Credit-history restrictions in public workforce job banks

The signed original contains the letter and three model notices. View the signed original.

                                                             CLASSIFICATION
   EMPLOYMENT AND TRAINING ADMINISTRATION                    OWI
                                                             CORRESPONDENCE SYMBOL
               ADVISORY SYSTEM
                                                             DWASWS/OWI
          U.S. DEPARTMENT OF LABOR                           DATE
             Washington, D.C. 20210                          October 17, 2014



ADVISORY: TRAINING AND EMPLOYMENT GUIDANCE LETTER NO. 11-14

TO:            AMERICAN JOB CENTERS
               STATE WORKFORCE AGENCIES
               STATE WORKFORCE ADMINISTRATORS
               STATE WORKFORCE LIAISONS
               STATE AND LOCAL WORKFORCE BOARD CHAIRS AND DIRECTORS
               STATE AND LOCAL EQUAL OPPORTUNITY OFFICERS
               STATE LABOR COMMISSIONERS
               WORKFORCE INVESTMENT ACT SECTION 166 INDIAN AND NATIVE
                     AMERICAN GRANTEES
               WORKFORCE INVESTMENT ACT SECTION 167 MIGRANT AND
                     SEASONAL FARMWORKER JOBS PROGRAM GRANTEES
               SENIOR COMMUNITY SERVICE EMPLOYMENT PROGRAM GRANTEES
               EMPLOYMENT AND TRAINING ADMINISTRATION REGIONAL
                     ADMINISTRATORS
               JOB CORPS CONTRACTORS
               RECIPIENTS OF DEPARTMENT OF LABOR FINANCIAL ASSISTANCE
               SUB-RECIPIENTS OF DEPARTMENT OF LABOR FINANCIAL
                    ASSISTANCE

FROM:          PORTIA WU /s/
               Assistant Secretary
               Employment and Training Administration
               NAOMI BARRY-PEREZ /s/
               Director
               Civil Rights Center
SUBJECT:       Update on Complying with Nondiscrimination Provisions: Credit History
               Restrictions and Possible Disparate Impact Based on Race, National Origin, Sex,
               and Disability

1. Purpose. The purpose of this Training and Employment Guidance Letter (TEGL) is to
provide information to the public workforce system and other entities (including the “covered
entities” listed above) that receive federal financial assistance to operate job banks, about the use
of credit information to exclude, screen, or select applicants for employment and to provide tools

 RESCISSIONS                                                EXPIRATION DATE
 None                                                       Continuing

to educate employers about the practical and legal drawbacks of this employment practice. This
guidance is being issued by the Employment and Training Administration (ETA), in conjunction
with the Civil Rights Center (CRC).

This TEGL is accompanied by Training and Employment Notice (TEN) number 12-14:
Promising Practices and Resources for Addressing Long-Term Unemployment, 1 which outlines
proactive steps that a number of employers, employer organizations, and workforce agencies
have implemented or pledged to implement to address the unique barriers to employment facing
many of the long-term unemployed. One of these barriers, the practice of using credit
information to exclude applicants from employment, is the subject of this TEGL. Long-term
unemployed individuals may be more likely than employed or short-term unemployed
individuals to fall into debt due to prolonged periods when they lack sufficient income or
employer-sponsored benefits such as health insurance to meet basic needs. As a result, these
long-term unemployed individuals may be more likely to be negatively impacted by these credit
screening practices.

2. Background. This TEGL addresses the practice of considering job applicants’ credit
information and excluding job seekers with negative credit information from consideration for
job vacancies. 2 According to a 2012 survey by the Society for Human Resource Management
(SHRM), almost 50 percent of its employer members use credit checks 3 in making hiring
decisions. Employers report that they use credit information to evaluate an applicant’s proclivity
for theft or embezzlement, and to reduce potential legal liability for negligent hiring. 4
This TEGL provides covered entities in the public workforce system, including those listed
above (and their employer customers), with tools to ensure that exclusionary policies regarding
workers’ credit information are not at cross-purposes with the system’s efforts to promote
employment opportunities for all workers. In addition, this TEGL provides guidance on
compliance with nondiscrimination obligations when credit information is used in making
employment decisions. This TEGL applies to all jobs available through a covered entity’s job
bank.



