I have been critical of using credit checks as contact center screening tools. Not only are they in most cases unnecessary, another excuse by hiring managers who are unable to examine people at their true worth but they are also morally wrong. They act as blows to the kneecaps of highly skilled and motivated individuals--whom through little fault of their own have fallen behind in their bills that is practically inevitable in today’s tough economy—that makes it even more difficult for them to get up. These checks serve then as virtual debtors’ prisons; Catch-22s for which there is little escape.

Now there is another reason—and rightfully so—why contact centers should consign credit cards to the dustbin: lawsuits. The U.S. Equal Employment Opportunity Commission (EEOC) filed suit late last year against Kaplan Higher Education Corporation for allegedly engaging “in a pattern or practice of unlawful discrimination by refusing to hire a class of black job applicants nationwide.” The EEOC claims that Kaplan has since 2008 rejected applicants based on credit history.

The EEOC brought action under Title VII of the Civil Rights Act of 1964. The commission says it is a violation of Title VII to use hiring practices that have a discriminatory impact because of race and that are not job-related and justified by business necessity (itals mine). 

The EEOC says it attempted to reach a voluntary settlement with Kaplan before filing suit. It is "seeking injunctive relief in its lawsuit, as well as lost wages and benefits and offers of employment for people who were not hired because of Kaplan Higher Education’s use of job applicants’ credit history."

“Title VII of the Civil Rights Act of 1964 was intended to eliminate practices that serve as arbitrary barriers to employment because of a job applicant’s race,” said Regional Attorney Debra Lawrence of the EEOC’s Philadelphia District Office, which oversees Pennsylvania, Delaware, West Virginia, Maryland, and portions of New Jersey and Ohio. “Employers need to be mindful that any hiring practice be job-related and not screen out groups of people, even if it does so unintentionally.”
 
Some law firms are now raising the red flags. A Jan.19, 2011 blog by Sheppard Mullin Richter and Hampton points out that  “although it is legal for employers to review the credit history of applicants, employers should use the practice with caution, especially in light of this recent lawsuit.

“If credit histories are used to evaluate applicants, policies and procedures should be in place to ensure that the use is relevant and fair. Employers should also determine whether there is a sound business reason to obtain such information because, if it is not directly job related, it could be considered discriminatory.

“Indeed, running credit reports on all applicants, regardless of position, can have the effect of discriminating against protected classes, as alleged in the Kaplan lawsuit. Moreover, employers should be aware that credit checks are not always accurate indicators of a person's qualification for a particular job or a valid predictor of job performance.”

The law firm points out several states: Hawaii, Illinois, Oregon and Washington ban or severely restrict credit checks in hiring. Many more may be joining their ranks: including Connecticut, Georgia, Maine, Maryland, Michigan, Missouri, New Jersey, New York, Ohio, Oklahoma, Pennsylvania, South Carolina, Vermont and Wisconsin.

Are there grounds for credit reports for employment screens? The law firm's blog says yes: if the employees handle money, makes financial decisions “or has access to private financial data.”

This last one may be the excuse for contact centers to use credit checks because many if not most of them are handling personal financial information especially as agents are prodded to convert sales and support calls into telemarketing transactions.

Yet there is a wide array of safeguards and strict standards governing and protecting data such as PCI-DSS, which is backed by law in some states: Minnesota, Nevada and Washington; Massachusetts has strict data privacy legislation.

And with how closely monitored every keystroke and utterance is, recorded and archived in contact centers, agents would have to be extremely stupid even if they could get access to try and get away with stealing data. There have been few instances of it happening even offshore; if they were there would be screaming headlines and quick action by lawmakers.

Sheppard Mullin rightly recommends that employers who use credit checks “should ensure that they are directly related to the job and necessary for business purposes. Employers should also review other hiring practices to ensure that they do not screen out groups of people, even if they do so unintentionally.”