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After banning the box last year, the D.C. Council will consider a bill that would prohibit employers from checking an applicant’s credit history during most of the hiring process.
Introduced by Ward 5 Councilmember Kenyan McDuffie, the Fair Credit History Screening Act of 2015 would allow employers to run a credit check on an applicant only after a conditional offer of employment is made. Credit screening during the job application process negatively impacts about one out of ten prospective employees nationwide, according to a study by policy think tank Demos.
“[Being judged by credit history] places burden on folks who need employment the most, especially when it has nothing to do with job at hand,” McDuffie said while introducing the bill in early June.
Nationally, similar laws are catching on, too. Ten states have passed similar legislation as of Sept. 2014, and more than 26 state legislatures are considering similar bills.
While most states with similar laws direct the authority of enforcement to their respective labor departments, this bill would task the D.C. Office of Human Rights with handling complaints. D.C.’s Fair Criminal Record Screening Amendment Act of 2014, a “ban the box” law that prevents employers from conducting criminal background checks until a conditional offer of employment is made, also uses OHR for enforcement.
Elliot Imse, director of policy and communications for OHR, said that since D.C.’s ban the box law went into effect on Dec. 17 last year, OHR has received 233 complaints, 172 of which have hearings scheduled. Thirty one have been settled in mediation. Fourteen of the docketed claims under investigation allege the employee was asked about her criminal background during the interview process or that her conditional offer of employment was unfairly revoked.
Most jurisdictions with ban the box laws in effect for a year or more have received around 50 complaints or less, Imse said.
While credit screening is theoretically used to determine the most qualified applicants for managerial positions—people who would have access to large sums of money, for example—it disproportionately impacts both black job applicants and employees in low-income areas. According to Demos, 65 percent of white households describe their credit scores as “good or excellent” as compared to 44 percent of African-American households. More than 50 percent of African-American households fall into the range of “fair and poor credit.”
When it was introduced, the bill garnered support from about half of the Council: It was co-introduced by Ward 4’s Brandon Todd, Ward 7’s Yvette Alexander, Ward 8’s LaRuby May, and at-large councilmembers Anita Bonds and Vincent Orange. At-Large Councilmember Elissa Silverman, Ward 1’s Brianne Nadeau, and Ward 6’s Charles Allen have since co-sponsored the bill.
“We are encouraged to see Councilmember McDuffie explore this bill as a further protection for working people in D.C. Your credit history should not be a barrier to getting a good job in the District,” said Ari Schwartz, lead organizer for DC Jobs with Justice. “That locks people in a vicious cycle.”
The bill would make it illegal for employers to consider a job applicant’s credit history during the hiring process before a conditional offer of employment is made. After that, an offer can only be terminated for a “legitimate business reason.”
While McDuffie’s bill does not define “legitimate business reason,” it uses the same determination basis as the ban the box law. To terminate an offer, an employer must consider the “specific duties and responsibilities necessarily related to the employment sought or held by the applicant.”
If a job applicant suspects she wasn’t hired because of bad credit history, this bill gives her the option to file an administrative complaint with OHR. If the employer was found guilty, the financial penalty would be staggered based on the size of the employer’s company: A business with 11 to 30 employees would receive a $1,000 fine, one with 31 to 99 employees would get a $2,500 penalty, and companies with over one hundred employees would get slapped with a $5,000 fine. The victim would receive half of the money.
This is a more victim-friendly system than ones in place in states like Connecticut, which gives victims no monetary compensation at all.
“With any workers’ rights law, a crucial part is making sure people know about their rights and how to get recourse when their rights are violated. So we’re hopeful that discussion will be had as this bill moves forward,” Schwartz said.
Photo by Darrow Montgomery