1
  Training and Employment Notice 12-14, Promising Practices and Resources for Addressing Long-Term
Unemployment, issued October 17, 2014, available at http://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=7919.
2
  Examples of such job announcements recently found posted in public workforce system job banks include: “Must
have a good credit rating”; “Must be able to pass a credit check prior to hire”; and “Ability to pass pre-employment
background investigation, including credit check.”
3
  Employers can obtain credit information by purchasing it from credit reporting agencies (CRAs). A credit report
provided to an employer may include information on an individual’s current and past employment, credit and
payment history, and collection agency activity, as well as public record information such as bankruptcies,
foreclosures, tax liens, arrests, convictions, and court judgments and filings. See Federal Trade Commission, 40
Years of Experience With the Fair Credit Reporting Act at 1 (July 2011), available at http://www.ftc.gov/reports/40-
years-experience-fair-credit-reporting-act-ftc-staff-report-summary-interpretations; see generally Chi Chi Wu,
Credit Reporting and Repair for Domestic Violence Survivors (National Consumer Law Center Apr. 27, 2010),
available at www.nclc.org/images/pdf/domestic_violence/credit-reporting.pdf.
4
  SHRM, Background Checking – The Use of Credit Background Checks in Hiring Decisions (July 19, 2012),
available at http://www.shrm.org/research/surveyfindings/articles/pages/creditbackgroundchecks.aspx.

3. Actions to be taken by covered entities.
a. Covered entities must provide the attached Notices to Employers (Attachments 1 and 2),
which describe the drawbacks of using credit information in any part of the hiring process, and
encourage employers to adopt best practices for such screening. At a minimum, covered entities
must advise employers, through use of the Notices to Employers, about some of the reasons why
screening job seekers based on credit history may be imprudent:

    •    Negative information on credit reports may reflect that applicants have experienced
         difficult circumstances beyond their control that have no relationship to their ability to
         perform the job, such as a medical emergency, disability, layoff, loss of a spouse, or
         identity theft.
    •    Credit reports may contain inaccuracies. 5
    •    No reliable body of evidence validates the use of credit history in hiring decisions. 6
    •    Using credit history as an employment screening tool may disproportionately exclude
         certain racial and ethnic groups, women, and people with disabilities from hiring
         consideration. 7

5
  See, e.g., Statement of Chi Chi Wu, Esq., National Consumer Law Center, at 4 (Oct. 20, 2010), submitted for
EEOC Meeting on Employer Use of Credit History as a Screening Tool (hereinafter “EEOC Meeting on Credit
History”), available at http://www.eeoc.gov/eeoc/meetings/10-20-10/wu.cfm (summarizing available data on
accuracy showing material error rates of 12 to 37 percent in credit reports). But cf. Michael A. Turner, et al., U.S.
Consumer Credit Reports: Measuring Accuracy and Dispute Impacts (Policy & Economic Research Council
(PERC) 2011), available at http://www.perc.net/wp-content/uploads/2013/09/DQreport.pdf (finding that 1.78% of
credit reports that were subjected to the Fair Credit Reporting Act (FCRA) dispute resolution process were found to
contain errors that had lowered the individual's credit score by 10 or more points, but failing to examine the error
rate for credit reports that were not subjected to the dispute resolution process). Because the results of studies that
measure the accuracy of credit reports vary widely, Congress directed the Federal Trade Commission (FTC) to
conduct a nationwide study of the accuracy of credit reports. See FTC, Report to Congress Under Section 318 and
319 of the Fair and Accurate Credit Transactions Act of 2003 at 2-3, 5 (Dec. 2004), available at
http://www.ftc.gov/reports/facta/041209factarpt.pdf. Accordingly, the FTC has conducted two pilot studies and a
nationwide representative study. See FTC, Fourth Interim Report to Congress Under Section 319 of the Fair and
Accurate Credit Transactions Act at 2-6 (Dec. 2010), available at http://www.ftc.gov/reports/section-319-fair-
accurate-credit-transactions-act-2003-fourth-interim-federal-trade; and FTC, Fifth Interim Report to Congress
Under Section 319 of the Fair and Accurate Credit Transactions Act (Dec. 2012), available at
http://www.ftc.gov/reports/section-319-fair-accurate-credit-transactions-act-2003-fifth-interim-federal-trade. The
FTC’s December 2012 report found that approximately 20 percent of consumers had an error that was corrected by a
credit reporting agency (CRA) after it was disputed, on at least one of their three credit reports; four out of five
consumers who filed disputes experienced some modification to their credit report; and approximately 13 percent of
consumers saw a change in their credit score after the CRAs modified errors on their credit report.
6
  See, e.g., Laura Koppes Bryan & Jerry K. Palmer, Do Job Applicant Credit Histories Predict Performance
Appraisal Ratings or Termination Decisions?, THE PSYCHOLOGIST-MANAGER JOURNAL, Vol. 15, Issue 2, at 106-27
(2012) (finding no relationship between credit history and job performance or negative reasons for terminations);
compare Jeremy B. Bernerth et al., An Empirical Investigation of Dispositional Antecedents and Performance-
Related Outcomes of Credit Scores, J. APPLIED PSYCHOL. Vol. 97, Issue 2, at 469-78 (Mar. 2012) (finding credit
scores may be related to certain measures of job performance, but not to “workplace deviance”); see also Statement
of Michael Aamodt, Ph.D., Principal Consultant, DCI Consulting Group, Inc., at 2, submitted for EEOC Meeting on
Credit History, available at http://www.eeoc.gov/eeoc/meetings/10-20-10/aamodt.cfm (concluding after meta-
analysis of available studies that “[t]here is so little research on the topic that any conclusions would be premature”).
7
  Studies have shown racial disparities in what is considered “good” or “bad” credit history and credit scores. (A
credit score is a number created by the credit bureaus using a mathematical formula based on data from the credit

