El metro de Madrid Las sociedades estatales.

The FCRA states that in order for a user to obtain a consumer credit report, users must have a permissible purpose. One of the permissible purposes is to obtain a credit report to determine a person’s eligibility for employment, promotion, or employment related purposes.360 A survey shows that thirty five percent of companies use credit checks in pre- employment screening.361 Employers tend to believe that employees are less likely to steal from them and be more productive if they have good credit scores362. Another important aspect is that employers may be liable for negligence for hiring violent or dangerous employees.363 An employer has no right to obtain such a report without obtaining the employee’s oral or written consent and informing the employee of the nature and scope of the communication.364 However, there is no proven relationship between the credit score and job performance.365

One commentator notes that one of the biggest flaws of the FCRA is the inability of the FCRA to stop employers from conditioning employment opportunities on the attainment of the employee credit report. He asserts that in most types of jobs, a credit report has no relevancy.366 The commentator refutes employers’ assertions of using credit reports as a performance predictive tool. The contention that employees with good credit scores are less likely to steal because they manage their financial responsibilities wisely is groundless. Poor credit history may be attributed to many reasons; some are not the employee’s fault. For example, credit reports are full of errors and mistakes or are a mix of files. Thus, a credit report cannot predict the performance of the employee. Likewise, a poor credit score may be due to ignorance of how the credit scoring system works, such as having only one credit card and spending most of its limit or by canceling an old credit card.367

The commentator states that protection given to the employees through the FCRA sections368 is meaningless. If an employer complies with the FCRA, there is no protection for the consumer.369 The employer can take an adverse action against the employee by firing,

357 Id. 358 Id. at 67-68. 359

David Worsley, Fair Credit Reporting Cases illustrate Risks for Credit Reporting Agencies, Creditors, and

Lawyers, 56 Consumer Fin. L.Q. Rep. 68, 74 (2002).

360

15 U.S.C. § 1681b. (Provides that in order to furnish a credit report: “any consumer reporting agency may furnish a consumer report under the following circumstances and no other: … to a person which it has reason to believe … intends to use the information for employment purposes”).

361

Kelly Gallagher, Rethinking The Fair Credit Reporting Act: When Requesting Credit Reports for

Employment Purposes Goes Too Far, 91 Iowa L. Rev. 1593, 1599 (2006).

362

Id. at 1595. 363

Id. at 1599. 364

15 U.S.C. § 1681b(2)(a)(i) and (ii). 365

Gallagher, supra note 361, at 1599. 366

Id. at 1596. 367

Id. at 1600. 368

15 U.S.C. § 1681b(2)(a)(i) and (ii). 369

demoting, or not accepting him as an employee in his company even if his credit score is irrelevant to his performance. It is a new type of discrimination yet a lawful one.370

In addition to the inaccuracy issue in credit reports, allowing a credit report check on every job without distinction is problematic. While employers’ interest in knowing off-duty habits of the employees may be reasonable in financially sensitive positions, it seems unnecessary and unreasonable in other positions.371 Off-duty conduct has little if nothing to do with the performance of employees. Based on this premise, obtaining a credit score when it is irrelevant for the job position is an unnecessary invasion of privacy. 372

Another problem arises with people who live in poor neighborhoods. Because they are living in those neighborhoods, they have limited access to credit. One study shows credit is denied to black applicants more than twice as often as white applicants who share the same circumstances and qualifications. Without credit black people may not be able to improve their credit, and getting jobs becomes more difficult. Further, people without jobs are more likely to default and suffer bad scores on their credit report. They cannot get out of this vicious cycle.373

The author further discusses the possibilities of holding employers liable under different theories if they condition their offer of employment on a credit report. First, the employee may bring tort action for a common law privacy invasion. Regardless of preemption provisions,374 at least one court held that an employee might recover if the employer obtains a credit report for an impermissible or illegal purpose and uses the report in violation of common law privacy rights.375

Second, an employee may prevail under a disparate impact claim. In Griggs v. Duke Power Co.,376 the U.S. Supreme Court found unlawful disparate impact discrimination even if there was no intent to discriminate. Disparate impact discrimination is defined as employment “practices that seem facially neutral in the treatment of different groups, but in fact falls more harshly on one group than another”. The defendant employer required a high school diploma and a particular test score in order to get the job. This requirement seemed neutral, but disproportionately affected black people as only 12% of them at that time held a high school diploma, and only 6% passed the test, while white people suffered no disparate impact. The court ruled that the plaintiff satisfied the cause of action of a disparate impact claim, because the employer required tests that had no significant relevance to job performance. In the credit report context, an employee in a poor neighborhood with a low credit score can successfully bring a disparate impact claim if he proves that the use of a

370 Id. at 1603. 371 _{Id. at 1604.} 372 Id. at 1605. 373 Id. at 1608. 374

15 U.S.C. § 1681(h)(e). (Provides, “no consumer may bring any action or proceeding in the nature of defamation, invasion of privacy, or negligence with respect to the reporting of information against any consumer reporting agency, any user of information, or any person who furnishes information to a consumer reporting agency, based on information disclosed pursuant to §§ 1681g, 1681h, or 1681m of this title or based on information disclosed by a user of a consumer report to or for a consumer against whom the user has taken adverse action, based in whole or in part on the report, except as to false information furnished with malice or willful intent to injure such consumer”).

375

Gallagher, supra note 361, at 1610. 376

credit score for employment decisions will result in a disparate impact for people who live in poor neighborhoods, and the credit score has no significant relevance to job performance.377

In cases with possible mixed motivations, the employee has to prove with direct evidence discrimination on the basis of race, color, sex, religion, or national origin. If there is no direct evidence, the court will apply a disparate impact framework. To meet the prima facie requirements, the employee must prove that he belongs to the discriminated minority, that he was rejected despite his qualifications, and that after his rejection the position was still open to applicants. One court found the prima facie case was satisfied when an employer refused to hire an employee because he failed a credit check.378 Nevertheless, if the employer shows that there is a legitimate non-discriminatory reason to take the adverse action, then there is no liability.379

The author finally proposes changes to the FCRA to limit employer usage of credit reports in making employment decisions. One proposed is that the FCRA should be amended to limit employer use of credit reports in employment decisions when the information is of a little relevancy to the job’s duties. An alternative proposal is to limit, not the usage, but rather to require employers to show the relevancy of a credit report to job duties. Under this proposal, employers have to prove that credit reports are a performance predictor, thus they would be allowed to discriminate on that basis. Otherwise, the presumption is that the credit report has no relevancy to job duties and no discrimination is allowed.380