To provide a measure of relief to Massachusetts job applicants, the State Senate has approved a bill, sponsored by State Senator Mike Barrett (D-Lexington), to restrict the use of credit reports in hiring and promotions.
“People see their credit reports dinged due to circumstances they couldn’t reasonably foresee — their spouse becomes ill, they get laid off, or they hit a combination of student debt and under-employment,” said Barrett. “All these things are regrettable, but none should stop them from getting back on their feet.”
“Limiting the use of credit reports during hiring will guarantee Massachusetts residents applying for jobs that past credit mistakes will not be used against them. This is responsible, common-sense legislation that protects both employers and potential employees,” said Senate President Stan Rosenberg (D-Amherst).
Student loans and medical bills are piling up on middle-class families, Barrett says. The average educational debt of a four year college graduate in Massachusetts is $29,300, according to the Institute for College Access and Success, a California non-profit. A survey by Blue Cross Blue Shield found that nearly one in five insured adults in Massachusetts struggled with paying medical bills in 2015.
Barrett’s bill, as passed, bars most employers from using credit reports for hiring purposes. The bill does, however, provide exemptions for jobs that require credit checks under federal or state law; high-level positions at financial institutions; jobs that require national security clearance; and jobs with authority over funds of more than $6,000.
“Where your common sense would see the need for an exemption, you will find that the legislation provides one,” said Barrett.
U.S. Sen. Elizabeth Warren (D-MA) has filed similar legislation on the federal level.
47% of employers nationally use credit checks to evaluate job applicants. Recent studies show credit reports are often riddled with errors; an eight-year study by the Federal Trade Commission found that 25% of consumers spotted mistakes in their records.
Credit agencies concede their scores don’t predict job performance. In testimony before the Oregon State Legislature, Eric Rosenberg, Legislative Director for Transunion — a top reporting bureau — has said, “We don’t have any research to show any statistical correlation between what’s in somebody’s credit report and their job performance or their likelihood to commit fraud.”
“Ten other states have passed bills restricting this practice,” Barrett said. “Massachusetts should be next.”