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LEGISLATIVE HEARING ON H.R. 3149, 

THE EQUAL EMPLOYMENT FOR ALL ACT 

HEARING 

BEFORE THE

SUBCOMMITTEE ON FINANCIAL INSTITUTIONS 

AND CONSUMER CREDIT 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

SEPTEMBER 23, 2010 

Printed for the use of the Committee on Financial Services 

Serial No. 111–159 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

BARNEY FRANK, Massachusetts, Chairman 

PAUL E. KANJORSKI, Pennsylvania 

MAXINE WATERS, California 

CAROLYN B. MALONEY, New York 

LUIS V. GUTIERREZ, Illinois 

NYDIA M. VELA ́ ZQUEZ, New York 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

DENNIS MOORE, Kansas 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

MELISSA L. BEAN, Illinois 

GWEN MOORE, Wisconsin 

PAUL W. HODES, New Hampshire 

KEITH ELLISON, Minnesota 

RON KLEIN, Florida 

CHARLES A. WILSON, Ohio 

ED PERLMUTTER, Colorado 

JOE DONNELLY, Indiana 

BILL FOSTER, Illinois 

ANDRE ́ CARSON, Indiana 

JACKIE SPEIER, California 

TRAVIS CHILDERS, Mississippi 

WALT MINNICK, Idaho 

JOHN ADLER, New Jersey 

MARY JO KILROY, Ohio 

STEVE DRIEHAUS, Ohio 

SUZANNE KOSMAS, Florida 

ALAN GRAYSON, Florida 

JIM HIMES, Connecticut 

GARY PETERS, Michigan 

DAN MAFFEI, New York 

SPENCER BACHUS, Alabama 

MICHAEL N. CASTLE, Delaware 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

RON PAUL, Texas 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, JR., North Carolina 

JUDY BIGGERT, Illinois 

GARY G. MILLER, California 

SHELLEY MOORE CAPITO, West Virginia 

JEB HENSARLING, Texas 

SCOTT GARRETT, New Jersey 

J. GRESHAM BARRETT, South Carolina 

JIM GERLACH, Pennsylvania 

RANDY NEUGEBAUER, Texas 

TOM PRICE, Georgia 

PATRICK T. MCHENRY, North Carolina 

JOHN CAMPBELL, California 

ADAM PUTNAM, Florida 

MICHELE BACHMANN, Minnesota 

THADDEUS G. McCOTTER, Michigan 

KEVIN McCARTHY, California 

BILL POSEY, Florida 

LYNN JENKINS, Kansas 

JEANNE M. ROSLANOWICK, Staff Director and Chief Counsel 

(III) 

SUBCOMMITTEE ON FINANCIAL INSTITUTIONS AND CONSUMER CREDIT

LUIS V. GUTIERREZ, Illinois, Chairman 

CAROLYN B. MALONEY, New York 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

BRAD SHERMAN, California 

DENNIS MOORE, Kansas 

PAUL E. KANJORSKI, Pennsylvania 

MAXINE WATERS, California 

RUBE ́ N HINOJOSA, Texas 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

AL GREEN, Texas 

WM. LACY CLAY, Missouri 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

EMANUEL CLEAVER, Missouri 

MELISSA L. BEAN, Illinois 

PAUL W. HODES, New Hampshire 

KEITH ELLISON, Minnesota 

RON KLEIN, Florida 

CHARLES A. WILSON, Ohio 

GREGORY W. MEEKS, New York 

BILL FOSTER, Illinois 

ED PERLMUTTER, Colorado 

JACKIE SPEIER, California 

TRAVIS CHILDERS, Mississippi 

WALT MINNICK, Idaho 

JEB HENSARLING, Texas 

J. GRESHAM BARRETT, South Carolina 

MICHAEL N. CASTLE, Delaware 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

WALTER B. JONES, JR., North Carolina 

SHELLEY MOORE CAPITO, West Virginia 

SCOTT GARRETT, New Jersey 

JIM GERLACH, Pennsylvania 

RANDY NEUGEBAUER, Texas 

TOM PRICE, Georgia 

PATRICK T. MCHENRY, North Carolina 

JOHN CAMPBELL, California 

KEVIN McCARTHY, California 

KENNY MARCHANT, Texas 

CHRISTOPHER LEE, New York 

ERIK PAULSEN, Minnesota 

LEONARD LANCE, New Jersey 

(V) 

C O N T E N T S 

Page 

Hearing held on: 

September 23, 2010 .......................................................................................... 1 

Appendix: 

September 23, 2010 .......................................................................................... 41 

WITNESSES 

THURSDAY, SEPTEMBER 23, 2010 

Cohen, Hon. Steve, a Representative in Congress from the State of Tennessee 4 

Crawford, Sarah, Senior Counsel, Lawyers’ Committee for Civil Rights Under 

Law ........................................................................................................................ 9 

Denston, Colleen Parker, Director of Human Resources, Worcester Preparatory School, on behalf of the Society for Human Resource Management 

(SHRM) ................................................................................................................. 17 

Gootkind, Judy, Vice President of Finance and Administration, Creative Services, and Member, Board of Directors, National Association of Professional 

Background Screeners (NAPBS) ......................................................................... 15 

Klein, Adam, Partner, Outten & Golden LLP ....................................................... 14 

Livingston, Donald R., Partner, Akin Gump Strauss Hauer & Feld LLP, 

on behalf of the U.S. Chamber of Commerce ..................................................... 13 

Shelton, Hilary O., Director, NAACP Washington Bureau .................................. 19 

Wu, Chi Chi, Staff Attorney, National Consumer Law Center (NCLC) ............. 11 

APPENDIX 

Prepared statements: 

Gutierrez, Hon. Luis V. .................................................................................... 42 

Cohen, Hon. Steve ............................................................................................ 47 

Crawford, Sarah ............................................................................................... 51 

Denston, Colleen Parker .................................................................................. 56 

Gootkind, Judy .................................................................................................. 63 

Klein, Adam ...................................................................................................... 71 

Livingston, Donald R. ....................................................................................... 78 

Shelton, Hilary O. ............................................................................................. 83 

Wu, Chi Chi ...................................................................................................... 86 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Gutierrez, Hon. Luis: 

Demos report entitled, ‘‘Discrediting Workers’’ .............................................. 97 

Neugebauer, Hon. Randy: 

Written statement of the Financial Services Roundtable ............................. 109 

Written statement of the National Federation of Independent Business 

(NFIB) ............................................................................................................ 111 

Written statement of various trade associations ........................................... 113 

(1) 

LEGISLATIVE HEARING ON H.R. 3149, 

THE EQUAL EMPLOYMENT FOR ALL ACT 

Thursday, September 23, 2010 

U.S. HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON FINANCIAL INSTITUTIONS

AND CONSUMER CREDIT, COMMITTEE ON FINANCIAL SERVICES, Washington, D.C. 

The subcommittee met, pursuant to notice, at 10 a.m., in room 

2220, Rayburn House Office Building, Hon. Luis V. Gutierrez 

[chairman of the subcommittee] presiding. 

Members present: Representatives Gutierrez, Watt, Moore of 

Kansas, Waters, Baca, Green, Scott, Cleaver; Neugebauer, Paulsen, 

and Lance. 

Chairman GUTIERREZ. This hearing of the Subcommittee on Financial Institutions and Consumer Credit will come to order. Good 

morning and thanks to all of the witnesses for agreeing to appear 

before the subcommittee today. 

Today’s hearing will examine H.R. 3149, the Equal Employment 

for All Act, introduced by Representative Cohen. This legislation 

would prohibit the use of credit reports for employment purposes 

with several limited exceptions. 

As we will hear today, this is a growing and controversial use of 

these reports, and I look forward to the discussion. We will be limiting opening statements to 10 minutes per side, but without objection, all members’ opening statements will be made a part of the 

record. 

We may have members who wish to attend but do not sit on the 

subcommittee. As they join us, I will offer an unanimous consent 

motion for each to sit with the committee and for them to ask questions as time allows. 

I yield myself 5 minutes for an opening statement. 

The Equal Employment for All Act was introduced by Representative Steve Cohen on July 9, 2009, and currently has 55 cosponsors. I am proud to be an original cosponsor of the bill and have 

discussed its importance at hearings, briefings, and townhall meetings. This legislation, if enacted, would be a significant step forward in eliminating unfair hiring practices and open up more good 

jobs to those unemployed Americans who, aside from a poor credit 

report, are otherwise qualified to do these jobs. 

H.R. 3149 would amend the Fair Credit Reporting Act to prohibit 

an employer from using a consumer report for either employment 

purposes or for making an adverse action, including promotions, 

transfers and terminations, if the report contains information that 

2 

bears upon the consumer’s creditworthiness, credit standing, or 

credit capacity. This prohibition applies even if the consumer consents to the use or procurement of a consumer report for employment purposes or in connection with an adverse action concerning 

employment. 

The bill provides certain exemptions to this prohibition that we 

feel are proper, including jobs that require a national security or 

FDIC clearance, jobs with a State or local governmental agency 

that specifically require a credit check, or employment that is at a 

supervisory, managerial, professional, or executive level at a financial institution or is otherwise required by law. This legislation 

does not prohibit the use of background screening for a criminal 

background, even when it is not required by law. 

This subcommittee has held two hearings this year, on March 

24th and May 12th, in which we reviewed the methodology, impact 

of, and the use of consumer reports under the Fair Credit Reporting Act and discussed the potential impact of H.R. 3149, along with 

other reform proposals. We heard from various industry representatives, consumer advocates, and others. 

More recently, on August 30th, I held a townhall meeting in Chicago that was attended by hundreds who came from Detroit and 

Boston, even as far as Los Angeles and elsewhere, to express their 

concerns about the increasingly widespread use of credit checks for 

employment purposes. This practice unfairly hurts the chances of 

otherwise qualified candidates to get a job. 

Credit reports are simply inappropriate for use in most hiring decisions. An individual’s credit history is often marred by circumstances beyond their control, such as income loss, medical problems, and the breakup of families, which often leads to bankruptcy. 

The Consumer Bankruptcy Project has estimated that 85 percent 

of bankruptcies are caused by these issues and a bankruptcy can 

have a strongly negative impact on your credit report. The industry’s own studies indicate that bankruptcy, when noted in a credit 

report, is something that potential employers take into account 

when making employment decisions. 

Along with many others in Congress, I am concerned that relying 

upon credit reports will continue to have a harmful impact on 

many, especially on communities of color as minorities have disproportionately worse credit reports even when income is taken 

into consideration. No fewer than 8 separate studies in the last 15 

years conducted by the Federal Reserve, the Federal Trade Commission, the Brookings Institution, and Fair Isaac itself have documented the disproportionately lower report quality of minorities. 

The Equal Employment Opportunity Commission has repeatedly 

expressed their concern that the use of credit reports for employment purposes might violate Title VII of the Civil Rights Act. 

Even if there is no overt bias on the part of an employer against 

an applicant based on their credit report, there is the potential for 

a subconscious bias against those who have more negative data on 

their reports versus those who do not. 

You simply cannot tell a person’s character, integrity, or how 

well they will perform their job by looking exclusively at their credit report. A credit report should not be one of the determining factors of whether someone gets a job. The fact that someone has a 

3 

credit report that is not superior to another job candidate does not 

make them less able to do the work at an office or factory, nor does 

it make them more or less likely to steal from their employer. 

Four States, including my own of Illinois, have already passed 

legislation at the State level that will ban the widespread use of 

credit reports for employment purposes. Seventeen other States 

have legislation on this topic coming before them as well. Congress 

should act to make these sensible protections available to all Americans, not just those lucky enough to live in a State that is willing 

to protect them from this practice. 

We have heard testimony from the Consumer Data Industry Association, from Experian, TransUnion, and Equifax, from FICO and 

VantageScore and others about how credit reports are prepared 

and used. Among other witnesses, today we will hear from the National Association of Professional Background Screeners about how 

its members use, prepare, and provide background checks and consumer reports to employers. We will also hear from the Society for 

Human Resource Management about how its members use a current or prospective employee’s consumer or credit report to make 

employment-related decisions. 

I welcome and thank these and other witnesses for appearing 

with us today. 

Now, I call upon the Minority for any opening statement. 

Mr. Neugebauer, would you— 

Mr. NEUGEBAUER. Thank you, Mr. Chairman, and I will be brief. 

I just wanted to respond in that I think what is interesting is 

I think about 60 percent of the businesses in this country use credit reports as one of the tools that they use in making a final determination. So this is not like—evidently, there has been some reason to correlate that as a part of the screening process, that credit 

reports are being helpful. Otherwise, we wouldn’t have such a large 

number of employers using that tool. 

Obviously, we already have laws that prohibit discriminating 

against someone because of race, and everybody on this panel I 

think would agree that is unacceptable and that is the reason there 

are laws on the books to do that. 

But, also, this bill even precludes an applicant from allowing a 

business owner to run a credit report even if he or she requested 

it, basically taking away the individual’s right. And, quite honestly, 

in some cases—I have been an employer. We have done credit reports on employees. Certainly it was just a tool, and I think the 

thing I would say to you is that I don’t think it is the primary tool 

used, but I think that evidently the business community has found 

it to be a useful tool. 