  In addition, covered entities should advise employers, through use of the notices, about best
  practices to avoid or minimize improper decisions based on an applicant’s credit information:
          o An employer should only take credit information into account if:
                   the employer will be able to show that it has an objective, clearly-defined
                     reason why credit information used to disqualify an applicant is job-related
                     for the position in question and consistent with business necessity (for
                     example, necessary for the safe and efficient performance of the job in
                     question);
                   the use of credit histories is not prohibited by governing state or local law;
                     and
                   the employer will comply with the Fair Credit Reporting Act (FCRA), 15
                     U.S.C. 1681 et seq., which mandates certain procedures when employers
                     screen applicants using credit reports (see below).
          o If the employer has an objective, clearly-defined reason why credit information is
              relevant to a particular job, to ensure consistency with business necessity, the
              employer should:
                   verify whether the information in an applicant’s credit report is accurate and
                     how recent it is;
                   determine the reasons the applicant may have negative information on a
                     credit report;



report; employers typically see credit reports rather than credit scores.) For example, a 2007 Federal Reserve study
reported that the mean credit score (based on a model score used for the study, where a higher score connotes better
credit) for Asians was 54.8; for non-Hispanic whites was 54.0; for Hispanics was 38.2; and for blacks was 25.6. See
Bd. of Governors of the Federal Reserve, Report to the Congress on Credit Scoring and Its Effects on the
Availability and Affordability of Credit at 80 (Aug. 2007), available at
http://www.federalreserve.gov/boarddocs/rptcongress/creditscore/default.htm. A 2004 Texas Department of
Insurance study concluded that “Blacks have an average credit score that is roughly 10% to 35% worse than the
credit scores for Whites” and that “Hispanics have an average credit score that is roughly 5% to 25% worse than
those for Whites.” Texas Dep’t of Insurance, Use of Credit Information by Insurers in Texas at 13 (Dec. 2004),
available at http://www.tdi.texas.gov/reports/credit3.html. Further, a 2000 Freddie Mac study reported that 48% of
African Americans, 34% of Hispanics, and 27% of whites had “bad” credit. See Testimony of Adam Klein, Partner,
Outten & Golden, LLP, before the H. Subcomm. on Financial Services and Consumer Credit, at 1 (Sept. 23, 2010)
(citing Freddie Mac National Consumer Credit Survey (2000)), available at
www.financialservices.house.gov/Media/file/hearings/111/Klein092310.pdf. Additionally, studies have shown that
women, who have higher medical debt that leads to credit card debt, and persons with disabilities, who have higher
medical expenses, could be disadvantaged by credit checks. See, e.g., Statement of Sarah Crawford, Esq., Lawyers
Committee for Civil Rights Under Law, submitted for EEOC Meeting on Credit History at 2, available at
http://www.eeoc.gov/eeoc/meetings/10-20-10/crawford.cfm; see also Mariko Chang, Lifting as We Climb: Women
of Color, Wealth, and America’s Future at 13 (Insight Center for Community and Economic Development Spring
2010), available at http://www.insightcced.org/uploads/CRWG/LiftingAsWeClimb-WomenWealth-Report-
InsightCenter-Spring2010.pdf (women are more likely to have credit card debt than men, and the overall debt
burden for black women is among the highest of all groups). Disparities in credit history may be attributed to
disparities in income levels, unemployment, and health insurance coverage, among other factors. See, e.g.,
Testimony of Stuart J. Ishimaru, Then-Acting Chairman of the EEOC, before the Hawaii State Senate Committee on
Labor at 2-3 (Mar. 19, 2009), available at
http://www.capitol.hawaii.gov/session2009/testimony/HB31_TESTIMONY_LBR_03-19-09_LATE.pdf

                   determine whether the applicant has taken steps, such as credit counseling,
                    to improve any of the circumstances reflected in the negative information;
                   not discourage job seekers by stating in vacancy announcements that only
                    those with “good credit” need apply; and
                   not rely exclusively on negative information in a credit report to
                    automatically disqualify applicants; instead, the employer should always
                    consider other relevant information regarding the applicant’s fitness for the
                    job the applicant is seeking.

