March 19, 2024 — Press Release

H. 1434 Will Bar Massachusetts Employers from Using Credit Reports in Employment Decisions

BOSTON – Last week, the Massachusetts House of Representatives passed H.1434, the Fair Chance in Employment Act, confirming that credit reports have no place in the employment process. Consumer advocates have demonstrated that credit reports don’t predict job performance and that they shouldn’t be used to make hiring and employment decisions. 

“Credit scores are riddled with errors, they blatantly reflect current and historical racial inequities and injustices, and they don’t accurately predict job performance,” said Michael Best, senior attorney at the National Consumer Law Center. “We’re glad to see lawmakers reducing barriers to employment for Massachusetts residents who want to work, and hope the Senate will follow suit.”

The Fair Chance in Employment Act (S.1144 & H.1434), introduced by Sen. Mike Barrett and former Rep. Josh Cutler, aims to regulate the use of credit reports by employers by barring employers from considering an employee or job applicant’s credit report in hiring or employment decisions. Despite the failure of these reports to predict job performance, about half of all employers obtain credit reports on at least some of their job applicants. 

“As the pandemic emphasized, a bad credit score is often the result of unavoidable circumstances like illness or being laid off. These types of setbacks shouldn’t be a barrier for employment,” said State Senator Mike Barrett, chief sponsor of the Senate bill. “Pleased to see the bill moving.”

Even if credit reports did predict job performance, the Federal Trade Commission found that 20% of consumers had verified errors in their reports and 5% had errors so serious it could cause them to be denied credit or a job. 

Data in credit reports also reflects the economic consequences of the long history of racial discrimination in our nation, with credit scores often lower in communities of color—in Boston, 91 points lower— than in predominantly white areas. 

The bill now heads to the Senate, where we urge the Senate to swiftly pass the bill and send it to the Governor’s desk. 

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