And the fact that if I had two or three applicants who maybe 

were going to perform managerial functions in my company and 

they were all equal in many ways and I was looking for a tipping 

factor, if I found someone who was having a difficult time managing their own personal affairs, I would question whether they 

had the capability of managing my affairs as well. 

So I think there are several things troubling about this legislation, one, taking away an individual’s right. We are moving left, 

but we are skipping to the left in this area. And, also, telling businesses that they can’t use tools that they have evidently found to 

4 

be effective in making hiring decisions, to me, is another taking, 

and certainly, I think our Founders didn’t intend for us to move in 

that direction. 

Also, I ask unanimous consent to enter into the record statements submitted by NFIB, the Financial Services Roundtable, and 

30 other business and trade associations, all whom are opposed to 

this legislation. 

Mr. GUTIERREZ. Without objection, it is so ordered. 

Mr. NEUGEBAUER. I thank you, and I yield back my time. 

Chairman GUTIERREZ. Anybody else? 

We are ready to hear from the author of the bill. For our first 

panel, we will hear from the author of H.R. 3149, Representative 

Steve Cohen from the 9th District of Tennessee. 

Mr. Cohen, you have 5 minutes. 

STATEMENT OF THE HONORABLE STEVE COHEN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TENNESSEE 

Mr. COHEN. Thank you, Mr. Chairman. I appreciate the opportunity to address the committee, and I also thank the ranking 

member for agreeing to this hearing and the members who are 

here on this panel. 

The Equal Employment for All Act is an important bill, and I 

hear the arguments made in opposition. But the fact is in this 

economy, which is in a recession—regardless of what any person 

might say or group, we are in a recession. It is difficult to find jobs 

right now, and when some employers use credit checks for a lot of 

people, particularly minorities, it makes it almost impossible to get 

a job. 

The use of credit checks to determine employment is a growing 

trend but a dangerous trend, and while some submit that it is an 

effective tool, that business must find it effective, I would submit 

to you, Mr. Chairman and members of the committee, there is no 

way business can know it is effective because if they don’t give a 

person a job because of a bad credit score, how do they know that 

was a bad employee? They never hire anybody who has a bad credit score if they use that as the determining factor not to hire him. 

So they never know. They hire the other guy or the other woman. 

It is unfortunate that in our society, a high percentage of the 

people with bad credit scores are minorities, and I will get to that 

in a minute. In my district, 1 in 10 people are unemployed. My district has a very high African-American population. Among African 

Americans, it is more like one in five, and throughout the Nation, 

we see those same types of statistics. While in the Nation, it is 9.6 

percent unemployment, among African Americans it is 16.3 percent, and among Latinos it is 10.4 percent. 

One of the reasons that credit checks contribute to the high unemployment among African Americans and Latinos is because they 

have not had a history of wealth in this country. That is what is 

known, gentlemen, as institutional racism. It is not racism on the 

front. I am not going to hire you because you are African American 

or you Latino or I am not going to hire you because you are a 

woman. It is the history of our Nation and what goes into it and 

the work product. And when you are African American and your 

5 

family started out as slaves, from 1865 before, you didn’t have a 

chance to build up wealth. Caucasians did. So you are starting behind. 

Jim Crow laws, you are still not getting jobs and opportunities, 

and you are getting to go to separate Plessy v. Ferguson schools 

that mean you are still in the hole. Whites are going to the good 

schools and getting the good books and getting the opportunity and 

Blacks aren’t. So Whites build up a history of having money, family 

wealth passed on, the old family farm that we are trying to protect 

through inheritance laws, make sure we get whole family farms 

and not just 60 percent of it. 

So those folks have money. They lose their job in this economy— 

and a lot of people have lost their jobs because they just cut back. 

FedEx cut off 10 percent. If you are Caucasian and your family 

built up some wealth from having friends whom you could sell real 

estate to and get a better 6 percent of a higher and more expensive 

house than somebody who is poor who doesn’t have as many 

friends for those wealthy houses or a stockbroker contact that you 

know from the country club or whatever, you don’t have accumulated wealth to help you through bad times. So you are more likely 

to have a bad credit score. 

The effect of that is African Americans, Latinos, and others who 

have immigrated to this country and haven’t had wealth built up, 

that is what is called institutional racism. It is something that is 

not racism on the front. It is something that just happens through 

the institution of what goes in this Nation. So it is there, regardless of one does it on the front or doesn’t even realize that it is 

something that is just part of the system. 

Forty-three percent of all employers admit to performing credit 

checks despite the fact that there is no study that says it is effective. Eric Rosenberg with TransUnion said in a hearing in Oregon 

during sworn testimony that his company had zero statistical evidence to document that employees with bad credit checks are more 

likely to steal or commit fraud than workers with perfect credit. A 

study at Eastern Kentucky said the same thing, as highlighted in 

The Hill in an article this morning about these studies. 

Nothing shows it is effective, and I would submit to you, some 

would say, oh, somebody’s going to be more of a risk. There are exceptions for financial situations, but if somebody has a bad credit 

rating and they want a job, I would submit to you, once they get 

that job, they are less likely to commit any type of fraud than anybody else because they want that job. They are seeking a job, and 

they want to pay off their bills and earn a living. So they want to 

keep that job and not only not get arrested but keep that job. I 

think they are going to be extra good employees. 

There is simply no basis to show that it is an effective tool, and 

I think it is used in a de facto way to discriminate against people, 

whether it is intended to or not. 

This legislation has been endorsed by the NCAAP, the National 

Organization for Women, the National Consumer Law Center, the 

Leadership Conference on Civil Rights, the National Association of 

Consumer Advocates, Unite Here, the National Employment Law 

Project, the U.S. Employers Interest Research Group, the AFL-CIO, 

and the Lawyers Committee for Civil Rights. 

6 

The law is simple. It says people should have a chance, some 

would say a second chance. I would say it is not even a second 

chance because they have done nothing wrong, but in show business, people get second chances all the time. In business, they do. 

If you think a credit check really determines whether you can be 

trustworthy, ask Sir Alan Stanford of Stanford Financial and all of 

his people, and what is the man’s up name up in New York who 

ripped everybody off? Madoff, Bernie Madoff. They had great credit 

ratings. It is hard to tell somebody who is a crook and isn’t credit 

ready, and I would submit a hard-working person with a bad credit 

rating because of this society who wants a job is a better risk than 

somebody else, and I think they want to get that job and keep it 

to pay off their bills. 

I appreciate the committee’s time, and I appreciate the red light 

because I have been on the other side of it, and I thank you for 

the opportunity to give this testimony. 

[The prepared statement of Representative Cohen can be found 

on page 47 of the appendix.] 

Chairman GUTIERREZ. Thank you so much for introducing the 

legislation, and I won’t ask you any questions. I know we have 

some witnesses who are going to be enlightening us on your legislation. 

But I would like to just briefly say, they say that people have the 

moral responsibility these days to not walk away from their mortgages, walk away from their bills. I think we have the same responsibility to make sure they have a fair chance at taking care of 

that. I think people do, and given the kind of crisis that we have, 

a crisis that was not manufactured by them, that they have fallen 

into, I think credit reports, number one, have a lot of information 

that is erroneous to begin with, and number two, don’t really tell 

the true nature, as you stated earlier. 

So I thank you for your legislation. 

Mr. Neugebauer, you are recognized for 5 minutes, if you have 

any questions. 

Mr. NEUGEBAUER. Thank you. 

I respectfully disagree with the author of this bill. If it is found 

to be ineffective by all these studies, it is interesting to me that we 

have a substantial number of businesses—and I understand it is 

increasing—that are using credit reports as a part of and not the 

sole tool that they are doing it. 

So the other piece of it is is that from the gentleman’s testimony 

it almost appears that he believes that employers, small businesses, large businesses across the country are using credit reports 

to kind of circumvent the Equal Employment Opportunity Act and, 

in fact, are overtly discriminating. I have not ever seen any reports 

or evidence of that, and I would ask the author if he has evidence 

that there is widespread use of this to circumvent equal opportunity laws. Because it is a fairly major accusation that you are 

making that these companies are, in fact, using this as a tool to 

be discriminatory. 

And I would tell you, as a former small businessperson, I am a 

little offended by that, the fact that you would think that, because 

I was using that, I was using that to discriminate, and I don’t 

think that is the case. I haven’t seen evidence, and I am certainly 

7 

open to review such evidence if you can show me where studies 

have shown or that the law enforcement or people enforcing this 

are finding widespread use of credit reports to violate the Equal 

Opportunity Employment Act. 

Mr. COHEN. My passion sometimes might give the wrong impression. I didn’t intend to imply that people were intentionally doing 

it. Institutional racism and those things are things that are just 

part of the system that we have had over the years, and when you 

have had over the years these factors, where Blacks are less likely 

to have accumulated wealth because they didn’t inherit granddaddy’s plantation or granddaddy’s insurance company, they happen to be working on the plantation or working maybe at a low 

level, they don’t have it. It is unwitting, unknowing discrimination. 

It is part of a system, and when you have a system where credit 

checks are necessarily unequal because you don’t have accumulated 

wealth to build up on or histories of going to a certain college to 

get you into a college or the finances of your family to get you into 

that college—and contacts in college are important. I went to Vanderbilt. You go to Vanderbilt, you have better contacts to sell stocks 

to and you can sell Berkshire Hathaway and more shares of it than 

if you went to Texas Southern, and you don’t have student body 

friends generally who have enough money to buy Berkshire Hathaway. 

It is not anything intentional. It is the fact that you get wealth. 

It is easier to have wealth if you come from a privileged background, and all of us who are Caucasian or have had histories here 

of working in families have privilege, and so it is nothing intentional. I am not suggesting people are intentionally discriminating. 

I am saying that they are doing it because of systems in society 

that we have not ferreted out, and it will take years to do that. 

Mr. NEUGEBAUER. I guess there I go again disagreeing with you. 

I know a lot of people who didn’t inherit a plantation or didn’t inherit anything, who actually started from scratch. 

Mr. COHEN. There is no question about that, sir. That is why you 

don’t find any Black people who did inherit a plantation. 

Mr. NEUGEBAUER. I have African-American friends, I have Hispanic friends, who went out and basically they didn’t inherit anything and they started from scratch and they started small businesses and they worked hard. This country was founded on the 

principle that if you work hard and apply yourself, you have the 

opportunity to succeed and to fail. Many times people fail; sometimes people succeed. 

But, again, I think the concept that the reason we are doing this 

is because not everybody inherited something again is a flawed reason to be taking away the rights and privileges not only of the people who are potentially looking for employment but also for the 

people who are actually employing and creating jobs in this country 

and penalizing them somehow because of an unsubstantiated reasoning that you are giving this committee today that people are 

using this process to somehow circumvent laws that are already in 

place. It is already against the law, and if someone believes that 

they were turned down for employment because of their race, they 

have an avenue to do that. It doesn’t matter if it was because of 

the way they filled out the application or a reference check or their 

8 

credit report. It is against the law to do that, and we don’t need 

any more laws. 

Chairman GUTIERREZ. The gentleman’s time has expired. 

Would anyone else would like to ask questions? 

Hearing no questions of the witness, I just want to enter into the 

record a report entitled, ‘‘Discrediting Workers’’ by Demos, and specifically pages 3 and 4 where Bank of America was found to have 

discriminated against African Americans by the very use, by a Federal judge, of using credit reports and disproportionately not hiring 

African Americans for entry level positions precisely because of 

using credit reports. 

Mr. NEUGEBAUER. And Mr. Chairman, were they prosecuted for 

that? 

Chairman GUTIERREZ. There is a civil case. 

Mr. NEUGEBAUER. And so what was the— 

Chairman GUTIERREZ. I don’t think an individual is going to be 

sent to jail for this. 

Mr. NEUGEBAUER. What was the outcome of it? 

Chairman GUTIERREZ. The outcome is that they have to go back 

and redo the whole thing over again. Because what the Federal 

court found and the judge found was that there was absolutely no 

good reason for using the credit report to determine whether or not 

the person was going to be a good employee, number one, and that 

even using the same credit scores—imagine, the same credit 

scores—this group got 700, this group using the same credit scores 

you still find disproportionate number of people not getting a job 

based on, unfortunately, the color of their skin. But we will give 

you a copy of the report. 

And the witnesses on the second panel, they will be coming up. 

So let’s go to the witnesses who will speak to Mr. Neugebauer’s 

questions. 

Ms. WATERS. Before my colleague leaves, I would like to thank 

him for giving us this report and having this legislation. It is not 

easy to talk about discrimination or racism. You get accused of 

playing the race card every time, and so it has prohibited many 

folks from moving forward on some of these issues. But I want you 

to know that I appreciate the fact that you have the courage to do 

so. 

I am a cosponsor of this bill, and I think that we should all work 

toward making sure that these kinds of actions do not limit the 

ability of individuals to get a job. I do not believe credit scores have 

anything to do with whether or not you will be a good employee. 

Thank you very much. 

Mr. COHEN. You are welcome. Thank you. 

Chairman GUTIERREZ. Thank you. 

We will go to Mr. Scott. 

