by David Cohen, President, DCI Consulting Group

As described in a previous post, on October 20th EEOC held its first commissioner’s meeting of the year. The topic of interest was the use of credit checks to make employment decisions. The meeting was organized into 4 panels, and included panelists representing stakeholders who were both for and against the use of credit checks in employment decision-making.

Dr. Michael Aamodt, Principal Consultant at DCI, was invited by EEOC to testify as part of a final panel on a critical issue related to legal defensibility: what does the research show on job-relatedness? In other words, do credit checks predict importance aspects of performance on the job? If credit checks produce substantial impact against particular racial/ethnic groups and are generally not related to job performance, they may be a discriminatory selection tool. However, if credit checks are meaningfully related to important aspects of job performance, they may be defensible.

Mike summarized the available literature on this topic and concluded:

‘Given the potential levels of racial/ethnic adverse impact as well as the impact on individuals whose poor credit history is due to reasons often out of their control (e.g., divorce, illness), it would seem prudent for organizations using an applicant’s credit history to do so in the context of a thorough background check that would indicate whether a poor credit history is an anomaly or is indicative of a problematic lifestyle that might impact behavior at work.’

In other words, context matters in interpreting credit checks and making inferences from this information.

All of the panelists and testimony can be found here. The Washington Post published an insightful article on the topic over the weekend and emphasized Dr. Aamodt’s testimony. That article can be found here.

Dr. Aamodt’s complete written testimony can be viewed here.

Stay in the Know!