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Senate Co-Sponsorship Memoranda
Senate of Pennsylvania
Session of 2013 - 2014
Regular Session
MEMORANDUM
| Posted: | March 25, 2013 06:34 PM |
|---|---|
| From: | Senator Anthony H. Williams |
| To: | All Senate members |
| Subject: | PA Equal Employment for All Act |
| In the near future, I will be introducing legislation to address the use of credit information in employment decisions. This legislation will prohibit the use of consumer credit reports for purposes of employment or for making an adverse employment decision, unless (1) the consumer applies for or holds employment requiring government security clearance, (2) the consumer applies for or holds employment with a state or local government agency requiring use of a consumer report, (3) the consumer applies for or holds a supervisory or professional position with a financial institution, or (4) it is otherwise required by law. A 2003 study, considered by many experts as the most noteworthy academic analysis comparing credit history and job performance, found no correlation between indicators of poor credit and job performance ratings of employees. Moreover, a 2011 study conducted by researchers at Louisiana State University found that a person's credit score, which is a summary of the credit report that employers receive, has no predictive value on whether the consumer will commit theft or other deviant types of work behaviors against an employer. Regardless, recent surveys indicate that approximately 60% of employers use credit history information in some portion of their hiring decisions, up from just 19% in 1996 and 35% in 2001, and that nearly 1 in 5 consumers has a credit report error (i.e., an estimated 42 million Americans, according to a 2013 Federal Trade Commission study). With the current level of unemployment and in the aftermath of the mortgage crisis, we have seen more citizens seeking employment who have experienced a negative impact on their credit. This erroneous reliance on consumer credit information has a particularly disproportionate impact on minorities, given the rate of unemployment for African-Americans stood at 14% at the end of 2012 and at nearly 10% for Hispanics, as compared to 6% for white Americans according to the Economic Policy Institute. Given the fact that studies demonstrate high error rates and no correlation between job performance and credit information, it is not fair for employers to discharge or refuse to hire individuals based on their credit score. This practice is especially offensive when the job sought does not require the handling of money, has no fiduciary responsibilities, or is essentially labor intensive. Presently, 8 states have addressed this problem and limited the use of consumer credit reports in employment. In addition, there are 36 bills in 21 states and the District of Columbia that have been introduced or are pending this year relating to the use the credit information in employment decisions. Out of the total 36 bills, 34 address restrictions on the use of credit information in employment decisions. If you have any questions about this legislation, please contact my office at 787-5970. Thank you for your consideration. |
Introduced as SB839