Labor and Public Employees Committee

JOINT FAVORABLE REPORT

Bill No.:

SB-40

Title:

AN ACT CONCERNING EMPLOYER INQUIRIES ABOUT AN EMPLOYEE'S OR PROSPECTIVE EMPLOYEE'S CREDIT HISTORY.

Vote Date:

2/23/2016

Vote Action:

Joint Favorable

PH Date:

2/16/2016

File No.:

4

SPONSORS OF BILL:

Labor and Public Employees Committee

REASONS FOR BILL:

To restrict the conditions by which an employer may require an employee or prospective employees to consent to a credit check as a condition of employment for jobs that have access to nonfinancial assets valued at $2,500 dollars or more.

RESPONSE FROM ADMINISTRATION/AGENCY:

State of Connecticut, Commission on Human Rights and Opportunities (CHRO): This bill increases access to employment opportunities for minorities and other individuals who may have less than a perfect credit history unrelated to their employment while still maintaining protection for employers' financial interests. Research has shown that there is practically “no relationship between credit history and performance.” The Equal Employment Opportunity Commission (EEOC) also has maintained a longstanding position that credit checks have a disparate impact on individuals who are members of racial minorities, women and those with disabilities.

State Representative Matthew Lesser 100th Assembly District: Representative Lesser supports this measure is an important but minor fix to existing statute passed by the General Assembly in 2011 with bipartisan support. He added that removing the reference of “2500 or more” restores the original intent of the bill and would protect prospective employees from discrimination based on their credit history.

NATURE AND SOURCES OF SUPPORT:

Lori Pelletier, President, Connecticut AFL-CIO: Supports the bill on the grounds that credit reports should be limited to certain industries and that credit reports in general aren't as reliable after the 2008 economic crisis.

Melissa Mason, Executive Director, New Haven Works: is a nonprofit that builds a talent supply of city residents for regional employers and prepares New Haven residents to compete in a very competitive job market. Credit checks represent an unnecessary barrier to qualified applicants who, in coping with this hostile job market, have fallen behind in a few payments or stretched their credit cards a little too thin. As of January 2016, our largest Partner Employer, Yale University, has dropped the credit check requirement for all positions, except those who have responsibility for financial transactions or handling of cash valued at or in excess of $50,000 or those working in restricted areas, which contain University collections.

NATURE AND SOURCES OF OPPOSITION:

National Federation of Independent Business: Opposes the bill as it significantly expands existing restrictions on an employer's ability to request a credit inquiry on their employees or potential employees by narrowing the definition of “substantially related” through removing the reference in lines 41 and 42 to employees or potential employees that may have access to an employer's “non-financial assets” of $2500 or more. The bill will eliminate a screening tool available for some small businesses related to their employees who regularly deal with and/or have access to significant amounts of company non-financial assets such as vehicles, machinery tools, computer hardware and electronic devices, vaults and safes.

Eric W. Gjede, Assistant Counsel, Connecticut Business and Industry Association (CBIA): This bill will revoke the ability to properly vet applicants who have access to a business's critical non-financial assets. Additionally, the bill as written creates an inequity in the way individuals can be screened for employment. For instance, a library, museum or pharmacy can use a credit report on an employee who only has access to a single dollar worth of assets, while most business would be prohibited from conducting a credit check even if an employee have access to millions of dollars in assets.

Connecticut Conference of Municipalities (CCM): The bill would restrict a municipality's ability to properly screen someone who would work in sensitive areas such as in the Information Technology Office or a local Department of Public Works.

Melissa Sorenson, Executive Director, National Association of Professional Background Screeners (NAPBS): Have concerns with the legislation which would further limit an employer's ability to responsibly consider credit history information in employment background checks. Credit checks are not in and of themselves a barrier to employment. The vast majority of employers do not view credit information as a “yes or no” determining factor. Of the minority of employers that use credit checks, 80% report that they have hired a candidate whose credit report presented their financial situation negatively. Significant consumer protection law already exists when employers use credit information as part of the hiring process.

Reported by: Joshua F. Quintana

Date: 3/15/2016