers’ pre-hiring screening practices, including the use of background checks, criminal records checks, and credit checks, to determine whether such practices have a disparate impact on women, minorities, or other protected groups.

If you have any questions about pre-hiring screening, or other employment matters, please contact Kent Munson, Susan Rowe or Jennifer Raymond at (314) 231-2800.