b. Covered entities should conduct their activities using safeguards to prevent discrimination
against individuals in protected groups based on their credit information. Using negative credit
information to disqualify applicants from hiring consideration may amount to unlawful
discrimination under federal civil rights laws, as discussed below. Covered entities also should
familiarize themselves with the FCRA and any state or local laws that impose conditions on the
use of credit information to screen and select applicants for employment or to make other
employment decisions. The information contained in this TEGL does not supersede those laws.
 i. Posting job announcements in Job Banks. Covered entities should establish policies and
 procedures to ensure that job announcements containing restrictions based on credit
 information are handled as described below.
      When an employer registers with the American Job Center (AJC) (or other covered
       entity) to use a job bank, the applicable covered entity must provide the employer a
       notice that appears as Attachment 1 to this TEGL. This notice explains practical
       considerations that counsel against employers excluding job seekers on the basis of
       negative credit information. This notice also advises employers not to automatically
       exclude job seekers based on their credit history or any other hiring criterion unless it
       is job-related and consistent with business necessity, because these types of
       employment practices may violate federal civil rights laws if they have a disparate
       impact on protected groups. In addition, the notice provides information for employers
       about their obligations under the FCRA, which requires employers to obtain
       applicants’ permission before asking a consumer reporting agency for a credit report
       and to provide applicants with a copy of the report and a summary of their rights
       before taking adverse action, such as denying employment.
      Covered entities should use a system (automated or otherwise) for identifying job
       postings that include hiring restrictions based on credit history. This system may be
       the same system that entities already use to identify other discriminatory language in
       job postings.
      When job postings that exclude applicants based on credit history have been identified,
       covered entities must provide employers that have posted these vacancy
       announcements the notice that appears as Attachment 2 to this TEGL. This notice
       states that the employer will be given the opportunity to remove or edit the vacancy
       announcement. The notice and opportunity to remove or edit must be provided to the
       employer whether the vacancy announcement has been posted directly with the
       covered entity or has instead been made available in the Job Bank through other
       means.

        Any job postings containing language that excludes candidates based on credit history
         should remain posted only when accompanied by the Notice to Job Seekers that
         appears as Attachment 3 to this TEGL. This notice explains that the exclusions in the
         posting may be unlawful under certain circumstances. The notice further informs job
         seekers that the covered entity does not prohibit individuals with negative credit
         information from applying for the posted position, and that they may obtain a free copy
         of their credit report by visiting www.AnnualCreditReport.com or calling 1-877-322-
         8228. Covered entities that accept job applications from job seekers should continue
         to forward to employers the applications of all applicants who otherwise meet the job
         qualifications, despite language in vacancy announcements excluding candidates based
         on their credit history.

The Department recognizes that covered entities have a variety of systems in place to comply
with nondiscrimination obligations, and that such entities engage with employer customers in
varying ways. Covered entities may elect to take steps other than those listed above that are at
least equally effective in preventing unlawful exclusions based on credit history, except that
covered entities must provide the attached notices as discussed in this TEGL.

    ii. Screening and referral based on credit history restrictions. When screening or referring
    applicants for job postings, job orders, training, or other employment-related services:
        Covered entity staff should refrain from screening and refusing to make job referrals
         based on what may be perceived (by the applicant, staff, or employer) as negative
         credit information. Job seekers who are referred for positions where the job posting
         states that the employer takes credit history into account must receive a copy of the
         notice to job seekers (see Attachment 3), along with the job announcement.
        Nothing in this TEGL prevents covered entity staff from taking into account an
         individual’s credit history for purposes of providing appropriate employment-related
         services or participating in programs designed to provide credit-related help.

c. Covered entities are also encouraged to consult the TEN 12-14: Promising Practices and
Resources for Addressing Long-Term Unemployment, which contains best practices for
overcoming barriers to employment for the long-term unemployed. 8

4. Applicable civil rights statutes, regulations, and guidance.
The nondiscrimination provisions that apply to the federally-assisted workforce system prohibit
intentional discrimination on the basis of race, national origin, sex, disability and other protected
bases, as well as policies or practices that appear neutral, but which have a disparate impact on
these protected groups and cannot be justified as job-related and consistent with business
necessity. Although individuals with negative credit histories are not a protected group under
the applicable federal civil rights laws, and FCRA permits the use of credit reports for
employment decisions, antidiscrimination laws may be implicated when credit history is used to

