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Employers: Be cautious about the use of credit checks

 

credit check

I have written about the use of background checks in general, and credit reports in particular, several times before, including here, here and here.   Now there is word that the University of Miami Medical School is facing a class action lawsuit over its use of credit reports to disqualify job applicants.

The plaintiff in this new case is African-American who was conditionally offered a position as a collector with the University of Miami School of Medicine.   After her credit report showed some delinquencies, however, the offer was withdrawn.   Her lawsuit alleges that Blacks and Latinos experience higher rates of financial difficulties, and have lower credit ratings than whites.  It also claims that there is no correlation between job success and credit ratings.  Therefore, the plaintiff alleges that the use of a credit check discriminates against her on the basis of her race, and violates Title VII of the Civil Rights Act.   She seeks certification as a class action

The EEOC has taken the position that any selection criteria that might have a disparate impact on minority applicants must be shown to be job-related and “consistent with business necessity”.  In other words, an employer who uses credit checks or other background searches needs to be able to show how that information is related to the applicant’s ability to perform the job in question.  Blanket policies which do not consider individual circumstances will open the door to charges of discrimination.

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