Sen. Annette Dubas
Job seekers could not be denied employment based on their credit history under a bill in the Legislature sponsored by Sen. Annette Dubas of Fullerton.
The Legislature’s Business and Labor Committee heard testimony Monday on LB 95, the Employee Credit Privacy Act. The bill would prevent employers from obtaining job applicants’ credit reports, with exceptions for positions at banks, savings and loan companies and other financial institutions.
Dubas said we need to ask what employers look for when they use a credit check.
“There is little correlation between credit history and job performance or the likelihood of committing fraud,” she said.
Dubas said the practice of reviewing an applicant’s credit report creates a potential Catch-22 for many job seekers. They need to find a job to get themselves out of debt, but their debt is preventing them from getting a job.
“There are many occurrences in our lives that are out of our control but can have an impact on our credit score,” Dubas said. She cited the loss of a loved one, divorce, medical expenses and job loss.
“The use of a credit score in job applications has an especially negative impact on women, the disabled, and certain populations such as Hispanic and African Americans because their scores tend to be lower,” Dubas said.
Thirty-four percent of employers reported using credit checks in the hiring process, according to a 2012 national survey conducted by the Society for Human Resource Management.
Most of those (87%) did so for positions with financial responsibility.
Under current law, employers have to get permission from applicants before obtaining their credit report. If employers choose to deny employment based on credit history, they are supposed to notify the applicant of the reason for the decision.
“It’s my understanding that that doesn’t happen very often,” Dubas said, referring to the notification requirement.
Robert Hallstrom, representing the National Federation of Independent Businesses, testified against the bill. He said the U.S. Equal Employment Opportunity Commission, the federal body that enforces workplace discrimination laws, already requires employers to have a justifiable policy for using credit reports in hiring decisions.
Ron Sedlacek, a lobbyist for the Nebraska Chamber of Commerce, also testified against the bill. He said that because credit checks cost employers time and money, they are only used in the final stages of the hiring process.
“As a candidate, if you make it to the point where the employer wants to go back and check your credit report, you should celebrate because that’s great news,” Sedlacek said. “It means you’ve made it to the next stage of the hiring process and they’re interested in considering you as a candidate.”
He added that employers use credit reports to assess accountability and responsibility and to avoid potential conflicts of interest.
Tad Fraizer, representing the American Insurance Association, took issue with the bill’s exemption of certain positions for which a good credit history is an occupational requirement. He said the language of the bill is too vague and fails to lay out specifically what positions would be exempt.
Dubas closed her remarks to the committee by reading an email sent to her by a constituent. The woman, an Army veteran and single mother of three with two master’s degrees, ran into difficult times and accumulated significant debt despite working two jobs. Dubas said if this woman were to apply for a job now, she could be denied employment because of her credit history.
“I really feel like this makes the point that I’m trying to make through LB 95,” Dubas said, referring to the email.