8
 Training and Employment Notice 12-14, Promising Practices and Resources for Addressing Long-Term
Unemployment, October 17, 2014 available at http://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=7919.

make employment decisions. For example, if applicants of a particular race receive more
favorable hiring consideration than applicants of another race who have the same or similar
negative credit information, this could indicate a form of intentional discrimination. As another
example, if an employer screens out all workers who have negative credit information, this may
have a disparate impact on certain protected groups whose members have negative credit history
at a disproportionately higher rate than other groups. To determine whether a particular practice
violates federal antidiscrimination statutes, an analysis of the relevant facts of the particular case
and, if available, more refined data would be necessary.
a.      Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. 2000e et seq., prohibits
employment discrimination based on race, color, religion, sex, and national origin. See 42
U.S.C. 2000e-2. Entities within the public workforce system, such as State Workforce Agencies
and AJCs, may be regarded as “employment agencies” under Title VII. 9 Thus, Title VII
prohibits employment agencies from failing or refusing to refer an individual for employment or
otherwise discriminating against any individual based on race, color, religion, sex, or national
origin. 42 U.S.C. 2000e-2(b). In addition, employment agencies may be liable for violating
Title VII if they “print or publish or cause to be printed” any job announcement that
discriminates based on race, color, religion, sex, or national origin. 10

The Equal Employment Opportunity Commission (EEOC), the federal agency that administers
and enforces Title VII, 11 held a public meeting on October 20, 2010, on Employer Use of Credit
History as a Screening Tool. 12 Credit check policies, when used as employee selection tools, are
subject to Title VII employment discrimination analysis. 13

9
   See 42 U.S.C. 2000e(c) (defining “employment agency” as “any person regularly undertaking with or without
compensation to procure employees for an employer or to procure for employees opportunities to work for an
employer”); EEOC, COMPLIANCE MANUAL, SEC. 2, THRESHOLD ISSUES (2000), available at
http://www.eeoc.gov/policy/docs/threshold.html. EEOC POLICY GUIDANCE, NO. N-917.002, WHAT CONSTITUTES
AN EMPLOYMENT AGENCY UNDER TITLE VII, HOW SHOULD CHARGES AGAINST EMPLOYMENT AGENCIES BE
INVESTIGATED, AND WHAT REMEDIES CAN BE OBTAINED FOR EMPLOYMENT AGENCY VIOLATIONS OF THE ACT?
available at 1991 WL 11665181, at *1-2 & n.1 (Sept. 20, 1991).
10
    42 U.S.C. 2000e-3(b). See, however, 47 U.S.C. 230, which may shield Internet-based Job Banks from civil
liability for posting content created by third parties.
11
    The Department’s Office of Federal Contract Compliance Programs (OFCCP) administers Executive Order
11246, which, similar to Title VII, prohibits covered federal contractors, federally-assisted construction contractors,
and covered subcontractors from discriminating in employment decisions on the basis of race, color, religion, sex,
sexual orientation, gender identity, or national origin. See Executive Order 11246, as amended. OFCCP enforces
the nondiscrimination requirements of Executive Order 11246 in accordance with Title VII. The Vietnam Era
Veterans Readjustment Assistance Act of 1974, as amended (VEVRAA), which requires covered federal
government contractors to post certain categories of job announcements in the state workforce agency job bank or
with American Job Centers, also is administered and enforced by OFCCP. See 38 U.S.C. 4212(a)(2).
12
    Testimony and a transcript of that meeting are available at http://www.eeoc.gov/eeoc/meetings/10-20-10/.
13
    See Ishimaru Testimony at 1; see also EEOC, “Pre-Employment Inquiries and Credit Rating or Economic
Status,” available at http://www.eeoc.gov/laws/practices/financial_information.cfm (“[i]nquir[ies] into an
applicant’s current or past assets, liabilities, or credit rating” that are not job-related and consistent with business
necessity “generally should be avoided because they tend to impact more adversely on minorities and females”); see
EEOC Factsheet “Employment Tests and Selection Procedures” (last modified Sept. 23, 2010), available at
http://www.eeoc.gov/policy/docs/factemployment_procedures.html; EEOC Informal Discussion Letter, Title VII:
Employer Use of Credit Checks (Mar. 9, 2010), available at http://www.eeoc.gov/eeoc/foia/letters/2010/titlevii-
employer-creditck.html (“Title VII prohibits an employment practice that disproportionately screens out racial