Mr. SCOTT. For the record, I, too, want to commend the Congressman from northwest Tennessee for taking this on. These are 

tough times. People are having difficulties, and the one thing that 

the credit reports determine, it deals with credit, good times, bad 

times. But the one thing that a credit report’s history does not do, 

it does not determine or predict job performance or have anything 

to do with that. So it is sort of like measuring somebody but measuring them with the wrong set of measurements. You are attemptVerDate Nov 24 2008 14:06 Dec 22, 2010 Jkt 062684 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 K:\DOCS\62684.TXT TERRIE
9 

ing to correct that; and I, too, am proud to be a cosponsor of your 

bill and want to really just let you know how much we appreciate 

you taking the lead on this. 

Thank you. 

Chairman GUTIERREZ. Thank you, Congressman. 

We are going to call our first panel. 

Mr. COHEN. Thank you, gentlemen. 

Chairman GUTIERREZ. The first—I am sorry, the second panel. 

This is what happens when you have a panel of one. 

We are going to introduce Sarah Crawford, senior counsel for the 

Lawyers’ Committee for Civil Rights Under Law. Next, we have 

Chi Chi Wu, staff attorney from the National Consumer Law Center. Following her will be Donald Livingston, partner of Akin Gump 

Strauss Hauer & Feld, LLP, representing the U.S. Chamber of 

Commerce. Next is Adam Klein, a partner of Outten and Golden, 

LLP. Next is Judy Gootkind, VP of finance and administration for 

Creative Services and a member of the board of directors of the National Association of Professional Background Screeners. Next, we 

have Colleen Parker Denston, director of H.R. at Worcester Preparatory School on behalf of the Society for Human Resource Management. And last but not least, Hilary Shelton, senior VP for advocacy at the NAACP. 

You are welcome, and we will begin with Sarah Crawford. 

Please, you are recognized for 5 minutes. 

STATEMENT OF SARAH CRAWFORD, SENIOR COUNSEL, 

LAWYERS’ COMMITTEE FOR CIVIL RIGHTS UNDER LAW 

Ms. CRAWFORD. My name is Sarah Crawford, and I am senior 

counsel with the Employment Discrimination Project for the Lawyers’ Committee for Civil Rights Under Law. I am honored to testify here today in support of the Equal Employment for All Act. 

In light of research showing the lack of predicted value of credit 

information, credit checks create an unnecessary obstacle for those 

seeking gainful employment. Credit checks create barriers for those 

who apply for a job in order to pay their bills, to support themselves and their families, and to get out of debt. I am here today 

to comment on the negative impact, particularly for communities of 

color. 

Credit checks are becoming an increasingly prevalent practice in 

the employment sector, as we have heard. According to a recent 

survey conducted by the Society for Human Resource Management, 

approximately 60 percent of its member employers use credit 

checks as a hiring tool, compared to 35 percent of its members in 

2001. Some employers report that they use credit checks in hiring 

for all jobs. This practice is particularly troubling in light of research indicating that an individual’s credit history does not predict job performance or risk of theft or fraud in the workplace. 

Contrary to the sales pitch promulgated by credit bureaus that 

profit from selling credit reports to employers, credit reports do not 

provide meaningful insight into character, responsibility, or propensity for theft in the workplace. And, as we have heard, a 

TransUnion official recently testified that there is no research to 

justify the practice. 

10 

Research has shown that credit information does not predict job 

performance, as demonstrated by a recent study that looked into 

the credit reports of nearly 200 current and former employees 

working in the financial services areas of six companies. The study 

revealed that those with good credit reports were no more likely to 

receive positive performance evaluations and were no less likely to 

be terminated from their jobs. In fact, one aspect of the study revealed that workers with a higher number of late payments actually received higher performance ratings. So think about that. It 

makes common sense that someone who has bills to pay may have 

an added incentive to do their job well and perform well. 

While credit reports show whether bills have been paid on time, 

they do not reflect the circumstances surrounding debts or reasons 

for any late payments. For example, a credit report will not explain 

that an individual’s credit suffered because she was the victim of 

identity theft, that her credit suffered as a result of divorce or 

death of a spouse, that she lost her job unexpectedly because her 

employer went out of business, or that she lost her health insurance coverage and incurred substantial medical bills. 

Indeed, credit reports fail to provide context and fail to provide 

information that can be easily interpreted for employment purposes, and I encourage you to review the credit report that was 

provided as an attachment to my testimony that was submitted 

here today and try to determine for yourself if that person is a good 

employee or a bad employee. It is very difficult to use the information in the credit report and make any kind of judgment about 

whether that person will be a performer. 

The medical debts reflected in credit reports raise particular concern. Medical debt often arises due to circumstances outside of an 

individual’s control and can have a catastrophic impact on personal 

finances. Seventeen percent of our citizens are uninsured, including 

12 percent of Whites, 21 percent of Blacks, and 32 percent of Hispanics. And what happens when the uninsured face a major medical illness? Often, they incur medical debt; and further, a significant portion of those with health insurance face medical debt due 

to medical procedures that are not covered. Although most employers report that they do not base hiring decisions on medical debt, 

the impact of medical bills could be reflected in outstanding judgments, bankruptcies, foreclosures, and other forms of debt that employers may take into consideration. Indeed, over half of accounts 

in collection arise from medical debt. 

Credit background checks negatively and disproportionately impact communities of color and the poor. Unemployment has skyrocketed in recent years, and the effects of the recession have fallen 

most harshly on minorities. Currently, 16 percent of Blacks and 12 

percent of Hispanics are unemployed, compared to 9 percent of 

Whites. Twenty-five percent of Blacks and Hispanics live in poverty, according to a recent report. 

Credit checks only compound this crisis. Because minorities are 

significantly more likely to have poor credit, credit checks screen 

out disproportionate numbers of minorities from job opportunities. 

In addition, I think, as most of you know, credit reports are rife 

with errors. One study found that most consumer credit reports 

surveyed contained some kind of error or mistake. 

11 

I will just conclude by saying that this practice is based on 

flawed assumptions that have detrimental effects on those who 

simply want to work so that they can pay their bills and escape the 

vicious cycle of debt and unemployment. 

[The prepared statement of Ms. Crawford can be found on page 

51 of the appendix.] 

Chairman GUTIERREZ. Thank you so much. 

Next, we will have Ms. Chi Chi Wu, who is staff attorney for the 

National Consumer Law Center. You are recognized for 5 minutes. 

STATEMENT OF CHI CHI WU, STAFF ATTORNEY, NATIONAL 

CONSUMER LAW CENTER (NCLC) 

Ms. WU. Thank you, Mr. Chairman. Thank you, Representative 

Neugebauer, and members of the subcommittee, for inviting me 

here today. 

My name is Chi Chi Wu. I am testifying on behalf of low-income 

clients at the National Consumer Law Center. Mr. Chairman, 

thank you for holding this hearing regarding H.R. 3149, the Equal 

Employment for All Act. 

The use of credit reports in employment is a practice that is both 

harmful and unfair to American workers. For this reason, we 

strongly support H.R. 3149 and thank the chairman and Congressman Steve Cohen for introducing it. 

This bill would restrict the use of credit reports in employment 

to only those positions for which it is truly warranted, which is 

those requiring a national security or FDIC-mandated clearance. 

We oppose the unfettered use of credit histories and support this 

bill for a number of reasons. 

First is the absurdity of the practice. Considering credit histories 

in hiring creates a vicious catch-22 for job applicants. A worker 

who loses her job is likely to fall behind on her bills due to lack 

of income. She can’t rebuild her credit history because she doesn’t 

have a job, and if she can’t get a job, she has bad credit. Commentators have called this a financial death spiral. 

Now, opponents of H.R. 3149 have argued there is no catch-22 

because employers use credit checks strategically and take into account the circumstances for a worker’s financial difficulties, but we 

can’t assume all employers are going to be this wise and fair. Yes, 

some employers may review credit histories carefully and thoroughly, but others may automatically screen out all applicants with 

a weak credit record. After all, it is easier and quicker to make a 

yes or no decision based on credit, especially in a competitive market where there are lots of applicants. Why take the trouble of 

being so careful? In fact, as Representative Neugebauer mentioned 

himself, that is a tipping point. If you have a bunch of candidates 

in front of you who are equally good, just get rid of the one with 

the bad credit record. 

That is what happened to Robert Mendez, an IT worker featured 

just this Tuesday on the PBS Nightly Business Report. He lost his 

job over a poor credit record, even though he explained it was the 

result of a layoff and was told it wouldn’t be a problem, but it was. 

And, by the way, having provisions for consent in this bill 

wouldn’t do any good for American workers who are hurt by this 

practice because the Fair Credit Reporting Act already requires the 

12 

employee’s consent to pull their credit record, and employees have 

to give it. If they want to be considered for the job, they have to 

consent. We already have that. It hasn’t been effective in protecting 

workers. 

The use of credit history for job applicants is especially absurd 

when we have massive job losses and an unemployment rate of 9.6 

percent and nearly 15 million workers looking for a job. It presents 

another barrier for economic recovery. It is the proverbial process 

of kicking someone when they are down. 

Combine job losses with foreclosures and other fallouts of the 

economic crisis and what we have seen is plummeting credit scores 

and damaged credit records. Fair Isaac reports that over one-quarter of consumers have a credit score under 600, considered a poor 

credit score, a 10 percent increase than before the recession. That 

means one-quarter of American workers are at risk of losing a job 

opportunity or even being terminated over their credit history. 

This is now exactly the wrong time to be permitting this unfair 

and inaccurate practice. Passing H.R. 3149 isn’t just the right thing 

to do; it is an economic recovery measure. 

As we have heard, the use of credit histories also discriminates 

against African-American and Latino job applicants. We have had 

study after study documenting how they as a group have lower 

credit scores which are supposed to reflect their credit records. 

These groups have also been disproportionately affected by predatory credit practices, such as the marketing of subprime mortgages 

and overpriced auto loans and, as a result, have suffered higher 

foreclosure rates, all of which damaged their credit history. 

Despite all this harm to American workers, there is no evidence 

that credit history benefits employers by predicting job performance. We have heard that studies on this issue haven’t found a correlation. Even industry representatives have said there is no correlation. 

Opponents to H.R. 3149 have cited a report noting that one of 

the warning signs exhibited by some fraudsters is financial difficulties or living beyond their means. Now, just because some 

fraudsters had financial difficulties doesn’t mean that any worker 

with money problems is predisposed to theft. That is implying that 

25 percent of American workers are likely thieves. 

The same study found that men are responsible for twice as 

much fraud as women. Workers over 50 incur losses that are twice 

as high, and another warning sign for fraud is divorce. No one is 

suggesting screening out men, older workers, or divorced workers 

because they are supposedly prone to committing theft. 

Also, some of the most frequent users of credit checks, such as 

health care or social service providers, aren’t industries that handle 

large amounts of cash. Why are they screening the credit histories 

of day care workers, administrative assistants, and nurses? 

Finally, as we have testified many times here before, the credit 

reporting system has highlighted high rates of inaccuracies and a 

lot of flaws, rates that are unacceptable for purposes as important 

as use in employment. Some 3 percent to 12 percent to 37 percent— 

Chairman GUTIERREZ. Ten seconds to wrap up. 

13 

Ms. WU. In conclusion, the issue is whether workers are fairly 

judged on the ability to perform a job or discriminated against. I 

urge Congress to pass H.R. 3149. 

[The prepared statement of Ms. Wu can be found on page 86 of 

the appendix.] 

Chairman GUTIERREZ. Next, we will hear from Mr. Donald Livingston for the U.S. Chamber of Commerce. 

STATEMENT OF DONALD R. LIVINGSTON, PARTNER, AKIN 

GUMP STRAUSS HAUER & FELD LLP, ON BEHALF OF THE 

U.S. CHAMBER OF COMMERCE 

Mr. LIVINGSTON. Thank you for inviting me to testify today on 

behalf of the United States Chamber of Commerce. 

My name is Don Livingston. As you said, I am a partner with 

Akin Gump. I am also a former general counsel of the United 

States Equal Employment Opportunity Commission, where I directed the country’s litigation in cases of employment discrimination. 

H.R. 3149 addresses concerns that the use of credit history information for employment decisions cannot be justified in many circumstances, and it addresses the concern that the adverse consequences of using credit history information falls more heavily on 

minorities. Plainly, these are important concerns, but these are 

concerns that we believe have been effectively dealt with by Congress under existing laws. 

Since at least 1973, employers have understood that they cannot 

use credit histories unless they can demonstrate that the practice 

is predicated and supported by considerations of business necessity. 

It was in 1973 that the EEOC issued a decision requiring that an 

employer’s credit policy be job related if the burdens of the policy 

fall more heavily on minorities. The courts have agreed with the 

EEOC. Employers can use credit history information only when the 

employer can show it is job related for the job in question. 

H.R. 3149 differs from this approach. H.R. 3149 would not allow 

an employer to use job-related credit information except for specific 

categories of jobs. These are public-sector jobs, jobs requiring national security or FDIC clearances, and jobs at financial institutions. 

H.R. 3149 would eliminate the opportunity that employers have 

under existing law to demonstrate that the use of credit histories 

to assess the qualifications of applicants for other jobs is job related 

for those jobs. It cannot reasonably be argued that the existing job 

relatedness standard is not stringent or that it is not a powerful 

deterrent to an employer’s broad use of credit history information. 

