Submitted by State Senator Michael Barrett
State Sen. Mike Barrett recently testified in favor of a bill he filed last year to stop employers in Massachusetts from running credit checks on job applicants. Now U.S. Sen. Elizabeth Warren is leading the charge on the federal level.
“This idea is gaining serious momentum,” Barrett said. “Running credit checks on applicants is a barrier to employment at a time when jobs aren’t easy to come by. People often get low scores because of unavoidable circumstances — they’ve been laid off or become very ill.”
“Limiting the use of credit reports by employers in hiring decisions will help level the playing field for hardworking families who deserve a fair shot,” said Senator Warren. “This is about basic fairness — let people compete on the merits, not on whether they already have enough money to pay all their bills. I applaud Senator Barrett’s commitment to ending this harmful practice.”
Employers are using credit reports to screen out job applicants more and more, even though recent studies show they’re often riddled with errors, Barrett says. An eight-year study by the Federal Trade Commission found that 25% of consumers spotted mistakes in their own reports.
Barrett’s bill prevents employers from using credit reports for hiring purposes or from asking an applicant about his or her credit standing, except when federal or state law requires it.
Even credit agencies have admitted scores don’t reliably predict job performance. Eric Rosenberg, Legislative Director for Transunion — a top reporting bureau — has said, “…we don’t have any research to show any statistical correlation between what’s in somebody’s credit report and their job performance or their likelihood to commit fraud.”
Barrett says the practice also creates a vicious cycle. Jobseekers may not get hired due to bad credit; without regular income their scores will likely suffer more.
According to the National Employment Law Project, Massachusetts last year had an average of 88,000 people out of work for 27 weeks or longer.
Barrett has proposed another bill that would bar employers from discriminating against the unemployed. That bill recently received a favorable report out of the Committee on Labor and Workforce Development and is now before the House Ways and Means Committee.
Barrett said both bills are targeted approaches to fighting the problem of long-term unemployment. His credit report bill is currently before the Massachusetts Legislature’s Committee on Consumer Protection and Professional Licensure.
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