Bill would cut credit history from hiring step

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LANSING — An employee’s credit history may soon become off-limits to potential employers.

A bill in the Michigan House would prohibit employers from looking at credit histories when assessing present and potential employees.

“It wouldn't just prohibit it in the hiring process,” said the sponsor, Rep. Jon Switalski, D-Warren. “It would also prevent employers from using credit histories when firing or disciplining employees.” Switalski said the bill is necessary because a person's credit history often makes finding work more difficult.

“Our economy is struggling and people are losing their jobs and their homes through no fault of their own,” he said. “They have huge amounts of debt, and it hurts their credit score. It's sort of a catch-22. You can't get a job without a good credit history, but you can't improve your credit history without a job.”

Businesses aren’t convinced.

Mike Batterbee, director of government relations for the Small Business Association of Michigan, said the proposal would let the government go too far.

“Our opposition to the bill is mainly that employment decisions are between an employer and prospective employee,” he said. “The government shouldn't get involved. One of the things that credit histories allow the employer to do is to verify what's on the resume.”

According to Switalski, credit histories don’t accurately reflect a person's qualification for a job. “It's just a snapshot of a person's history,” he said. “It used to be that you would look at credit histories to see if people had repaid loans — that sort of thing. But now it's being used to judge a person's character.”

The bill would allow lawsuits by those who feel they've been discriminated against or wronged by an employer.

Other states such as Wisconsin, Georgia, Oregon and South Carolina are proposing similar versions of the bill. There is also a federal version in Congress.

Switalski defended the bill, saying government has a responsibility to promote equality. “Employers are using this against employees with a poor financial past,” he said. “That's discrimination, and any kind of discrimination is wrong.”

Michael Fox, president of Ingenuity IEQ, an environmental firm in Midland, said credit history checks are an essential part of his company's interview process.

“We employ 34 people,” he said. “We're an employee-owned company and that means that we're more like a family than a company. We're very particular about who we let into our family, and you do find out certain things from a credit report.”

Fox said the bill would take away an important step in the hiring process. “We use a pretty thorough interviewing process,” he said. “When we get into the final stages, we've done a very lengthy interview with the candidate and we go through their career history and everything else.

“One of the final things we do is check references and perform thorough background checks. That would include a credit report, so in a nutshell I would be opposed to a bill that says you can't do it.”

Tom Scott, senior vice president of communications and marketing with the Michigan Retailers Association, said that although his organization hasn't taken a stand on the bill, employers should be allowed to use a variety of tools to screen applicants.

“Generally speaking, many employee positions have some degree of fiduciary responsibility,” he said. “Employers need as complete a picture of an applicant as possible in order to make an informed hiring decision.”

However, Fox said that an applicant's poor credit history isn’t always a deal-breaker.

“We try very hard to hire people who are truthful and honest,” Fox said. “People make mistakes along the way and we're okay with that. It's more about their attitude.”

The bill is awaiting action in the House Labor Committee. Co-sponsors include Fred Miller, D-Mount Clemens; Vincent Gregory, D-Southfield; Lesia Liss, D-Warren; and Sarah Roberts, D-St. Clair Shores.

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