Switalski wants to stop use of credit reports in hiring process

(Photo: bitzcelt via Flickr.com)

State Rep. Jon Switalski thinks many of his constituents in his Macomb County district are experiencing a new kind of economic discrimination: job denial because of poor credit ratings.

“Many residents have lost their jobs or homes and are barely making ends meet. This can have a serious impact on their credit score. If employers are allowed to continue using credit scores in hiring decisions, many hard-working people will be unfairly penalized,” Switalski, a Democrat from Warren, said in an interview.

“Some employers check credit scores and credit history to determine if in their opinion if they are worthy of holding a job or not. I believe that is discriminatory.” And now he’s introducing legislation that would curb the practice.

(To hear the full interview with Switalski, you can download it here.)

But some employers argue that credit scores are an important part of the employment screening process. Matt Heins, Jackson’s police chief, said his agency uses credit reports and histories as part of the screening for hiring new officers. Heins said the credit checks can be necessary to get a feeling if a prospective officer is “likely to pocket cash” during a large drug raid or other law enforcement action where officers confiscate large sums of money.

Heins said the credit scores and histories are just one tool in the interview and review process for hiring new officers. Driving records and criminal backgrounds are also checked out.

“It gives us some indications about the maturity of the potential officer,” Heins said. He said in the past, officers he has interviewed who had bad credit scores or history were given the opportunity to explain their situation in a follow-up interview. He said many of them had bad credit unconnected with anything the officer may have done wrong, like medical bills or student loans. The chief said the credit score and history are used only for sworn officers or those who might come in contact with large amounts of cash.

“I’d be happy to speak to Chief Heins regarding that and hear his concerns,” Switalski said. “This is not necessarily a black or white issue, or right or wrong. There are shades of gray with some employers’ concerns.”

Paul Stephens, director of policy and advocacy for the San Diego-based Privacy Rights Clearinghouse, said this is not the first time the use of credit histories and scores has become an issue. He said the use of such scores are a “Catch 22″ for job seekers.

“It becomes a Catch 22 for some one applying for a job to pay off their bills, but those bills and that credit history prevent them from getting the job,” Stephens said. “You have a high unemployment rate in Michigan. Obviously there will be numerous applicants for that position. What it probably means (is), of that large number of applicants, a number may be end up not being considered simply because their credit history is not as good.”

Stephens said a similar move by California lawmakers failed to gain traction. He said he was aware of no studies that showed how widespread the practice of using credit scores or histories was in employment screening.

Stephens said it was important for job seekers to be aware of the expanded options available to employers in backgrounding potential employees.

“Individuals ought to be aware that anything they do during their life time can come back to haunt them when they are in the market for a job because there are so many opportunities for events to be captured online and utilized against them,” he said, noting that employers are using social networking sites like Facebook and MySpace in the background checks now.

Switalski said his bill will be introduced later this month, along with three other bills that aim to prevent discrimination based on the health or illness of an employee’s family member or on the physical attributes or fitness of an employee. Another plan will prohibit employers from making hiring and firing decisions based on a person’s legal actions that are either unrelated to employment, happen off the company property or conducted during non-work hours.