My written testimony provides several examples where courts 

have enjoined the use of credit information because the employer 

was unable to demonstrate that the information was job related for 

the specific jobs for which it was used, and I believe that the chairman has noted a more recent case where something similar occurred under employment discrimination laws. 

The job relatedness requirement under equal opportunity law 

has served well. The proposed legislation would serve less well because, except in narrow circumstances, it would prevent employers 

14 

from using credit histories that they can justify by job relatedness 

and business necessity. 

I hope that my testimony proves helpful to the committee. 

[The prepared statement of Mr. Livingston can be found on page 

78 of the appendix. ] 

Chairman GUTIERREZ. Thank you so much. 

Next, we will hear from Adam Klein. 

Mr. Klein, you are recognized for 5 minutes. 

STATEMENT OF ADAM KLEIN, PARTNER, OUTTEN & GOLDEN 

LLP 

Mr. KLEIN. Thank you. Good morning, and I appreciate the opportunity to come before the committee this morning. 

I am a plaintiffs’ side civil rights lawyer working in the field of 

employment discrimination law. I think it is very fortunate that I 

can respond to the points that Mr. Livingston has made here. 

My practical experience and that of my firm and generally on the 

plaintiffs’ side employment bar is that the problem or use of credit 

as a screen for employment is largely undetectable. The reality is 

that applicants who seek employment are not told that they are denied employment based on their poor credit history. What they may 

find out is they didn’t get the job, but what they will not find out 

is why, and it makes logical sense. Why would a prospective employer tell an applicant the reasons that they did not get hired? It 

is obvious that, for the most part, in the overwhelming majority of 

cases or instances where applicants are denied employment, they 

are not going to have any idea that the use of credit was a factor 

in the decision. 

And you ask, isn’t there at the Equal Employment Opportunity 

Commission the laws that Mr. Livingston mentioned, the Civil 

Rights Act of 1964 which, in fact, has banned use of credit if it has 

adverse impact and cannot be justified? Yes, but the EEOC is a 

charge-driven agency, meaning the applicants who are denied employment, who had their rights violated, need to know that in order 

to file a charge of discrimination. It is not enough to tell the EEOC 

that an African American or Latino, I wasn’t hired and that I think 

that is suspicious. That isn’t sufficient information for the EEOC, 

a charge-driven agency, to take action. 

Moreover, there are many other reasons that can come about 

why an applicant isn’t hired, including the fact of the matter is 

that, by and large, it is a common-day event that people apply and 

don’t get hired. That is not suspicious to a lot of people who go 

through that process. I am sure we have all not been hired over 

the course of our lives. So this is not an event that raises suspicion. 

What happens in my experience—in my firm’s experience, I think 

generally, is that the isolated examples where there has been enforcement is in the rare circumstance where an employer 

inexplicably tells the applicant they were denied the job because of 

poor credit. We have had a couple of examples like that, where the 

employer sends a letter to the applicant saying you are conditionally hired subject to a background check and subsequently told, 

after they were conditionally offered the job, that I am sorry, we 

can’t actually hire you because you failed our background check. 

15 

That is the rare, rare instance. It is an exceptional circumstance 

where an applicant would be told that information. 

And so while there is enforcement provided by the Civil Rights 

Act, it is extremely difficult to detect this practice and for the 

EEOC to take effective action. I think that has historically been 

the case. It is why we see so few of these cases out there. 

It also is obvious when you look at the statistics that 60 percent 

of employers are using this practice. If no one seriously argues that 

there is adverse impact, that racial minorities will be harmed by 

this practice, and yet there is no or very little enforcement action, 

there is a reason for that. So the problem is detection. The problem 

is employers are smart enough not to tell applicants why they were 

denied employment, and without that critical piece of information 

there is no enforcement available to the EEOC because EEOC is 

not going to be put on notice to a charge that this is a practice that 

is happening in the workforce. 

Another problem is that even if you have an applicant who receives disclosures that credit was used for a decision, under the 

Fair Credit Reporting Act oftentimes the information that is provided is unhelpful. It just provides information that you can challenge the credit report. It doesn’t say what the information was 

used for. It doesn’t provide any context. Oftentimes, we don’t receive that, it has been our experience. 

Moreover, if you look at the information provided in the credit 

reports, they are highly inaccurate. I would suggest, and I say this, 

pull your own credit history. Take a look at it. See if it is accurate. 

See if you can determine, if there is a negative entry, what that 

means, where that came from. Oftentimes, it is a collection agency 

or something that is indecipherable. That is the information employers are using to decide whether someone should be employed 

or not. 

It doesn’t make any sense. If it came to light, if employers are 

forced to disclose they used this information, it would clearly violate Federal civil rights statutes, and they would be targeting enforcement based on that. 

So I would urge this committee to pass H.R. 3149. I think it is 

long overdue and would have a major impact on the U.S. economy. 

Thank you. 

[The prepared statement of Mr. Klein can be found on page 71 

of the appendix.] 

Chairman GUTIERREZ. Thank you so much. 

Next, we will have Ms. Judy Gootkind, please, for 5 minutes. 

STATEMENT OF JUDY GOOTKIND, VICE PRESIDENT OF FINANCE AND ADMINISTRATION, CREATIVE SERVICES, AND 

MEMBER, BOARD OF DIRECTORS, NATIONAL ASSOCIATION 

OF PROFESSIONAL BACKGROUND SCREENERS (NAPBS) 

Ms. GOOTKIND. Chairman Gutierrez, Ranking Member Neugebauer, and members of the committee, thank you for this opportunity to testify. 

My name is Judy Gootkind, and I appear here today on behalf 

of the National Association of Professional Background Screeners, 

NAPBS. I am member of NAPBS’ board of directors. My company, 

Creative Services, Inc., located in Mansfield, Massachusetts, is a 

16 

founding member of NAPBS, and my role at my company is vice 

president of finance and administration. 

NAPBS is a trade association founded in 2003 which represents 

over 700 companies engaged in employment and tenant background screenings across the country. Our membership includes a 

range of companies from Fortune 100 to small worker businesses. 

In fact, the majority of our regular members are small businesses 

with 12 or less employees. Collectively, we conduct millions of employment and tenant screening checks each year. 

In the employment context, we provide background checks for 

private employers, volunteer organizations, nonprofits, government, 

public utilities, health care, higher education, and publicly held corporations. NAPBS seeks to promote ethical business practices, promote compliance with the Fair Credit Reporting Act and State law 

analogs, and foster awareness of issues related to consumer protection and privacy rights within the background screening industry. 

Our industry is highly regulated both by the Federal Trade Commission and the newly created Bureau of Consumer Financial Protection. Our ability to provide our employer end users with consumer reports is driven by consumers’ consent for such reports to 

be generated when they apply for employment or seek a promotion. 

Before responding to the committee’s questions, I would like to 

point out NAPBS’ concerns with H.R. 3149, the Equal Employment 

for All Act. We believe the legislation too narrowly restricts the use 

of credit reports for employment purposes and all but prohibits 

them in the private employment space. Our specific concerns are 

as follows: 

The legislation would limit the use of credit reports in private 

employment to certain positions at financial institutions, a narrowly defined term under the Fair Credit Reporting Act. 

The legislation would prohibit the requesting of credit reports for 

the following types of positions: lawyers, mortgage lenders, property managers, cashiers, pharmaceutical representatives, pharmacists, asset management and financial planners, jewelers, health 

providers, NBA referees, executives in nonfinancial institution employers, accounting employees, finance employees, information 

technology employees, procurement employees, and academic financial aid employees. 

Some would say that credit reports are reputation collateral, and 

for many consumers their credit history may be a good thing. 

NAPBS feels that there are instances beyond those which H.R. 

3149 would allow in which it would be important and/or necessary 

to our employer end users to request a credit report, either as a 

risk mitigation or a verification tool. 

I will turn now to the questions posed by the committee, and in 

the interest of time, I have shortened your questions. 

How do we develop the reports that you provide to employers? 

Each company who provides consumer reports to a third party is 

defined under the Fair Credit Reporting Act as a consumer reporting agency, or a CRA. We provide consumer reports to third party 

end users for a variety of permissible purposes under the Act, including for employment purposes. The FCRA specifically lists those 

permissible purposes for the use of such reports in Section 604. 

17 

One such permissible purpose is for employment, which is defined in the law as a report used for the purpose of evaluating a 

consumer for employment, promotion, reassignment, or retention 

as an employee. A consumer report could include information from 

a variety of sources, including a credit history report, employment 

verification, or education verification. 

It is important to mention that, in the context of employment 

checks, a credit score is never included. The three major credit bureaus do not sell credit scores for employment purposes, nor are 

CRAs able to report such scores if the purpose of the consumer report is for employment. 

Question: Has the use of credit reports for employment increased 

over the past decade? 

NAPBS does not keep such data. From personal experience, I can 

tell you that at my company the request for credit reports from our 

end users has decreased. 

Question: Do you add any information in the reports you receive 

from credit bureaus? 

No. As a reseller of credit reports, most CRAs merely pass 

through the credit reports they receive from the credit bureaus. 

What kind of information is included in credit reports? 

We have provided a sample of a report as a part of our written 

testimony. 

Do you have any proof that a credit record is an indicator of 

someone’s ability to successfully perform the duties of a job? 

CRAs are the providers of the information to end users when 

they are requesting background information, be it education or employment references or verification, credit history or criminal history. We believe the committee is better served by facts, rather 

than our personal views. 

Thank you for the opportunity to testify. 

[The prepared statement of Ms. Gootkind can be found on page 

63 of the appendix.] 

Chairman GUTIERREZ. You are welcome. 

Colleen Parker Denston, please, you are recognized for 5 minutes. 

STATEMENT OF COLLEEN PARKER DENSTON, DIRECTOR OF 

HUMAN RESOURCES, WORCESTER PREPARATORY SCHOOL, 

ON BEHALF OF THE SOCIETY FOR HUMAN RESOURCE MANAGEMENT (SHRM) 

Ms. DENSTON. Chairman Gutierrez, Ranking Member Neugebauer, and distinguished members of the subcommittee, my name 

is Colleen Denston. I am the director of human resources at 

Worcester Preparatory School located in Berlin, Maryland. I am 

also a member of the Society for Human Resource Management, 

otherwise known as SHRM. I thank you for the opportunity to appear before the subcommittee today to discuss the use of credit 

background checks in employment, and the Equal Employment for 

All Act. 

SHRM appreciates the heightened relevance of today’s issues in 

the current economic environment. To be clear, we believe that employment decisions should be made on the basis of an individual’s 

qualifications such as education, training, professional experience, 

18 

reliability, and integrity, and not on factors that have no bearing 

on one’s ability to perform job-related duties. 

However, SHRM does believe there is a compelling public interest enabling our Nation’s employers to take a full assessment of potential hires. This is because the consequences of making a poor 

hiring choice can be great. Consequences include financial or property losses for the company or employees, legal liability in the form 

of negligent hiring, identity theft, and physical harm to employees, 

customers, and property. 

To mitigate the potential of these threats in the workplace, the 

H.R. Department may conduct a background check on the final 

candidates or candidate. Some State laws even require employers 

to conduct background checks for certain positions such as licensed 

health care professionals, day care providers, and teachers. 

The background check process is described in detail in my written testimony. Under the Fair Credit Reporting Act, an employer 

that uses a third party or consumer reporting agency in a background process must notify the potential employee in advance, and 

it must obtain the applicant’s approval to have his or her background checked by the provider. 

Before taking any adverse action based on that background report, such as deciding not to hire the individual, the employer is 

first required to give the applicant a copy of the background report 

and also a copy of a summary of your rights under the Fair Credit 

Reporting Act, which is a document prescribed by the Federal 

Trade Commission. 

As noted in my written testimony, employees are already afforded Federal protections from the misuse of credit background reviews. Beyond the Fair Credit Reporting Act, employers are barred 

by the Civil Rights Act of 1964 from using background checks to 

screen out protected job applicants. We are, therefore, very concerned that the Equal Employment for All Act, as currently drafted, would nullify the right afforded to most private organizations 

under the Fair Credit Reporting Act to consider credit information 

and many other factors in making employment decisions. 

Additionally, the legislation effectively concedes that it is appropriate for some employers to conduct credit checks, as evidenced by 

the bill’s exceptions for national security or Federal Deposit Insurance Corporation clearance positions, State and local government 

positions, and supervisor or managerial position or executive positions at financial institutions. However, this is hardly a complete 

list of positions for which the public may have an interest in the 

integrity of its applicants, specifically those with the responsibility 

for managing money, property, personal identity, or financial information and other critical resources. 

Earlier this year, SHRM released one of the most complete surveys of employer background screening practices. The report found 

that the employer use of credit checks has not increased in recent 

years. Sixty percent of respondents said they conduct credit checks 

at least on some candidates, compared to 61 percent that conducted 

credit checks in a similar report done in 2004. 

Most organizations do not do credit checks at all: 4 out of 10 organizations reveal that they do not conduct credit checks. Employers generally conduct credit checks only for certain positions. Those 

19 

positions include ones with financial responsibility, senior executive 

positions, and ones with access to highly confidential employee information. Employers overwhelmingly use credit checks at the end 

of the hiring process, not to screen out applicants. At least 87 percent of organizations initiate credit checks only after a contingent 

offer is made—that was 57 percent—or after the job—which was 30 

percent. 

