Bill Bans Employers from Using Credit Checks
Another bill aimed at imposing more controls on the hiring process for Connecticut businesses is unfortunately showing signs of life at the state Capitol.
HB 6519 prohibits businesses outside the financial industry from running credit checks on prospective employees—a legitimate screening tool employers use to get a better sense of who they are hiring.
During the 2012 legislative session, proponents of HB 6519 and the business community negotiated reforms to the laws regarding employee credit checks.
These reforms reinforced an employer’s option to run a credit check on a prospective employee who has access to more than $2,500 worth of the employer’s nonfinancial assets.
A nonfinancial asset can be anything of value to the business—including jewelry, electronics, machinery, expensive raw materials, tools, and antiques.
Current law notes that nonfinancial assets include, but are not limited to, library collections, museum collections, and pharmaceutical drugs.
Businesses in many industries use this law to conduct credit checks to screen employees with access to valuable nonfinancial assets, which is not surprising given that 30% of business failures result from employee theft, according to the U.S. Department of Commerce.
So why change the law?
Advocates who want to prevent nonfinancial businesses from using credit checks to screen employees argue that everyone has bad credit these days, but that shouldn’t prevent applicants from getting a job that would help achieve better credit.
Of the employers that use credit checks, 80% hired a candidate who presented their financial situation negatively.
The National Association of Professional Background Screeners, testifying on a nearly identical bill in the 2016 legislative session, noted "of the minority of employers that use credit checks, 80% have hired a candidate whose credit report presented his or her financial situation negatively."
Those using credit histories allow candidates to explain the credit check result before a hiring decision is made. Credit histories are not the barrier to getting a job they're portrayed to be.
Even the bill's proponent apparently understands these checks are legitimate.
An amendment recently filed allows libraries, museums, and pharmacies to continue using credit checks for candidates who have access to their nonfinancial assets but not for any other type of non-financial business.
This essentially admits that credit checks are good enough for some industries, but not others, and undermines the very case to undo the reforms enacted in 2012.
CBIA and its allies will continue to monitor HB 6519.
Some lawmakers have shown a growing interest in inserting the state government in the employee hiring process.
We believe they should refocus their energies on attracting and retaining businesses that want to hire.
For more information, contact CBIA's Eric Gjede (860.480.1784) | @egjede
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