b.       Title VI of the Civil Rights Act of 1964, 42 U.S.C. 2000d, applies to all programs or
activities receiving federal financial assistance, such as covered entities that receive assistance
under the Workforce Investment Act and/or the Wagner-Peyser Act. Title VI and its
implementing regulations prohibit any program or activity from excluding from participation in
or denying the benefits of programs, or otherwise subjecting anyone to discrimination, on the
ground of race, color, or national origin. 42 U.S.C. 2000d; 29 C.F.R. 31.3(a). The Department’s
CRC administers and enforces these requirements.
Recipients may not use any “criteria or methods of administration which have the effect of
subjecting individuals to discrimination because of race, color or national origin.” 29 C.F.R.
31.3(b)(2). Further, the “selection and referral of individuals for job openings or training
opportunities and all other activities performed by or through employment service offices” must
be done without regard to race, color, or national origin. 29 C.F.R. 31.3(d)(1)(i).
c.      The Americans with Disabilities Act of 1990 (ADA), 42 U.S.C. 12101 et seq., prohibits
discrimination against qualified individuals on the basis of disability. 42 U.S.C. 12112. The
ADA also applies to employment agencies, 42 U.S.C. 12111(2), as well as state and local
government programs, services, and activities, 42 U.S.C. 12132; 28 C.F.R. Part 35. The CRC is
delegated responsibility by the Department of Justice for enforcing Title II of the ADA with
regard to “[a]ll programs, services, and regulatory activities relating to labor and the work force.”
28 C.F.R. 35.190(b)(7).

d.      The Rehabilitation Act of 1973, 29 U.S.C. 794 (Section 504), prohibits discrimination
against qualified individuals with a disability “under any program or activity receiving federal
financial assistance.” 14 CRC administers and enforces the Department’s regulations
implementing Section 504 that apply to recipients of the Department’s financial assistance.
These regulations state that no qualified individual shall, on the basis of disability, “be excluded
from participation in, be denied the benefits of, or otherwise be subjected to discrimination under
any program or activity,” 29 C.F.R. 32.4(a), nor may a recipient use criteria or administrative
methods that “have the effect of subjecting qualified . . . individuals [with disabilities] to
discrimination on the basis of [disability].” 29 C.F.R. 32.4(b)(4)(i).

e.      The Workforce Investment Act (WIA), 29 U.S.C. 2801 et seq., is the key source of
federal assistance for state and local workforce development activities. The relevant
nondiscrimination provision in WIA states that no “individual shall be excluded from
participation in, denied the benefits of, subjected to discrimination under, or denied employment
in the administration of or in connection with, any such program or activity” on the basis of race,

minorities, women, or another protected group unless the practice is job related and consistent with business
necessity. Thus, if an employer’s use of credit information disproportionately excludes African-American and
Hispanic candidates, the practice would be unlawful unless the employer could establish that the employment
practice is needed for it to operate safely or efficiently.”).
14
   The Department’s OFCCP enforces Section 503 of the Rehabilitation Act, 29 U.S.C. 793, which requires covered
federal contractors and subcontractors to take affirmative action to employ and advance in employment qualified
people with disabilities. The same standards that are applicable under the ADA to determine whether discrimination
has taken place also apply to Sections 503 and 504 of the Rehabilitation Act. Similar standards apply under WIA
Section 188 and its implementing regulations.

color, religion, sex, national origin, age, disability, or political affiliation or belief. 29 U.S.C.
2938(a)(2). The regulations implementing this provision, which CRC administers and enforces,
apply to all programs and activities that are operated by AJC (formerly known as One-Stop)
partners as part of the AJC delivery system. 29 C.F.R. 37.2(a)(2). Similarly, under the Wagner-
Peyser Act regulations, states are required to assure nondiscrimination regarding any services or
activities authorized under that Act. 20 C.F.R. 652.8(j)(1). 15
The WIA nondiscrimination regulations prohibit recipients from using “standards, procedures,
criteria, or administrative methods” that have the purpose or effect of subjecting individuals to
discrimination on a prohibited ground due to the recipient’s administration of programs
providing aid, benefits, services, training or facilities “in any manner.” 29 C.F.R. 37.6(d). In
addition, the Wagner-Peyser Act regulations specifically require states to “[a]ssure that
discriminatory job orders will not be accepted, except where the stated requirement is a bona fide
occupational qualification (BFOQ).” 20 C.F.R. 652.8(j)(2).


5. Action Requested. Covered entities and their program operators are directed to review their
existing policies and procedures and make any changes necessary to implement the guidance
provided in this TEGL. They are also encouraged to consult TEN 12-14: Promising Practices
and Resources for Addressing Long-Term Unemployment, 16 which contains best practices for
overcoming barriers to employment for the long-term unemployed.