In summary, employer reviews of credit information are one 

small but important part of the overall hiring process. Current 

Federal laws already safeguard employees, and job applicants from 

discrimination and background investigation and preserving employer’s right to review credit information ensures the integrity of 

their work forces and helps protect employees, consumers, and 

businesses of all size. 

Thank you for your invitation to participate in today’s hearing, 

and I welcome any questions you may have. 

[The prepared statement of Ms. Denston can be found on page 

56 of the appendix.] 

Chairman GUTIERREZ. Thank you so much. Now, we have Mr. 

Hilary Shelton, Senior VP for NAACP. You are recognized for 5 

minutes, sir. 

STATEMENT OF HILARY O. SHELTON, DIRECTOR, NAACP 

WASHINGTON BUREAU 

Mr. SHELTON. Good morning, Mr. Chairman. My name is Hilary 

Shelton, and I am the director of the NAACP’s Washington Bureau. 

The Washington Bureau is the Federal legislative and national 

public policy arm of our Nation’s oldest and largest grassrootsbased civil rights organization. 

I would like to begin by thanking Chairman Gutierrez and Ranking Member Hensarling for calling this important hearing, and I 

would also like to give special thanks to Chairman Gutierrez for cosponsoring this very crucial legislation. 

Also, finally, I would like to thank our good friends, Congressmen Cleaver, Green, Watt, Waters, Scott and others for their leadership on these crucial issues on financial services concerns. 

And finally, I would like to extend a sincere appreciation of the 

NAACP to our good friend, Congressman Cohen, for introducing 

this crucial legislation. 

The NAACP strongly supports H.R. 3149, the Equal Employment 

for All Act and urges its swift enactment. We continue to oppose 

the use of credit reports by employers when considering potential 

employees, as credit reports have proven to be racially biased and 

in most cases are irrelevant to the positions for which the individuals are being considered. 

Mr. Chairman and members of the subcommittee, as you know, 

our Nation is going through one of the most difficult economic 

times in recent history. The most recent numbers indicate that almost 15 million Americans were unemployed in August of this 

year, which has resulted in a national unemployment rate of about 

9.6 percent. At the same time, the unemployment rate among African Americans was 16.3 percent, and among Latinos was 12 percent. As we all know or can imagine, these high employment rates 

have led millions of Americans to postpone paying back their credit 

20 

card debt, to borrow, to charge their credit cards to the limit, or 

to make difficult financial decisions they would not ordinarily face 

if they indeed had a job. As a result, their credit ratings may be 

more reflective of their current unemployment situation than the 

type of employees they may very well turn out to be. And since African Americans and other racial and ethnic minorities are disproportionately unemployed, their credit reports are going to be 

disproportionately negatively affected. 

Furthermore, African Americans and other racial and ethnic minorities were targeted for decades by unscrupulous predatory lenders and are now facing or have gone through a foreclosure at unprecedented and highly racially disparate rates. 

And now we enter into the Catch-22. With more potential employers using credit reports than ever before to assess potential employees, those with checkered credit histories are going to be the 

first eliminated from the potential job pool, despite the fact that 

many of them are the very people who most need a job in order 

to bring stability to their financial lives and otherwise. 

Are employers using credit reports more now than ever before? 

Studies suggest that they are. More than 47 percent of employers 

admitted to using credit checks in 2009 at least sometimes, up 

from 25 percent in 1998. So the trend continues. 

In addition to disproportionate unemployment rates, the disparately high foreclosure rates due to years of systematic targeting, 

there are several other reasons that credit reports and similarly 

credit scores for that matter, which often are used for the same information, appear to be an unfair and racially biased means of 

screening potential employees. 

If I might digress for just a moment, I say appear to be because, 

as I testified before this committee in 2003, we do not know exactly 

what these reports have in them. In essence, a basic piece of information is shared, but most of it is considered proprietary. What 

was clear at that time and what continues to be evident and for 

more studies are conducted and released, is that racial and ethnic 

minorities consistently have disproportionately lower credit scores 

and worse credit reports and than their Caucasian counterparts. 

Because we are sure that credit reports and credit scores are often 

based on similar information, it is fair to conclude that the problems with one are indeed the problems with the other. 

In 2007, the Federal Reserve Board report to the Congress on a 

credit scoring and racial disparities analysis analyzed 300,000 credit files. Not surprisingly, the study found significant racial disparities. In fact, the average credit score for African Americans was approximately half that of White non-Hispanics, with Hispanics 

faring slightly better. 

There have also been several other well documented studies by 

respected governmental, quasi-governmental private organizations, 

and academia, all of which come to the same conclusion. Racial and 

ethnic minorities have lower credit scores than their White counterparts. 

Taking the next logical step to go to credit scores, we go to credit 

reports. So if credit scores and credit reports are disproportionately 

unfair to racial and ethnic minority Americans, why are they being 

21 

used by more potential employers than ever before? Frankly, I do 

not know the answer to that question, as it makes no sense. 

With a few obvious exceptions, there is no credible evidence that 

credit reports are an accurate indicator of a potential employee’s 

ability to perform the assigned duties, propensity to commit a 

crime, or even their trustworthiness. 

It is the contention of the NAACP that a resume, job references, 

and a face-to-face interview are much more reliable in telling a potential employer more about a job applicant without distortion. 

This will allow an individual to be judged on his or her ability to 

get the job done, not on irrelevant facts or unsubstantiated numbers. 

Mr. Chairman, I thank you for the opportunity to participate in 

this important hearing. I appreciate the subcommittee holding this 

hearing, and I look forward to your questions on this matter. 

Thank you very much. 

[The prepared statement of Mr. Shelton can be found on page 83 

of the appendix.] 

Chairman GUTIERREZ. Thank you so much. 

I want to go to this report by Demos, ‘‘Discrediting Workers,’’ and 

I just want to read a couple of paragraphs I think might be enlightening from the report: 

‘‘Earlier this year, the U.S. Government won a case brought by 

the Office of Federal Contract Compliance Programs in which Bank 

of America was found to have discriminated against— 

Mr. MOORE OF KANSAS. Mr. Chairman, could you tell us what 

page you are on, please? 

Chairman GUTIERREZ. I am on page 3. 

Mr. MOORE OF KANSAS. Thank you. 

Chairman GUTIERREZ. I am on page 3, the last paragraph, ‘‘was 

found to have discriminated against by using credit checks to hire 

entry level; that is, tellers, clerical and administrative. The percentage of candidates excluded because of a credit check was significantly higher for African Americans, 111⁄2 percent, than for 

Whites, 6.6 percent. Generally, civil rights law requires employers 

to justify appropriateness of an employment practice if it creates 

such a disparate impact on a group historically subject to job discrimination.’’ 

So there is a disparate impact, and we should figure out why. 

Despite the clear disparate impact of the policy on African Americans, Bank of America conducted no study to determine whether 

credit reports were actually a predictor of job performance and had 

not investigated the issue. That is, the company never went about 

the business of saying, let’s see, let’s do a study. Is this a good program that we should use, and does it really tell us anything? 

An expert cited in the court’s decision found the bank’s review 

of credit reports to be highly subjective with no specifications about 

what thresholds had to be met for what indicators. The judge concluded, ‘‘There is no evidence of any criteria used by the recruiter 

in using credit report information to disqualify applicants.’’ In the 

end, the bank was unable to offer evidence supporting its main justification for the practice, which was the credit reports were required for security and bonding purposes. Americans of color have 

22 

comparatively weak credit profiles due in large part to public policies and lending practices. 

And then it goes on to make a statement. 

So, that has been shown. And I just want to say that I thank everybody for putting the issue of consent. But the fact is, the way 

lawyers have told me, if I go for a job and they say can we have, 

sign for your credit report and I say no, you can just tell me you 

are not hired. Thank you. But you are not getting a job here. So 

I actually have fewer rights. I should sign, get it, because I might 

have a right to sue later on that you discriminated against me 

based on that credit report. 

So the whole thing of consent I think is really false here. You 

can’t get the job if you don’t consent. As a matter of fact, they can 

discriminate against you by simply telling you you do not have this 

job; thank you very much. You didn’t sign for the consent. So you 

are even in a worse position. 

And then there are just jobs that, we had testimony in Chicago 

from people who literally mop floors and clean bathrooms who because they have bad credit reports—I don’t quite get it. It is a vicious cycle. We are here to help Americans. Everybody lifts themselves up by their boot straps. How do you lift yourself up by your 

boot straps if you are in economic turmoil in your credit report? 

Credit reports? They have so many errors in them, so many mistakes. I don’t think anybody here would like to be judged by a third 

party who makes lots of mistakes. And I would just ask all my colleagues, since you get free credit reports, just get your credit report. You are going to find a lot of mistakes and a lot of bad information on those credit reports. I know I have done it, and I have 

to be very, very careful and continue to look at it and to look at 

it and to look at it to make sure that we are there. 

And lastly, look, there are historical measures here. Just drive. 

I can drive down Cicero Avenue and I can start, I don’t know, 

around Roosevelt and go to North Avenue and drive down. Cicero 

Avenue is a major street. And you can drive for nearly 3 miles 

through an African-American neighborhood down Cicero, and you 

know what, and I just looked at it the other day because I was just 

driving, and I didn’t see a major bank, not one major bank. Even 

the gasoline stations were like Thrifty gasoline stations. I didn’t 

see Walgreens or an Osco or a CVS open anywhere. How would I 

say it? I went and I said oh, there must be a big grocery store because Black people have to go eat, they have to go buy groceries, 

right? There were no Jewels, no Dominics, none of the major franchises. So the things that we see advertised on TV, it is almost, I 

think sometimes if you are African American you see things on TV 

and say I wonder where those stores are at because they are not 

open in my neighborhood. Wonder where that bank is, because it 

is not open in my neighborhood. So there are conditions. 

Now why is it that those neighborhoods are excluded from those 

opportunities? And those opportunities have disparate impact on 

those communities. And I just want to tell you, you can go Roosevelt south and you can go North Avenue north and you find all 

those wonderful institutions on that same Cicero Avenue. The only 

thing that changes is the color of the skin of the people who live 

23 

adjacent to that avenue. That is why I think it is important to look 

at historical conditions. 

And yes, it isn’t that people just cry discrimination, discrimination, discrimination the fact is that if you just open your eyes you 

see it. 

So I thank all of the witnesses. 

And Mr. Neugebauer, you are recognized for 5 minutes. 

Mr. NEUGEBAUER. Thank you, Mr. Chairman. It has been a little 

difficult sometimes to understand exactly what the title. I had to 

go back and look at what the title of this hearing was. We have 

talked about a lot of different issues here. 

I want to go back to one of the things that the chairman was 

talking about, was the lawsuit that was filed against that bank. 

And I don’t know whether it was appealed or not, but I think what 

it does show is that there are existing laws and that a case was 

brought against this bank. They evidently had hiring policies in 

that bank that the judge found troubling, and so the system 

worked. And we didn’t even have this piece of legislation in place. 

I was glad to hear some of the other panel understand and recognize the value of having somewhat of an idea about the background 

of the individuals that are applying for these jobs. And I also agree 

with everybody on the panel that discrimination is unacceptable, 

and I think we have gone a long way in removing some of that discrimination in this country. Have we completely eliminated it? No, 

but you know there are a lot of different forms of discrimination 

in this country. 

But really, I think what maybe was the intention of this legislation, and I have heard some of my colleagues allude to it as well, 

is about the economy and about jobs and about families that are 

having a hard time across this country. And all of us are concerned 

about that when we have almost 15 million people out of work in 

this country, almost 10 percent. And when you look at the U6 number, which is those people who took a lesser job and maybe gave 

up looking for a job, it is almost 17 percent. So we have a real problem in our country. 

But really what we ought to be spending a lot of our time on instead of whether employers ought to have the right to run credit 

reports or not, we ought to be down on the Floor of this House of 

Representatives extending tax breaks for small businesses all 

across this country. Those are the people who do create the jobs. 

Those are the people that we are talking about here today who will 

provide opportunities for minorities and people of all races and 

color to be able to have an opportunity to have jobs in this country 

and so if they do have jobs, that they don’t have bad credit scores. 

And the reason some people have bad credit scores, by the way, 

wake up to the real world, is not because they don’t have jobs or 

good jobs. I know a lot of people who have good paying jobs that 

have very bad credit scores. And so just being poor doesn’t mean 

that you have bad credit and just being rich doesn’t mean you have 

good credit. 

But we ought to stop all of these job-killing things that this Administration is doing. I was back in my district in August and time 

and time and time again they said, Congressman, I could hire some 

additional people. I could buy an additional piece of machinery that 

24 

I could use in my business. But you know what? There is too much 

uncertainty. We don’t know what this new health insurance plan 

is going to cost us. We don’t know what EPA is going to do with 

greenhouse gases. We don’t know what the tax environment is 

going to be. And every time we turn around, we look at Congress 

spending money that it doesn’t have and borrowing money from 

foreign countries and it has created some uncertainty so we are not 

doing anything. 

