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WASHINGTON – The Equal Employment Opportunity Commission has released a legal advisory letter warning that the use of credit checks to screen job applicants could be unlawful if it leads to the disproportionate exclusion of women, minorities and other protected group members.

While noting that neither the use of credit checks by employers nor discrimination based on credit scores violates federal employment laws, EEOC assistant legal counsel Dianna B. Johnston wrote that the their use could be unlawful if it has a disparate impact on members of protected groups.

“In particular, Title VII prohibits an employment practice that disproportionately screens out racial minorities, women or another protected group unless the practice is job-related and consistent with business necessity,” wrote Johnston in a letter posted on the EEOC’s website last week. “Thus, if an employer’s use of credit information disproportionately excludes African-American and Hispanic candidates, the practice would be unlawful unless the employer could establish that the practice is needed for it to operate safely or efficiently.”

Johnston also noted evidence suggesting that while credit checks have not been shown to be a valid measure of job performance, they can be appropriate for certain positions, such as where an employee handles large amounts of cash.

The advisory letter was written in response to a letter sent to the EEOC’s Acting Chairman Stuart J. Ishimaru by a worker whose employer uses credit checks. The employee urged the passage of legislation to outlaw the practice.

-Kimberly Atkins

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