(Centennial Fellow) At a time when state legislators should be doing everything possible to encourage job creation, a bill working its way through the Colorado Senate unfairly paints employers as unreasonable and untrustworthy.
Worse still, Senate Bill 3 gives trial lawyers another opportunity to sink their teeth into Colorado’s job creators—extracting “damages” where none exist and forcing employers to pay dearly just to prove their innocence.
Would it surprise you to learn that the bill’s sponsor, Sen. Morgan Carroll (D–Aurora), just happens to be a trial lawyer with one of the state’s most high–profile firms? Or that, at the bill’s first hearing in the Senate Judiciary Committee which Carroll chairs, not a single witness claimed to have been denied a job or a promotion as a result of a credit history check?
According to Carroll, employers should be prohibited by law from reviewing a job applicant’s credit history and could be sued by applicants or disgruntled employees if they do. The bill makes a very narrow exception for jobs in financial services or defense and security.
When customers engage in a transaction, we often entrust a business with our personal financial information, and we expect them to keep it confidential and secure. Businesses know that consumer fraud is a $30 billion–a–year problem, so one precaution they take is to review the credit history of potential employees. But credit history isn’t the only factor considered in the hiring process nor is it the most important.
Moreover, businesses don’t sneak around to snoop at employees’ credit history. The federal Fair Credit Reporting Act already requires employers to obtain written permission from the applicant to check credit history. Even then, the employer doesn’t see the actual credit score.
Various media reports suggest, using mostly anecdotal evidence, that job applicants with poor credit histories cannot get a job and that it’s normal for a person’s credit history to tank after losing a job.
Neither happens to be true.
With truly rare exceptions, an individual has more control over his or her credit history than does any external factor.
Losing a job certainly puts a strain on anyone’s finances, but not everyone who is unemployed dives deeply into debt or fails to make responsible adjustments to their spending habits. Surely job–seekers who maintain sound credit through these difficulties are entitled to be distinguished from those who don’t.
According to the Denver Post, “Senator Carroll said it’s unfair that a bad credit record should keep an otherwise qualified candidate from landing a job.” In fact, a bad credit rating is rarely, if ever, the determining factor.
Employers are, by and large, reasonable people who use a myriad of criteria to make personnel decisions. By considering an applicant’s employment history, training and references, employers are capable of discerning between someone who’s recently fallen on hard times and someone who is habitually one step ahead of the collection agency.
What is alarming is the persistent drumbeat by some legislators that treat employers as unscrupulous adversaries who must be constantly regulated, micromanaged and threatened with litigation.
Colorado businesses are job creators whose faith in our state’s economic climate and its government is essential to spur a sustained recovery. Yet year after year, a handful of legislators devise still more ways to make Colorado employers jump through regulatory hoops and spend countless hours and thousands of dollars in the courts defending themselves against mostly bogus allegations concocted by trial lawyers seeking a quick payday on behalf of disgruntled former employees.
Senate Bill 3 is yet another political solution in search of a real–world problem. Federal law already ensures that job–seekers control access to their credit history.
Here’s hoping legislators who recognize employers as allies rather than adversaries will stand together to defeat this ill–considered measure.
Mark Hillman is executive director of Colorado Civil Justice League (www.CCJL.org) and a Centennial Institute Fellow.