And so really, if we really want to help people in this country 

have better credit scores, then what we ought to really be doing is 

helping people to have better jobs in this country. And the way we 

help people have better jobs in this country is we get this Congress 

off high center here and quit worrying about the politics of if we 

increase taxes for this group or we don’t, what we ought to do is 

be leaving the money back in the economy of this country so that 

we can create jobs in this country. 

Government doesn’t create jobs and we have seen that. We have 

thrown trillions of dollars at programs, and we are going to be 

down on the Floor again this afternoon, another attempt at letting 

the government try to create jobs and do incentive type activities 

that don’t work. They don’t work, the President said they were 

going to work. And what has happened since then is we have lost 

over 21⁄2 million jobs in this country. 

And so I would hope that our efforts really would be to help 

these families and help get America back to work instead of trying 

to limit the rights of people to provide opportunity and documentation to get a job and to limit the ability for employers to make good 

hiring decisions so that we can move this country forward. 

With that, I yield back my time. 

Mr. CLEAVER. [presiding] I recognize the gentlewoman from California, Ms. Waters. 

Ms. WATERS. Thank you very much, Mr. Chairman. I would like 

to try and get a couple of questions in. My first question would be 

to Mr. Don Livingston. You were, you directed our country’s litigation in cases of employment discrimination over at the EEOC. Did 

you direct any cases relative to discrimination based on credit 

checks at all? Did you ever have any of those cases? 

Mr. LIVINGSTON. I can’t say. I just can’t say. We had, we brought 

about 500 cases a year and I was there for 3 years. 

Ms. WATERS. You don’t remember any? 

Mr. LIVINGSTON. No, ma’am. 

Ms. WATERS. Okay. Thank you. Let me also move quickly to Ms. 

Gootkind. You are the Chair of NAPDS. You have a board. Now let 

me just ask. You have a board of directors. They are making policy 

decisions for this organization for your company, is that right? 

Ms. GOOTKIND. We have a board of directors that directs the activity on behalf of the members of the company. 

Ms. WATERS. So, and all of these people, you checked their credit 

backgrounds? 

Ms. GOOTKIND. The different consumer reporting agencies that 

are members of our foundation would have their particular practices. I can tell you that in my company, we do background checks, 

yes. 

25 

Ms. WATERS. Do you know if the credit, have they checked credit 

on all of these directors? 

Ms. GOOTKIND. I don’t have the information on every particular 

member company of the association. I can speak to my company. 

We do national security background checks and so everyone who is 

a member of my company, an employee in my company does have 

to have a credit check done because it is required by the industry. 

Ms. WATERS. But you don’t know if the board of directors are 

credit checked? 

Ms. GOOTKIND. I don’t have that information here today. 

Ms. WATERS. Sometimes, it is instructive and very helpful if 

boards are representative of all of the people that they are making 

decisions about. Do you think that this board is representative? 

Ms. GOOTKIND. I would say yes. 

Ms. WATERS. Why do you think it is representative? 

Ms. GOOTKIND. Again, we are members of the consumer reporting industry. What we do is we deal with best practices. We deal 

with legislative initiatives. We have a brand, it is a relatively new 

organization. 

Ms. WATERS. Do you have diversity on your board? 

Ms. GOOTKIND. Pardon me? 

Ms. WATERS. Do you have diversity on your board in racial make 

up and— 

Ms. GOOTKIND. Diversity in the member organizations. 

Ms. WATERS. The board of directors. I am looking at and we have 

been checking a little bit. And my question is, the Chair-elect is 

Theresa Preg. 

Ms. GOOTKIND. Correct. 

Ms. WATERS. You have the treasurer, Mr. Fred Giles. 

Ms. GOOTKIND. Correct. 

Ms. WATERS. Noelle Harling is the secretary. Dan Shoemaker is 

your past Chair, Bruce Berger, Judy Gootkind, that is you, Julie 

Hickman, Nancy Ann Roberts, Christine Cooney, Don Standwick, 

Carl McManns, and Dean Corris. Do you have any African Americans on this board? 

Ms. GOOTKIND. We do not. 

Ms. WATERS. Do you have any Latinos on this board? 

Ms. GOOTKIND. We do not. 

Ms. WATERS. Do you have any Asians on this board? 

Ms. GOOTKIND. We do not. 

Ms. WATERS. How then is it representative of the people that you 

are making decisions about? 

Ms. GOOTKIND. Again, these are elected to the board, individuals 

who are representative of the consumer reporting agencies that 

make up our reporting organizations. 

Ms. WATERS. So the consumer reporting agencies that make up 

your board have sent you representatives who are basically all 

White? 

Ms. GOOTKIND. That is correct. 

Ms. WATERS. I can’t hear you. 

Ms. GOOTKIND. That is correct. 

Ms. WATERS. And we are here today talking about the problems 

that are created with the policies of credit checks for employment. 

26 

But you have nobody on your board who represents any of those 

classes that we are so concerned about; is that correct? 

Ms. GOOTKIND. That is correct. 

Ms. WATERS. Thank you very much. 

I yield back the balance of my time. How much time did I have 

left? 

Mr. CLEAVER. You have about 25 seconds. 

Ms. WATERS. Okay. Then I yield back. Thank you. 

Mr. GREEN. I will yield my time. 

Mr. CLEAVER. Mr. Green is yielding whatever time. 

Ms. WATERS. Thank you very much. I will just take a minute 

here. One of the big three credit bureaus, Experian I think it is 

pronounced, touts in its Web site that its employment screening 

product, Employment Insight, helps you make better employee hiring decisions by quickly and cost effectively providing objective and 

factual credit information. Credit information provides insight into 

an applicant’s integrity and responsibility toward his or her financial obligations. 

Do you agree with this statement that credit information provides insight into an applicant’s integrity? Mr. Livingston? 

Mr. LIVINGSTON. In some circumstances, sure. But I think we all 

tend to think about just certain paradigms. But if we were, for example, doing a background investigation on someone who is a candidate for a, say, chief financial officer, and we were to find that 

this person was routinely late in making payments, then that 

might be a factor. 

Ms. WATERS. Yes, but the question that I am asking is about the 

statement of Experian. Do you buy that statement? Do you concur 

with that statement? 

Mr. LIVINGSTON. I don’t know that company, and I would think 

in many circumstances the statement would not be— 

Ms. WATERS. Ms. Gootkind, what about you? 

Ms. GOOTKIND. Can you read it again to me, please? 

Ms. WATERS. One of the big three credit bureaus, Experian, touts 

in its Web site that its employment screening product, Employment 

Insight, helps you make better employee hiring decisions by quickly 

and cost effectively providing objective and factual credit information. Credit information provides insight into an applicant’s integrity and responsibility toward his or her financial obligations. 

Do you— 

Ms. GOOTKIND. If I could comment, I think that credit reports 

are one component of the background investigation. 

Ms. WATERS. So you don’t believe in this statement the way they 

have put forth? 

Ms. GOOTKIND. I would say that the credit report is a risk mitigation tool, but it is also a verification tool that is used by consumer reporting agencies. 

Ms. WATERS. Thank you. Ms. Denston? 

Ms. DENSTON. Yes, Congresswoman. I don’t know that I agree 

with the statement as it is just for credit reports. But I do know 

that it is used as a tool. 

Ms. WATERS. I am just asking about what they say. They said 

credit information provides insight into an applicant’s integrity and 

27 

responsibility toward his or her financial obligations. Do you believe that? 

Ms. DENSTON. Not so much integrity, but responsibility, yes. 

Ms. WATERS. Okay. So you don’t believe it. Thank you. And 

thank you very much for the time. I yield back. 

Mr. CLEAVER. The Chair recognizes the gentleman from New Jersey, Mr. Lance. 

Mr. LANCE. Thank you, Mr. Chairman. And good morning to you 

all. To Mr. Livingston, I am reviewing your testimony. As I understand the bill, and based upon your written testimony, exceptions 

would be provided for those holding jobs with State and local governmental agencies, national security, supervisory, managerial, 

professional or executive responsibility at financial institutions or 

when otherwise required by law. 

Number 4 impresses me as being broad in nature. Do you have 

any understanding, sir, what that might be criterion for? 

Is it your understanding that the current law prohibits employment discrimination based upon race, religion, creed, national origin, and other bogus criteria? 

Mr. LIVINGSTON. Yes, sir. The answer is yes. Federal law prohibits discrimination on the basis of race and those other factors. 

Mr. LANCE. Are there other irrelevant criteria? 

As I read these various categories, if one were to seek a position 

as the chief financial officer of a hospital, for example, it does not 

impress me as coming within any of the exceptions that I am reading based upon your testimony. Would that be your understanding 

as well? 

Mr. LIVINGSTON. Yes, sir. That would, to look into the credit history of someone seeking that job would be unlawful under this legislation. 

Mr. LANCE. I have, of course, several hospitals in the district I 

represent, as do all Members of Congress. And certainly, if I were 

on the board of a hospital, as my twin brother is, I think it would 

be perfectly legitimate to seek the credit history of someone applying for the position of the chief financial officer of a hospital. Can 

you give me other examples where it would become illegal to look 

at the credit history of a person, other examples, perhaps if not in 

the nonprofit sector, in the private sector? 

Mr. LIVINGSTON. Ms. Gootkind had an extensive list in her testimony. I was impressed by the number of categories that she used. 

Mr. LANCE. Thank you. I therefore defer to Ms. Gootkind. What 

were some of those categories? 

Ms. GOOTKIND. We feel that there are industries that use background checks as well as individual positions that are being hired 

for that have responsibility to cash information, consumers information and things of that nature. I would be happy to read the list 

to you again if you want. 

Mr. LANCE. If you would just briefly highlight several of the categories. 

Ms. GOOTKIND. Lawyers, mortgage lenders, property managers, 

cashiers. 

Mr. LANCE. Thank you. So, for example, I am an attorney. If I 

were to apply for a position in a law firm, it would be illegal for 

28 

that law firm to examine my credit history under the provisions 

contained in this potential legislation? 

Ms. GOOTKIND. That is correct. 

Mr. LANCE. Other members of the panel, would you think it appropriate to use credit as one of the criteria for a chief financial 

officer of a hospital or for employment in a law firm? And I would 

open it up to the entire panel. Mr. Shelton, good morning. 

Mr. SHELTON. Good morning. If you will repeat the question specifically. 

Mr. LANCE. Of course, sir. If I were to apply for the position of 

the chief financial officer of a hospital. 

Mr. SHELTON. Yes, can you establish the need? Why indeed 

would you need that kind of background information? Would it be 

nothing more than just another device to actually exclude many 

from consideration? Quite frankly, when I think about our conditions today and what affects our credit ratings and, quite frankly, 

what affects our financial disclosure, we are also thinking about 

those of us who took out multiple student loans to be able to finish 

our degrees and get our levels of higher education achieved. And 

very well indeed what you would be doing is locking out many who 

struggled to get from the bottom to be able to be considered for important positions like this. I don’t see any basis for the need for 

that kind of information. 

Mr. LANCE. So it is your position that you do not see a need for 

consideration for the position of chief financial officer of a hospital? 

Mr. SHELTON. I would want to know, quite frankly, if they have 

the skills to be able to carry out those responsibilities. I would not 

like extraneous diversions from the real issues and concerns of that 

person’s integrity, ability, and that person’s background to be able 

to fulfill the responsibilities for these positions. And certainly, I 

don’t see where this kind of information is helpful at all. 

Mr. LANCE. Thank you. I appreciate your answer to the question. 

I respectfully disagree. 

Thank you, Mr. Chairman. 

Mr. CLEAVER. The Chair recognizes the gentleman from North 

Carolina, Mr. Watt. 

Mr. WATT. Thank you, Mr. Chairman. We quite often sit in these 

hearings and markups and legislative sessions and marvel at the 

difference in the backgrounds that people bring to these deliberations. I don’t think I have seen many that reflect that difference 

more than this morning’s discussion between the folks on one side 

of the aisle and the folks on the other side of the aisle who come 

from different backgrounds, live in different worlds, and don’t understand the realities of how things work in the real world that we 

live in, at least. Maybe they understand it in the world they live 

in. 

It doesn’t take much for me to relate to the need for this kind 

of legislation, even based on my own personal experiences going 

back to high school when I got a summer job in a small warehouse, 

and there were four people working in that warehouse, all making 

very, very low wages, but the hardest-working people I had ever 

seen in my life. And they were always in some kind of credit 

crunch that would ultimately show up on their credit report, but 

had nothing to do with their commitment to the job that they were 

29 

doing every day for virtually minimum wages, showing up on their 

credit report because they were making virtually minimum wages, 

and it was virtually impossible for them to make ends meet. 

Fast forward to the time that I practiced law in the law firm that 

was litigating Griggs v. Duke Power, which established the job-relatedness requirement when employers were taking the same position that some of the witnesses on this panel are taking, that employers ought to be able to establish whatever criteria they want 

to establish, whether it had any justifiable relationship to the employment that they were hiring people or not, and the result was 

that systematically, Blacks were ending up in the lowest categories, and others were ending up in the higher categories. 

I dare say, Ms. Gootkind, the striking thing about Ms. Waters’ 

line of questioning, although I thought it was very personal, I dare 

say there is not a person on that board who got on that board having to have had a credit check. That is just a difference in the 

worlds that we live in. 

