Little credit due for Senate hiring bill

There is something intrinsically appealing about the idea of prohibiting businesses from using an individual’s credit scores when deciding whether to hire that individual.

A bill to do just that was approved by Democrats in the Colorado Senate Tuesday, with all of the Republicans in the Senate voting against it.

What bearing does the fact that someone may have been late on their car payment or may have run up excessive credit card debt have on that person’s fitness to work as a truck driver, a carpenter, a gas driller, a waitress, factory worker or, for that mater, a newspaper reporter?

Very little, if any bearing, it seems clear.

However, the way a person handles his or her personal finances could provide more than a little indication of their ability to perform certain tasks for an employer. It’s not hard to understand why a business owner might not want to hire someone with a troubled credit history and personal financial problems as the company’s chief financial officer.

What about a mortgage company hiring someone to work with credit rating agencies to obtain credit reports on home-loan applicants? Wouldn’t that person’s personal dealings with credit agencies be relevant?

How about other financial institutions or businesses that must trust certain employees to handle large sums of money?

Senate Bill 3, the credit and hiring bill passed Tuesday, originally had an exemption to allow banks and financial service companies to utilize credit checks in hiring, but that was struck from the version that passed this week. Now, the bill’s only exemption is for defense contractors and security firms.

Republicans were not unreasonable in opposing the bill and questioning the restrictions it would place on businesses, especially in situations like those mentioned above. But even if the legislation sought to draw broader exemptions — for more types of businesses under more circumstances — there would still be questions about where such lines should be drawn.

For instance, should restaurants or retail outlets that have certain workers assigned to close out the cash registers each night be allowed to do credit checks on those workers, but not others?

Furthermore, although there is some anecdotal evidence of businesses using credit checks under certain circumstances, there is little indication of widespread use or abuse of credit reports in hiring.

Obtaining a credit report costs money and takes time, two things that most business owners are loathe to waste. Many employers use credit checks in hiring rarely, if at all.

SB 3 now goes to the Republican-controlled House, where it is all but certain to die. That’s for the best, at least until someone can come up with a more carefully crafted bill that rationally spells out when it is appropriate to use credit reports as a hiring tool.


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