6. Contact Information. Inquiries about incentive programs and other efforts to promote
employment opportunities should be addressed to the appropriate ETA regional or national
office. Inquiries about civil rights issues in the public workforce system should be addressed to
CRC by phone at 202-693-6500 (voice) or 202-693-6516 (TTY); by relay at 800-877-8339
(TTY/TDD), or 877-709-5797 or myfedvrs.tv (video); or by e-mail at
[email protected]. Complaints alleging discrimination by entities in the system may
be filed with CRC by postal mail, e-mail, or fax, addressed to Director, Civil Rights Center, U.S.
Department of Labor, 200 Constitution Avenue, NW, Room N-4123, Washington, DC 20210,
[email protected], 202-693-6505 (fax). Further information about the
discrimination complaint process is available on CRC's website at
http://www.dol.gov/oasam/programs/crc/external-enforc-complaints.htm.

Inquiries relating to discrimination in employment by federal contractors and subcontractors
should be addressed to Office of Federal Contract Compliance Programs, U.S. Department of
Labor, 200 Constitution Avenue, NW, Room C-3325, Washington, DC 20210. Further
information is available at: http://www.dol.gov/ofccp, 1-800-397-6251 (Help Desk).



15
   The Workforce Innovation and Opportunity Act (WIOA), signed into law on July 22, 2014, supersedes the
Workforce Investment Act of 1998 and amends the Wagner-Peyser Act and the Rehabilitation Act of 1973. In
general, WIOA takes effect on July 1, 2015, which is the first full program year after it was enacted. Enactment of
WIOA in no way changes the nondiscrimination and equal opportunity obligations discussed in this TEGL.
16
   Training and Employment Notice 12-14, Promising Practices and Resources for Addressing Long-Term
Unemployment, issued October 17, 2014, available at http://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=7919.

7. Attachments.
   • Notice to Employers Regarding Job Bank Nondiscrimination and Hiring Restrictions
       Based on Credit Information

   •   Notice to Employers Regarding Job Posting Containing Hiring Restrictions Based on
       Credit Information

   •   Notice to Job Seekers to be Attached to Job Postings with Hiring Restrictions Based on
       Credit Information

Attachment 1: https://www.dol.gov/sites/dolgov/files/ETA/advisories/TEGL/2014/TEGL-11-14_Attachment1_Acc.pdf

                                                                                  Attachment #1


Notice to Employers Regarding Job Bank Nondiscrimination and Hiring Restrictions
Based on Credit Information

We advise employers not to automatically exclude job seekers based on their credit
history unless the employer can show that a credit history restriction is related to the job
posted and consistent with the employer’s business needs. While employers are
permitted to use credit reports in hiring and other decisions, this type of screening
requirement may unjustifiably limit the employment opportunities of applicants in
protected groups and may therefore violate federal civil rights laws. Any employer that
submits a job announcement containing restrictions or exclusions based on an applicant’s
credit information will have an opportunity to edit or remove the announcement.

Practical Considerations:
•   Screening job seekers based on their credit information may be imprudent because:
       o Negative information on credit reports may reflect that applicants have experienced
           difficult circumstances beyond their control that have no relationship to their ability
           to perform the job, such as a medical emergency, disability, layoff, loss of a spouse,
           or identity theft.
       o Credit reports may contain inaccuracies.
       o No reliable body of evidence supports the use of credit history in hiring decisions.
       o Using credit history as an employment screening tool may disproportionately
           exclude certain racial and ethnic groups, women, and people with disabilities from
           hiring consideration.

•   Best practices to avoid or minimize improper decisions based on an applicant’s credit
    history:

        o An employer should only take credit information into account if:
                the employer will be able to show that it has an objective, clearly-defined
                  reason why credit information used to disqualify an applicant is job-related
                  for the position in question and consistent with business necessity (for
                  example, necessary for the safe and efficient performance of the job in
                  question);
                the use of credit histories is not prohibited by governing state or local law;
                  and
                the employer will comply with the Fair Credit Reporting Act (FCRA), 15
                  U.S.C. 1681 et seq., which mandates certain procedures when employers
                  screen applicants using credit reports (see below).
        o If the employer has an objective, clearly-defined reason why credit information is
          relevant to a particular job, to ensure consistency with business necessity, the
          employer should:
                verify whether the information in an applicant’s credit report is accurate and
                  how recent it is;
                determine the reasons the applicant may have negative information on a
                  credit report;

                  determine whether the applicant has taken steps, such as credit counseling,
                   to improve any of the circumstances reflected in the negative information;
                  not discourage job seekers by stating in vacancy announcements that only
                   those with “good credit” need apply; and
                  not rely exclusively on negative information in a credit report to
                   automatically disqualify applicants; instead, the employer should always
                   consider other relevant information regarding the applicant’s fitness for the
                   job the applicant is seeking.

