EEOC issues advisory opinions on possible disparate impact in credit checks, education requirements

Lexology.com
Baker Donelson Bearman Caldwell & Berkowitz PC
USA May 4 2010

On March 29, 2010, the EEOC’s Office of Legal Counsel released two informal discussion letters addressing disparate impact in credit checks and education requirements.
Disparate Impact of Credit Searches
Although none of the laws enforced by the EEOC directly prohibit discrimination based on credit information, they may be implicated in some circumstances, explains the EEOC’s first informal discussion letter, released March 29, 2009. For example, an employer’s use of credit information that disproportionately excludes African-American and/or Hispanic candidates would be unlawful unless the employer could establish that the practice is needed for it to operate safely or efficiently. The letter addresses the concerns of an individual who wrote to Acting Chairman Stuart J. Ishimaru urging that legislation be passed to prohibit the practice of credit checks to screen job applicants. In the letter, Assistant Legal Counsel Dianna B. Johnston responded that while the EEOC has no authority to enact legislation, the EEOC was of the opinion that credit checks have not been shown to be a valid measure of job performance. Johnston did, however, note that some courts have determined that credit checks are appropriate for certain positions, such as where an employee handles large amounts of cash.

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