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Workplace Discrimination Hiding In Credit Histories?

Back in December of 2010 the (EEOC) Equal Employment Opportunity Commission filed a lawsuit against the Kaplan Higher Education Corporation. Kaplan runs a nationwide chain of for-profit colleges and training schools. The EEOC suit accused Kaplan of using credit histories to discriminate against black career seekers.

According to EEOC spokeswoman Justine Lisser, “Credit histories were not compiled to show responsibility,…They were compiled to show whether or not someone was paying the bills, which is not always the same thing.”

Washington, Oregon, Hawaii, Illinois and other states have made it illegal or restricted using credit reports as a part of the hiring process. The obvious concern being it would hinder the ability of the unemployed to reenter the workforce. The U.S. Congress is also looking at ways to protect these workers. The EEOC stated, “This practice has an unlawful discriminatory impact because of race and is neither job-related nor justified by business necessity..”

Black Americans have some of the highest percentages of low credit scores. Statistics show employers are increasingly using credit worthiness as a condition of employment even when it has no relevance to the job. The EEOC didn’t pinpoint the types of jobs investigated. Kaplan said, “We are an equal opportunity employer, and we are proud of the diversity of our work force.” Kaplan said it routinely performed background checks on all job applicants.

Kaplan also stated, “The checks are job-related and a necessity for our organization to ensure that staff handling financial matters, including financial aid, are properly screened…” The pattern of concern about this practice involves for-profit education companies graduating students with high debt-to-income rates versus low repayment rates. Another red flag is the inability of attendees to repay the federal student loans while receiving little or no job placement or assistance from these type of schools.

Kaplan maintains, “We are an equal opportunity employer, and we are proud of the diversity of our work force.” However, the EEOC lawsuit says from a least 2008 Kaplan denied career seekers based on credit histories having a “significant disparate impact” on black applicants. The Consumer Data Industry Association supports the use of credit histories in the hiring process. In reporting to the EEOC it stated employers put a lot of work into initiating and maintaining workplaces free from fraud and theft.

CDIA spokesman Eric J. Ellman, said, “In a climate of economic uncertainty, where employers are likely choosing from a large employment pool, they need to be critically careful about protecting their businesses and their customers.” According to Michael J. Zimmer, a professor of employment law at Loyola University in Chicago, under federal law, “if an employment practice has a disparate impact on a certain race, you have a case.” He believes the E.E.O.C. would not have sued Kaplan unless it had reviewed statistics about Kaplan’s hiring practices. Mr. Zimmer also believes the outcome of the lawsuit will hinge on the use of credit histories as being…justified as job-related and necessary for business,” he said. “That’s the defense’s standard in a disparate impact case.”

The EEOC wants a permanent injunction stopping Kaplan for using credit histories in it employment decisions including hiring. The EEOC also seeks lost wages and benefits for those not hired by Kaplan because of credit histories. The EEOC desires that Kaplan offer these rejected applicants employment. But, Mr. Elleman believes credit reports used for employment is a legally protected activity and “credit reports for employment purposes are reliable predictors of risk.”

However, the E.E.O.C. spokeswoman Ms. Lisser, strongly opposed that assertion. She maintained,“It’s not clear that employers who are relying on credit histories know if someone has never paid a bill for 10 years or if someone was a very responsible bill payer for years until they lost a job or someone in their family had a medical emergency and they suddenly couldn’t make a payment. We don’t think it’s a good marker for responsibility in employment,”

One thing is certain, discrimination in the workplace has increased dramatically. According to the EEOC, “Workplace discrimination charge filings with the federal agency nationwide rose to an unprecedented level of 99,922 during fiscal year 2010.” Every career seeker and employee should make it their business to understand workplace discrimination.


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