EEOC Alleges That The Use Of Credit Histories To Make Employment Decisions May Have A Disparate Impact On Minorities


The new year is a good time for employers to review their hiring practices to ensure that they are job-related and justified by business necessity. Indeed, even seemingly neutral hiring criteria may inadvertently have an adverse effect on a protected group of people. Recently, the use of credit histories to make hiring decisions has come under fire because it allegedly has a disparate impact on certain minority job applicants. On December 22, 2010, the Equal Employment Opportunity Commission's Cleveland Field Office filed suit against Kaplan Higher Education Corp. in the U.S. District Court for the Northern District of Ohio (Civil Action No. 1:10-cv-02882) alleging that Kaplan engaged in a pattern or practice of unlawful discrimination by refusing to hire a class of black applicants nationwide based on their credit history. Kaplan contends that it conducts background checks on all applicants, regardless of race, and that the use of credit reports is a necessary component of its background checks into applicants who would be dealing with financial matters, such as financial aid, if hired. The EEOC alleges that this practice violates Title VII of the Civil Rights Act of 1964 because it has a discriminatory impact on applicants due to their race and it is neither job-related nor justified by a business necessity.

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