EEOC Sues over Use of Credit Reports to Deny Jobs

EEOC Sues over Use of Credit Reports to Deny Jobs

Yesterday, the U.S. Equal Employment Opportunity Commission sued Kaplan Higher Education Inc. for race discrimination, based on its practice of using credit reports to winnow out job applicants.  The EEOC filed a class action suit in federal court in Ohio, alleging that the credit report use is more likely to single out African-American candidates.

As with job testing, employers need to be careful to tailor their screening requirements to the needs of the job.  Courts are more likely to accept a bank’s argument that people with poor credit histories might pose a risk of embezzlement than the same argument from a schoolteacher.

With the enormous numbers of layoffs and foreclosures, the credit reports of many hardworking, talented people have taken a hit.  Unemployment rates are higher among minority groups, leading to the disparate impact identified by the EEOC.

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