Judiciary Committee

JOINT FAVORABLE REPORT

Bill No.:

HB-6641

Title:

AN ACT CONCERNING THE USE OF CREDIT REPORTS IN EMPLOYMENT DECISIONS.

Vote Date:

4/15/2011

Vote Action:

Joint Favorable

PH Date:

4/4/2011

File No.:

SPONSORS OF BILL:

Judiciary Committee

REASONS FOR BILL:

It has been reported that the persons who need jobs the most are the one most affected by the practice that this bill would prohibit.

RESPONSE FROM ADMINISTRATION/AGENCY:

None Submitted

NATURE AND SOURCES OF SUPPORT:

Matthew Lesser, State Representative: Supports this bill. It has been found that the people who are most in need of jobs who are most likely to have bad credit and that this practice provide no benefit at all to most employers. It has been found that there is no evidence of any link between an employee's credit rating and their job performance.

On line 8, I would suggest strengthening the language to cover situations where an employee might not necessarily be “required” to consent to the creation of a credit report, but where one would be requested.

Renae Reese, Executive Director, Connecticut Center for a New Economy: Supports this bill. In the midst of record-high unemployment and ongoing foreclosures, sixty percent of employers recently surveyed report that they run credit checks on job applicants. This practice irreparably harms Connecticut workers and our state's economy despite strong evidence that credit checks have no validity in predicting job performance. The Equal Employment Opportunity Commission has recently sued two employers over this practice, acknowledging that it has a discriminatory impact against African American and Latino applicants.

NATURE AND SOURCES OF OPPOSITION:

Tim Phelan, President, Connecticut Retail Merchants Association: Opposes this bill. Under the Fair Credit Reporting Act an employer must certify to the consumer reporting agency that the employer has and will comply with the employment screening provision of the fair Credit Reporting Act and that the information from the consumer report will not be used in violation of any applicable federal/state employment opportunity laws or regulations. The consumer reports are an important part for employers and any attempt to restrict the use of these reports, we believe, would only cause problems for both parties in the long run. The consumer report used in employment purposes is only one piece of the hiring process that an employer uses.

Chiefs Anthony Salvatore and James Strillacci, Connecticut Police Chiefs Association: We respectfully request an exemption for law enforcement. A credit report may be relevant in determining the integrity or responsibility of a candidate for a position which requires both.

Connecticut Conference of Municipalities: CCM urges the committee to amend this bill, if it is to proceed. CCM is concerned that existing exceptions do not seem to include municipal employees whose positions require them to handle cash or people who hold positions of public trust, such as police officers or firefighters. This bill should be amended to include exceptions in those instances.

Jason Sokol, President, Connecticut Alarm & Systems Integrators Association: Opposes this bill. Credit checks and criminal background checks are often performed – and should be performed – to screen job applicants in the alarm industry to ensure that a candidate will not pose a threat to customers and their property and other valuables. Employees of alarm companies often have knowledge of and access to customers' financial data and personal property, as well as information regarding when customers are away from home.

We would also like to point out that federal law already provides protections to employees and job applicants relative to credit checks.

Kia F. Murrell, Assistant Counsel, Connecticut Business and Industry Association: Opposes this bill. This bill may negatively impact many Connecticut businesses in the following ways:

1. Many employers use credit information in employment decisions because the nature of their industries require it.

2. In industries such as: home care for the elderly, nanny and child care, home alarm companies, to name a few, often perform credit checks. Employees in these industries often have access to confidential information and the personal belongings of those they serve.

3. Under this legislation, these employers would not be able to perform background checks that are vital to the integrity of their work and necessary to protect the public interest.

4. This bill duplicates federal law regarding financial services employers. The Fair Credit Reporting Act regulates employer background check procedures.

Insurance Association of Connecticut: Opposes this bill. Credit reports are integral in the employment process, particularly for businesses with employees that hold certain positions in which their financial veracity is of concern. A credit report is a valuable tool to evaluate a person's personal responsibility and organizational skills. An individual with a high debt ratio may not be the ideal candidate for having access to consumers' assets or sensitive personal information. Prohibiting the use of such a vital tool in the hiring process for the insurance industry will be a direct impediment to hiring in Connecticut.

Richard Jacob, Associate Vice President for Federal and State Relations, Yale University: Opposes this bill. Yale University is a large and complex organization that has a number of operations where the use of credit reports in employment decisions is prudent and reasonable. These activities include museums and libraries with valuable collections; health care services that involve the distribution of prescription drugs; and payroll and other financial systems. The use of credit reports for employment decisions in these settings is essential for our prudent stewardship of University assets. It is also required as a condition of insurance policies covering Yale's museum and library collections.

We request that the committee incorporate language that allows credit reports to be considered for employment decision when the position:

a. Involves a fiduciary responsibility to the employer, including but not limited, to the authority to issue payments, transfer money or enter into contracts.

b. Provides an expense account.

c. Involves access to employer's non-financial assets, including, but not limited, to museum and library collections and to prescriptions and other pharmaceuticals.

Andy Markowski, Connecticut State Director, National Federation of Independent Business: Strongly opposes this bill. Eliminating the use of credit reports as a tool for employers is simply not conducive to the successful operation of our free enterprise system. Business owners must have all available information to best be able to make proper hiring decisions. This bill does not take into account small business owners and their employees who regularly deal with thousands of dollars in cash and/or have access to company checks and/or credit cards, customers' credit information, and other personal or sensitive information, including social security numbers, residential or commercial alarm codes, vault or safe combinations, proprietary data or equipment, etc. There needs to be some tool in the tool box for a small business owner to use a credit check when they feel they need to use it.

Reported by: George Marinelli

Date: April 27, 2011