So this is something that is hard for me to relate to this discussion without understanding that we come from different worlds 

here. 

And so a number of us have been strong advocates for doing 

away with this, these credit reports that have adverse impacts on 

people’s ability to do, to get jobs, have adverse impacts on their 

ability to get insurance. I, for the life of me, can’t understand why, 

how somebody’s credit report impacts their driving ability and their 

car insurance rates, or the likelihood that they would have a fire 

at their home. So it adversely impacts the rates on their homeowners insurance policies. There is no relatedness there. 

It is just a vicious cycle that takes you back to the very thing 

that Mr. Cohen testified about in his opening statement: That is 

the way we have always done it, and therefore, we justify it because we have always done it that way. 

And I dare say, just fast forwarding a little bit further, now that 

I am in Congress and have Bank of America as one of my prime 

corporate constituents, and having heard them be discussed here in 

an adverse way, they are probably better off with this bill because 

they don’t have to worry about whether they go out and look at 

some irrelevant criteria that doesn’t have any application to whether they can hire a janitor or a mail clerk or whatever. 

So I am sorry. I didn’t mean to get on a soap box here. I just 

wanted to— 

Mr. CLEAVER. If someone wants to yield another— 

Mr. WATT. No. I don’t want to take anybody else’s time because 

I would just further pontificate on these different worlds that we 

come from. It is striking. 

I yield back, Mr. Chairman. 

Mr. CLEAVER. The Chair recognizes the gentleman from Georgia, 

Mr. Scott. 

Mr. SCOTT. Thank you, Mr. Chairman. Mr. Livingston— 

Mr. LIVINGSTON. You understand, Mr. Scott, that I am a Georgian. 

Mr. SCOTT. Oh, very good. 

Mr. LIVINGSTON. I hope that will provide me some— 

Mr. WATT. We will probably hold that against you. 

30 

Mr. SCOTT. That is all the more reason for me to attempt to illuminate a little on this issue. 

First of all, I think we have to understand and look at this credit 

report as a discriminatory tool. There is no other way you can look 

at it as that. First, I am not necessarily talking about racial discrimination. Not first. But just by the very nature that here is a 

tool in the hands of an interviewer, prospective employer whose 

sole purpose is to make a discriminatory conclusion for a job for 

which this tool has no, is no indicator of how successful the individual would be at performing that job. That is the first part of the 

discriminatory tool. 

The second one is that it is not required—I don’t know, maybe 

you can correct me—that everyone who sits before this interviewer, 

that this credit card issue, this credit report is utilized. 

The first question then would be, to you, how heavily do employers typically weigh the credit scores in employment? And do they 

use it judiciously, or do they not use it discriminatorily? For example, this person who sits before them, they may use the credit report as a tool. Another person coming before them, they may not. 

It is all subjective. So when you look at all of the ramifications of 

why this is so wrong, it is a discriminatory tool on so many different levels that it is paramount, the paramount reason why we 

feel it is so unjustified and so unfair. 

So specifically, my first point to you is, how heavily do employers 

weigh credit scores in employment? What do they do with this 

when they get it? 

A man got behind on his payments and got into a little trouble. 

What do they do with this? How does that weigh in the decision? 

Mr. LIVINGSTON. It depends on the job. The employers who are 

members of the U.S. Chamber put in safeguards to try to protect 

the applicant or the employee from purposeful discrimination, from 

disparate treatment, from decisions which are made based upon 

the protective classification to make sure that everybody similarly 

situated is treated the same way with respect to their credit history information. 

The difficulty, the primary difficulty that I have with the bill is 

that it just doesn’t address only the janitor that Mr. Watt was referring to. It also throws out the employer’s ability to look into the 

way that the potential CFO has managed his or her own finances. 

The hospital that doesn’t want someone managing the finances of 

the hospital who has already proved to be irresponsible in managing their own money. 

Mr. SCOTT. But isn’t the decision to use this criteria done on a 

case-by-case basis? Does every single person coming before for employment go through this? 

Mr. LIVINGSTON. No. There are actually two parts to that. I think 

that one of the panelists has already testified, consistent with my 

own experience, that the background investigation occurs after the 

individual has already received a conditional offer of employment. 

So not every applicant would be subject to a credit screening. And 

then, based on my own experience, only with respect to those positions for which a credit screening might be relevant. Lots of the positions that we have talked about here today, in my experience, are 

not subject to a credit screen. When the position itself is subject to 

31 

a credit screen, then everyone who receives a conditional offer of 

employment for that position gets the screen. 

Mr. SCOTT. But doesn’t it vary between that—my time? 

Mr. CLEAVER. We have two additional persons to ask questions, 

and because we have a small group here, if it would please the 

members and if the witnesses are willing to wait around, we could 

go through one more round of 21⁄2 minutes. 

Mr. SCOTT. You are the chairman, Mr. Chairman. 

Mr. CLEAVER. The Chair recognizes the gentleman from Texas, 

Mr. Green. 

Mr. GREEN. Thank you, Mr. Chairman. I thank the witnesses for 

appearing today. And it is a difficult subject for those of us who 

have sat in the back of the bus, had to go to the back door, were 

forced to sit in the balcony of the movie, last hired, first fired. It 

is a difficult topic for us to embrace without some degree of emoting. If you only knew what we think, and I thank God that our 

thoughts are private. That is one of the great gifts that God has 

given humankind, the ability to secret your thoughts. 

So, I have a question: Does anyone really think that African 

Americans and minorities are inherently persons who merit poor 

credit scores? If so, would you kindly raise your hand? We will call 

this the voir dire or voir dire portion of this hearing, depends on 

where you are from. It is a French term, and lawyers know that 

it means to speak the truth. Does anyone really think that there 

is an inherent factor here that causes minorities and persons of 

color to have bad credit scores? 

I didn’t think anyone did. 

So then the question becomes, why do they seem to have credit 

scores that are higher or lower and in this case lower? Why are 

they lower? Why are they consistently lower? What has happened 

in their lives to cause their scores to be consistently lower? What 

happened? 

Are they just bad people who don’t care about credit? I think not, 

and I am confident that you would agree with me. So what happened? 

I am going to ask my friend, the lawyer from Georgia, what happened to Black people? Why is it that their unemployment rate is 

always twice that of White unemployment? Consistently. Check the 

numbers. Consistently twice or more than White unemployment. 

What happened to them? What happened, sir? Help me. 

Mr. LIVINGSTON. Mr. Green, I think that the majority of persons 

who are denied employment based upon credit screenings are 

White. Now, I believe that— 

Mr. GREEN. If I may intercede— 

Mr. CLEAVER. Let me interrupt everybody. Please move the 

microphone. Our technician is having difficulty picking up your 

voice. 

Mr. GREEN. Excuse me, since I control the time, and I beg your 

indulgence. But you see, unfortunately, I too have been trained, 

and when you say the majority, I immediately understand that we 

are not talking about majority as much as we are talking about 

percentages of a given group. 

Mr. LIVINGSTON. Right. I am not trying to be clever. I am just 

trying to— 

32 

Mr. GREEN. Whether you are trying to be clever or not, the answer is one that has to be addressed. You see, ‘‘most’’ does not 

mean that the higher percentage exists compared to the number of 

Whites in the country. 

Mr. LIVINGSTON. Indeed. Generally, a higher percentage of 

Blacks, as compared to— 

Mr. GREEN. And that is what we are talking about. Listen now. 

We are both going to acknowledge our intelligence today. On this 

day, you and I are going to acknowledge that we both understand 

how to use the king’s language. 

Mr. LIVINGSTON. Indeed. 

Mr. GREEN. And it was imposed on me, but I still embraced it. 

And I am ready to do battle with whomever comes forward, and 

you and I are here today, my brother. So explain to me, why are 

Black people in this shape that they are in with credit, with reference to their credit scores. 

Mr. LIVINGSTON. I couldn’t explain that to you, Mr. Green. But 

I do say that you have no argument with me over this issue. 

Mr. GREEN. Let me just ask you this, since you say you can’t explain. Good, I am glad you said that because listen now. Let me 

just share this with you. Mr. Cohen, whom I must tell you I gained 

a great amount of respect for today, Mr. Cohen gave us a plausible 

answer. He used the term ‘‘institutionalized racism,’’ a term that 

many persons of color are reluctant to use because of the way we 

have to then find ourselves dealing with those who will simply just 

dismiss us out of hand. But I am glad he said it. He has the ‘‘hue’’ 

power, if you will, to say it and get away with it. But I want to 

just— 

Mr. CLEAVER. The gentleman’s time is up, but he has an extra 

11⁄2 minutes because he yielded. 

Mr. GREEN. Just listen to this point. He said ‘‘institutionalized.’’ 

‘‘Institutionalized,’’ as dastardly as it is, is not nearly as dastardly 

and invidious as ‘‘legalized.’’ This is legalized, and it has always 

been the intelligentsia that was able to perpetuate and perpetrate 

legalized invidious discrimination. Dred Scott was produced by the 

intelligentsia. This that we try to right today, which is wrong, the 

intelligentsia perpetuates. 

I am just going to beg of you, give some thought to those of us 

who have had this history. And we don’t come here because we just 

simply want to make things difficult for people. It is a history that 

you cannot imagine how it has impacted us. 

So these hearings are difficult for some of us. And I close with 

the simple comment to all of you, and I appreciate you. Please understand that we support the same Constitution you support, believe in it the same way you do, except that we can recognize a 

wrong that ought to be righted, and that is what we are trying to 

do today. 

I will yield back the time that I don’t have. And I thank you for 

being so kind, Mr. Chairman. Thank you. 

Mr. CLEAVER. Mr. Lance, we are going to give another 21⁄2 minutes, if you have a question. 

Mr. LANCE. Thank you, Mr. Chairman. 

Mr. CLEAVER. We don’t discriminate, so we want to make sure 

that both sides have opportunities here. 

33 

Mr. LANCE. Thank you. And in my view, Dred Scott was based 

upon an erroneous decision of Roger Taney and eloquently opposed 

by Abraham Lincoln. 

Regarding the testimony of Ms. Wu, I read with interest and I 

certainly agree that if there has been erroneous rates of credit, inaccurate rates, that is something that we should address. And as 

I read your testimony, there is a study ongoing now regarding 

that? 

Ms. WU. The Federal Trade Commission is required under the 

2003 Fair and Accurate Credit Transactions Act that amended the 

Fair Credit Reporting Act to conduct a study of accuracy in credit 

reports. It is a long study. They have engaged in two pilots already. 

The data from the two pilots is what is in my testimony, showing 

error rates in credit reports that I think are significant. 

Mr. LANCE. And will there be a final report at some point in the 

immediate future? 

Ms. WU. As I understand it, and this may be a question better 

directed to the Federal Trade Commission, the study is ongoing. It 

is nationwide. They do expect to have a final, a statistically significant study in the next few years. I have heard within a few years, 

but I would be happy to find out more for you. 

Mr. LANCE. Thank you. And through the Chair, I think that this 

is an area that we should investigate and certainly I would like to 

work in a bipartisan capacity with members of the committee so 

that the rates of error are reduced or I would hope eventually 

eliminated, and certainly none of us favors a system where there 

is significant rates of error. 

Thank you, Mr. Chairman. 

Mr. CLEAVER. Thank you. We have—Ms. Denston, are you an attorney as well? Are you, Ms. Gootkind? Mr. Livingston, I guess you 

are. 

I want to deal with the issues that my colleague Mr. Green mentioned earlier about when he actually quoted from Mr. Cohen about 

unintentional but still brutal discrimination, vicious discrimination. 

You agree that there is discrimination? 

Mr. LIVINGSTON. Yes, sir. 

Mr. CLEAVER. Okay. Here is—maybe you can look at this. Is it 

legal to deny a person employment if they have filed bankruptcy? 

Mr. LIVINGSTON. I believe that it is illegal to use bankruptcy as 

a basis for an employment decision. But I don’t know for certain. 

Mr. CLEAVER. Okay. I know for certain. You cannot exclude a 

person from employment based on bankruptcy. But it is a moot 

point. If you file for bankruptcy, the chances are you didn’t pay, 

you were having difficulty paying your bills. You probably didn’t 

have a job. So it doesn’t matter. Somebody can say, in an interview, 

I filed for bankruptcy, or show that they filed for bankruptcy, an 

employer can say, we absolutely will not discriminate against you 

because of the bankruptcy. But the employer automatically knows 

that the credit is bad. Do you agree with me? 

Mr. LIVINGSTON. I think that we end up, we ended up in this 

hearing sort of talking around one another. I agree with most of 

what has been said. 

Mr. CLEAVER. Okay. I don’t want to talk around it. So if you can 

help me, I will go straight to it. 

34 

Mr. LIVINGSTON. Some decisions to deny persons employment on 

the basis of credit history are unlawful under Title VII now. 

Mr. CLEAVER. Yes. 

Mr. LIVINGSTON. Unless the employer can prove that the decision 

was job related for the specific job being sought by the applicant. 

So lots of the examples that I am asked if I agree with, I do agree 

with. My point is that it is illegal now and that the current law 

permits for there to be some flexibility so that, as Mr. Lance pointed out, an employer may be permitted to look into the credit background of the person who seeks to be the chief financial officer of 

the hospital, but might not be able to consider the credit history 

of someone who is seeking a position as a janitor, to draw two extreme examples. 

