Greater credit privacy sought for job seekers, employees

The Business and Labor Committee heard testimony Jan. 31 on two bills meant to prevent workplace discrimination based on credit reports.

LB530, sponsored by Omaha Sen. Brenda Council, would create the Employee Credit Privacy Act. Under the bill, an employer would be prohibited from refusing to hire or recruit, discharging or otherwise discriminating against an individual based on information obtained from his or her credit report. An employer also could not inquire about or obtain a copy of an applicant or employee’s credit history.

LB530 provides an exemption for employment for which a satisfactory credit history is a bona fide occupational requirement, including employment where:

• state or federal law requires an individual to be bonded;
• duties of the position include signatory power over marketable assets of $100 or more per transaction;
• the position is managerial and includes control of the business; or
• the position meets either state or federal Department of Labor criteria that requires a credit history.

Council said credit reports are used by employers to identify productivity and reliability in potential employees, confirm employment history and identify individuals with a propensity for theft. But, she said, there are other means – often more reliable, and less potentially discriminatory – of assessing those factors.

“I question the validity of the use of credit reports for those purposes,” Council said, adding that no study has found a predictive relationship between credit history and criminal activity.

A bill sponsored by Fullerton Sen. Annette Dubas also would prohibit discrimination based upon an individual’s credit report. LB113 also provides an exemption for situations where the information in a credit history or report relates to a bona fide occupational qualification for employment.

Dubas said credit reports often do not provide a reliable picture of an individual’s character, adding that it is common for reports to contain inaccuracies that are difficult to rectify.

John Rehm of the Nebraska Association of Trial Attorneys testified in support of both bills, saying studies have found no link between credit history and dishonesty in employment.

Lincoln attorney Kathleen Neary testified in support of LB113, saying that employment tests that are not a reasonable predictor of job performance are discriminatory. Furthermore, she said, credit histories can be skewed by events beyond an individual’s control.

“A medical situation can wipe away a person’s [good] credit report through no fault of their own,” Neary said.

Jennifer Flynn of the Consumer Data Industry Association testified in opposition to both bills. Only about 15 percent of background checks include a credit check, she said, and those that do are for positions that employers believe require it.

Applicants have an opportunity to explain negative information on their report, she said, and usually a report provides a context of 20 years of an individual’s financial life.

“A credit report is not a snapshot,” Flynn said. “It’s absolutely the opposite. It’s your entire lifetime of credit.”

Ron Sedlacek testified in opposition to LB113 on behalf of the Nebraska Area Chamber of Commerce, saying the bill does not clarify what constitutes a bona fide occupational requirement for obtaining a credit check for an applicant or employee.

“What is the difference between a bank teller and a cashier at a grocery store?” he said. Both handle cash and are audited, Sedlacek said, so it is unclear whether an employer should be allowed to require a credit check for one position and not the other.

Barbara Albers of the Nebraska Equal Opportunity Commission testified in a neutral capacity on LB113, saying it likely would increase the EOC’s caseload by 60-70 cases per year. The agency will lose two investigators under current budget recommendations, she said, resulting in possible delays in case resolution.

The committee took no immediate action on either bill.