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The EEOC has cited national convention marketing firm Freeman Companies with discriminatory hiring practices based on the company’s use of applicants’ credit scores and criminal background checks in hiring.

Based in Dallas, Freeman has a large operation in Newark that supports conventions in the New York City area.

The EEOC alleges the company’s hiring practices have a disparate impact on minorities and women. According to the complaint, the credit and criminal background checks are neither job related nor of business necessity. The EEOC alleges they screen out otherwise qualified women and minority candidates.

Note: Employers may use credit and criminal background checks only if they can demonstrate the information is relevant to the applicant’s ability to perform the job.

Employers using credit and criminal checks should be prepared to detail exactly how their use relates to job performance. When pressed, the employer will have to show that a particular credit score predicts whether an employee will steal from the employer. Do you have that data?

These days, employers that rely on credit scores may be on even thinner ice. That’s because reasons other than a bad payment history may cause low credit scores. In fact, a large part of someone’s credit score is based on percentage of credit usage—the amount charged compared to the credit limit. Several credit card companies have recently cut customers’ credit lines. That raises cardholders’ percentage of credit usage—and lowers credit scores even though all payments have been made on time.

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