Mr. CLEAVER. But you used the word earlier, and I wrote it 

down, ‘‘irresponsible.’’ 

Mr. LIVINGSTON. If I was using it, I was using it with respect to 

the CFO example, chief financial officer example, and using, and 

looking, and asking in some ways rhetorically, wouldn’t it be job related for an employer to consider if the candidate for that senior 

position, managing the finances of the company, was having difficulty managing his or her own finances. I wasn’t making that reference with respect to lower level jobs where it would be less likely 

that the employer could prevail under discrimination laws. 

Bank of America is a good example. Bank of America, based on 

upon what I have heard in this hearing today, lost it under current 

law, which precluded them from considering the credit histories in 

whatever job was at issue. 

Mr. CLEAVER. So you are concluding that this legislation is completely unnecessary because there is already existing law? 

Mr. LIVINGSTON. I said in my testimony that I believe that the 

existing law works better than what would replace it, which would 

be this bill, yes, sir. 

Mr. CLEAVER. Why? 

Mr. LIVINGSTON. Because this bill throws out, it encompasses all 

situations, including those situations where under current law, an 

employer may be able to show that the consideration of certain factors in a person’s credit history were related to the job that the person sought. And a good example I continue to return to is the example offered by Mr. Lance, Congressman Lance, that dealt with 

the CFO of a hospital. 

Under current law, the employer would have an opportunity to 

demonstrate that person’s credit history was relevant to the position and possibly could win. Under the bill, the hospital would have 

no opportunity to make that showing. The hospital would not be allowed to consider that information. 

Mr. CLEAVER. But do you understand, and Mr. Watt tried, and 

maybe he failed, so I probably will fail as well. Can you struggle, 

struggle, struggle to see that there are individuals who are in fact 

discriminated against, and if you, in the throes of a recession have 

discrimination, that you would say it is not based on color, but 

based on their ability to pay on time and not come across as irresponsible. And if you look at all of the statistics, Mr. Shelton was 

one who testified before our committee. I think it is inevitable that 

35 

minorities were pushed towards exotic loans. Do any of you disagree with me? The facts. 

Mr. LIVINGSTON. I passionately agree with the principles of equal 

employment opportunity in Title VII. 

Mr. CLEAVER. But then we have to be as aggressively trying to 

make sure that people are not discriminated against as we are in 

a number of other arenas. All of a sudden, it is almost like we have 

solved all of the problems, and there is no discrimination, so let’s 

just keep going the way we are going. That is not the real world 

that we are in. And there are people, through no fault of their own, 

today, who are struggling just to make it, some of the 99ers who 

have gotten off the unemployment benefits and they are just out 

here in the world. They are not even in the numbers that Mr. 

Shelton mentioned, the 9.6, the 7.1, the 12.0. They are not even in 

there. It is probably up in the 20s. And these people are going out 

trying to get a job. They can’t get a job because somebody pushed 

them into an exotic loan. 

My time is way past up. I am going to recognize the gentleman 

from Georgia. 

Mr. SCOTT. Thank you, Mr. Chairman. And I want to just say, 

Dred Scott was mentioned, and many of you may know that Dred 

Scott is my great-great-grand uncle. And it is a joy to have his spirit mentioned because it is his spirit that we are dealing with here 

today. 

The great evolving decision that opened up the major wound of 

this country emanated from the Dred Scott decision as to whether 

a portion of this country or a State would be free or slave. And that 

is why I think you hear the passion from us who are descendents 

of people who have suffered because of the pangs of color shock. 

Now, Mr. Livingston, I want to come back to you because I want 

to give an example of this, why I say we all have to see out of the 

same lenses in order to grab this picture. 

When the chairman asked, why do you oppose this, and I understand because I feel that you are basically understanding of this. 

But it is very simple to point out something. He asked you that and 

you responded, let me give you this example why I am against this 

bill. I think because of a CFO of a hospital. And clearly, in the bill, 

how the language reads, that there are exemptions in this bill, including jobs that require national security, FDC clearance, jobs 

with a State or local government agency, that specifically require 

credit check or employment that is supervisory, managerial, professional, executive level at a financial institution or is otherwise specifically required by law. Almost a loophole in this bill that you 

could drive 20 Mack trucks through. Surely, within here, a CFO of 

a hospital—Grady Hospital should have this. You are from Georgia. You know Grady Hospital. You know the trouble we went 

through. 

I agree with you they ought to have checks on that. These are 

guys who are handling a lot of different money from State, local, 

and Federal Governments. 

So the reason of opposition to this bill is on something else that 

we were talking about, is the fact that this requirement is a major 

discriminatory barrier that is a target of people who come autoVerDate Nov 24 2008 14:06 Dec 22, 2010 Jkt 062684 PO 00000 Frm 00041 Fmt 6633 Sfmt 6633 K:\DOCS\62684.TXT TERRIE
36 

matically there and they saw you coming. That is why I asked you 

about case by case. 

There are certain things, if they see a Black man coming, sitting 

down, there is a whole different thing going through this person’s 

mind. That is why African-American males right now in the cities 

of the United States are hovering at 50 percent unemployment. 

They see them coming. He doesn’t have a job. If he doesn’t have 

a job, you know he can’t pay his bills. But he’s trying to get a job. 

And this darn thing is sitting up there for them to use as a discriminatory tool that he can’t get the job. He has a bad credit report. He can’t pay his bills. He can’t pay his bills because he can’t 

get a job. This man said you can’t get a job because you can’t pay 

your bills. There is a catch-22, and it needs to be dissected out. 

So I wanted to explain that to you so you could see where and 

how this is a major discriminatory tool. That is why I wanted to 

ask how much weight you give to this, who it is applied to. But, 

clearly, if a person has been unemployed for some time, they have 

trouble paying their bills, and then they get this negative effect of 

credit scores. This is truly a consideration of credit scores for employment that is counterproductive. 

You can see that, can’t you? Can’t you see that, how it is counterproductive? 

Mr. LIVINGSTON. I can see that the use of credit scores in many 

contexts discriminates on the basis of minorities, and my testimony 

pertains to the employment arena, which is what we are talking 

about. There are laws, powerful laws, which currently exist that 

deal with this issue and they work, while at the same time giving 

employers flexibility to deal with these more—these other situations that I think we—I think we agree. It sounds like we agree 

that there should be these other exceptions. 

Mr. SCOTT. But I want to make sure that your point is covered 

within the exemptions here and that the fact that as this bill 

moves along, if it is not clear, we will make these exemptions clear. 

The exemptions are clearly—this isn’t the purpose of the bill. A 

man gets to the point where he is being qualified for the top financial officer or CEO of a major hospital—this is going to try to help 

people who are being discriminated against already, who come to 

the point of wanting the job they are discriminated against. 

Mr. Shelton, I wanted to ask you, because I think that you can 

get right to it and explain to us how the use of credit scores as a 

hiring criteria disproportionately discriminates against minorities. 

Mr. SHELTON. Let me first start off by saying the biggest challenge that we have is to talk about credit scores. Credit scores are 

oftentimes a component thereof of a credit report but credit scores 

separately of a credit report is that you really don’t know. 

Now the reason I put it in those terms is because whenever we 

have talked to the FICOs of the world and other credit scoring companies about what exactly goes into the credit scoring process, they 

are unable to tell us. They are unwilling to tell us. They will state 

that we can tell you generally that we are looking at your payment 

history, we are looking at any mortgages you have held, we are 

looking at your background and so forth. But when you ask specifically, how do you come up with the scoring, they will say we can’t 

37 

tell you because it is proprietary. In other words, meaning a black 

box that locks you out of that process. 

As a matter of fact, we have also seen very specifically is oftentimes African Americans, with the same background, the same history of payments, the same educational level of attainment, even 

the same salary ranges find themselves with lower scores than 

White Americans in the same boat. As a matter of fact, the Center 

for Responsible Lending and a few others have taken a good look 

at this issue and very clearly indicated to us there is discrimination 

in this process. 

Again, as you talk to the people who manage this, they will tell 

you, this is our business and because this is our business we can’t 

tell you exactly how we do the mathematics, but somehow, magically, African Americans score much lower. 

Mr. SCOTT. Okay. Thank you, Mr. Chairman. 

Mr. CLEAVER. I recognize the gentleman from Texas, Mr. Green. 

Mr. GREEN. Thank you, Mr. Chairman. 

Mr. Livingston, I want to make this conspicuously clear. I love 

you. I hold no ill feelings toward you. I would be honored if we 

could have lunch or dinner at my cost. It is not about you. 

And, Ms. Gootkind, because you are the person that I would be 

talking to next, I extend the same invitation to you as well. I love 

you, too. 

Now, Mr. Livingston, before we conclude and I go to Ms. 

Gootkind, let me just ask you a question. Is there a requirement 

that you check the credit history of that CEO or that hospital person that we have been talking about? Is there a requirement that 

you do it? 

Mr. LIVINGSTON. Is there a legal requirement? I don’t know. 

Mr. GREEN. I can tell you. There is no requirement that you 

check it. You may if you choose; and given that you don’t have to 

check the history, you now put the person who may be discriminated against who had the credit concerns in the position of having 

to sue to prove that this invidious discrimination took place, and 

the person, as has been indicated by the testimony I believe of 

Mr.—I am not sure whether it was—was it Mr. Klein? I can’t see. 

Let me just see your name. Mr. Klein. 

People don’t know always know they have been discriminated 

against. It puts them in the rather awkward position of having to 

do the discovery of some sort to find out they actually have a lawsuit. I guess they can go to the EEOC if they have enough understanding about what is going on to do so. But it is an awful burden. 

It costs a lot of money to engage in what we call long-term litigation, and that is what it is. It is not resolved overnight or right 

away. 

So you put the person who is being discriminated against in a 

position of having to expend a large sum of money or find a means 

by which some lawyer who sees that as his mission or her mission 

in life to help people to do this. It is a tough position to be in when 

you have to prove that you have been discriminated against. It 

really is difficult. Assuming that remedy works, it is a very expensive remedy for people to prove. 

Ms. Gootkind, am I pronouncing your name correctly, ma’am? 

Ms. GOOTKIND. ‘‘Gootkind.’’ 

38 

Mr. GREEN. ‘‘Gootkind,’’ excuse me. 

Ms. Gootkind, I just want to leave you with a thought because 

you are in a position to go back to your board and say to them we 

need to take another look at ourselves. You have an opportunity to 

do some good. Go back to the board and tell them that at this hearing, it was made rather clear to me that there are some people who 

look upon us with an eye of suspicion because we don’t have the 

diversity that some people think that we should have. 

There is something we say around here that might apply to your 

circumstance. I have heard it stated in many quarters if you are 

not at the table—and those people who are on your board are at 

the table—if you are not at the table, you are on the menu. Seems 

like a lot of what you talk about has to do with people who are not 

at the table. So they are at least on the agenda which some people 

call the menu. 

So I look forward to either of you accepting my invitation for 

lunch, and I hope you love me as much as I love you. I yield back. 

Mr. CLEAVER. One final question, Ms. Denston. Your testimony 

caught me by some surprise. I love you, too, Mr. Scott, as you are 

leaving. Thank you. 

Ms. Denston, you said that you didn’t know whether or not the 

use of credit reports for employment purposes has increased over 

the past decade, which is fine, and you added because you don’t 

track those numbers. 

Ms. DENSTON. The use of credit reports has not increased from 

our survey back in 2004. In 2004, it was at 61 percent of the selected candidates, and the survey that was took place, the one that 

was released in 2010, was at 60 percent. 

Mr. CLEAVER. Okay. Has your industry increased in size in the 

past decade? 

Ms. DENSTON. I am not aware of those figures. I cannot answer 

that question. I would have no— 

Mr. CLEAVER. Has the volume of sales and contracts in your industry increased over the past decade? 

Ms. DENSTON. Again, I cannot answer that question. I don’t have 

that information, but we can get back to you on that. 

Mr. CLEAVER. Okay. You wouldn’t be in business if you had not 

increased. 

Ms. DENSTON. I can only speak—I work for a private individual, 

and SHRM is an organization I belong to. 

Mr. CLEAVER. Okay. 

Ms. DENSTON. I don’t understand your question. 

Mr. CLEAVER. The question is, you were saying that you didn’t 

know if the credit reports for employment purposes had increased, 

and one of the questions I asked is, has your industry increased the 

volume of sales and contracts? Because if everything is increasing, 

then you are hiring more people, and then you are looking at more 

credit reports. 

Ms. DENSTON. Okay. I do understand that question. But I don’t 

have those figures. I cannot answer that question. I do not know. 

I cannot give you an intelligent answer. 

Mr. CLEAVER. Okay. All right. Thank you. Let me thank all of 

you, all the witnesses. We love all of you. 

39 

The Chair notes that some members may have additional questions for the witnesses which they may wish to submit in writing. 

Therefore, without objection, the hearing record will remain open 

for 30 days for members to submit written questions to the witnesses and to place their responses in the record. 

If no other comments, this subcommittee is adjourned. 

[Whereupon, at 12:12 p.m., the hearing was adjourned.] 

(41) 

A P P E N D I X 

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