No more credit checks for job applicants? Maybe

Pennsylvania may soon join the list of states banning employers from pulling job applicants' credit scores during the hiring process.

The House Labor and Industry Committee recently approved House Bill 2207, which would outlaw the practice in most circumstances – except for jobs in finance or those subject to specific mandates by federal or local law.

“No convincing evidence exists to suggest that a person’s credit history predicts their job performance,” said Committee Chairman Rep. Jason Dawkins, D-Philadelphia. “As we know, credit reports and the ability to obtain credit have a longstanding history of discrimination.”

Bill sponsor Rep. Heather Boyd, D-Drexel Hill, said “workers deserve a fair chance when applying for a job.”

Supporters of the proposal also noted that credit scores have disproportionately negative impacts on groups that include women, people of color, those living with disabilities and those with low income. Many already face higher barriers to employment, they add.

“Credit scores can be negatively impacted by a range of factors that serve no useful purpose in predicting job performance including divorce, layoff, childcare costs, medical debt and other unexpected life events,” Boyd said.

Current federal legislation requires employers to disclose credit checks to job applicants and requires them to sign off before the records are pulled. Alongside anti-discrimination laws and the Fair Credit Reporting Act, critics say enough is already in place to protect employees.

“When hiring an employee, the employer bears all the risk,” said Rep. Barabara Gleim, R-Carlisle. “They need to adequately screen employees for the standards of their business.”

Critics of the bill do not deny the potential problems with employer credit checks. Rather, they took issue with the bill itself, noting that by creating a broad exemption for work-related checks, the bill could prove to be ultimately ineffective legislation.

“My opinion is you could basically walk through that loophole,” said Rep Ryan Mackenzie, R-Macungie. “If your goal is to actually protect individuals and not have this information asked because it’s totally not job-related, I think there could be better ways to do that.”

Those who break the law would be required to pay the Department of Labor and Industry $500 per violation.