NACS Opposes Credit Checking Legislation

Bill pending the U.S. House of Representatives would prohibit employers from using credit checks as part of background checks.

July 23, 2010

WASHINGTON - Next week the House Financial Services Committee is scheduled to hold a markup on H.R. 3149, the Equal Employment for All Act. NACS has joined with other trade groups representing the business community to express opposition to the bill because it would prohibit employers from using credit checks as part of background checks in all but an extremely limited number of circumstances €" most involving government employment.

So, why should convenience store operators care about this bill? Because "Checking credit is done responsibly, and is not in and of itself a barrier to employment," notes a letter the group sent to the committee. The letter continues:

Employers may check credit history as part of a background check to help them determine whether a prospective employee is a possible risk to the financial health of a business or to their customers. Employers use credit checks as part of a background check very responsibly, and prohibiting their use in assessing employees makes employers, other employees and customers more vulnerable to fraud and identity theft.

Credit checks are only used in about 15% of all background checks, and when they are used they are used primarily for executive positions, positions that have fiduciary and financial responsibility, or for positions that have access to confidential or proprietary information. When examining credit history, employers look for lawsuits, judgments and accounts in collection, NOT late payments (which did not even make the list of things employers consider, according to a study by the Society for Human Resource Management).

Finally, the vast majority of employers do not use credit as a "yes or no" proposition, but to provide prospective employees with the opportunity to explain their circumstances.

Check NACS Daily next week for more on H.R. 3149 and follow up from the markup.

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