Relevant Information from Federal Agencies

The U.S. Department of Labor, Civil Rights Center (CRC), is responsible for investigating
complaints concerning public workforce system entities and programs that allege
discrimination on the basis of race, color, religion, sex, national origin, or disability, among
others. More information about the laws CRC enforces and its external complaint process is
available at http://www.dol.gov/oasam/programs/crc/external-enforc-complaints.htm, (202)
693-6500 (voice) or 202-693-6516 (TTY); by relay at 800-877-8339 (TTY/TDD), or 877-709-
5797 or myfedvrs.tv (video); or by e-mail at [email protected].

The Equal Employment Opportunity Commission (EEOC) is responsible for investigating
charges of employment discrimination on the basis of race, color, religion, national origin, or
sex under Title VII of the Civil Rights Act of 1964, and disability under Title I of the
Americans with Disabilities Act of 1990. Both laws apply to employers with 15 or more
employees. More information about the laws EEOC enforces and its complaint process is
available at http://www.eeoc.gov/facts/howtofil.html, (800) 669-4000 (voice), or (800) 669-
6820 (TTY).

The Federal Trade Commission enforces the Fair Credit Reporting Act, which requires that
employers:
   • Tell the applicant that the employer may obtain a credit report and get the applicant’s
      written consent before asking a consumer reporting agency for a credit report.
   • Provide the applicant with a copy of the report and a summary of the applicant’s rights
      before the employer takes an adverse action (such as denying an application for
      employment) based on information in the credit report.

For more information, please visit: http://business.ftc.gov/documents/bus08-using-consumer-
reports-what-employers-need-know.

Attachment 2: https://www.dol.gov/sites/dolgov/files/ETA/advisories/TEGL/2014/TEGL-11-14_Attachment2_Acc.pdf

                                                                                      Attachment #2


Notice to Employers Regarding Job Postings Containing Hiring Restrictions Based on
Credit Information

The public workforce system has identified hiring restrictions based on credit history in the
job announcement submitted for posting by this employer or in a job announcement
referenced in a job bank.

We advise employers not to automatically exclude job seekers based on their credit history
unless the employer can show that a credit history restriction is related to the job posted
and consistent with the employer’s business needs. While employers are permitted to use
credit reports in hiring and other decisions, this type of screening requirement may
unjustifiably limit the employment opportunities of applicants in protected groups and
may therefore violate federal civil rights laws. Any employer that submits a job
announcement containing restrictions or exclusions based on an applicant’s credit
information has an opportunity to edit or remove the announcement.

Please take this opportunity to remove or edit the announcement as needed. If you
continue to post the announcement as is, the announcement will be posted along with
information for job seekers about the civil rights laws that may apply to restrictions based
on credit history.

Practical Considerations:

•       Screening job seekers based on their credit information may be imprudent because:
           o Negative information on credit reports may reflect that applicants have experienced
               difficult circumstances beyond their control that have no relationship to their ability
               to perform the job, such as a medical emergency, disability, layoff, loss of a spouse,
               or identity theft.
           o Credit reports may contain inaccuracies.
           o No reliable body of evidence supports the use of credit history in hiring decisions.
           o Using credit history as an employment screening tool may disproportionately exclude
               certain racial and ethnic groups, women, and people with disabilities from hiring
               consideration.

    •    Best practices to avoid or minimize improper decisions based on an applicant’s credit
         history:

             o An employer should only take credit information into account if:
                   the employer will be able to show that it has an objective, clearly-defined
                     reason why credit information used to disqualify an applicant is job-related
                     for the position in question and consistent with business necessity (for
                     example, necessary for the safe and efficient performance of the job in
                     question);
                   the use of credit histories is not prohibited by governing state or local law;
                     and

                  the employer will comply with the Fair Credit Reporting Act (FCRA), 15
                   U.S.C. 1681 et seq., which mandates certain procedures when employers
                   screen applicants using credit reports (see below).
         o If the employer has an objective, clearly-defined reason why credit information is
           relevant to a particular job, to ensure consistency with business necessity, the
           employer should:
                 verify whether the information in an applicant’s credit report is accurate and
                   how recent it is;
                 determine the reasons the applicant may have negative information on a
                   credit report;
                 determine whether the applicant has taken steps, such as credit counseling,
                   to improve any of the circumstances reflected in the negative information;
                 not discourage job seekers by stating in vacancy announcements that only
                   those with “good credit” need apply; and
                 not rely exclusively on negative information in a credit report to
                   automatically disqualify applicants; instead, the employer should always
                   consider other relevant information regarding the applicant’s fitness for the
                   job the applicant is seeking.

Relevant Information from Federal Agencies

The U.S. Department of Labor, Civil Rights Center (CRC), is responsible for investigating
complaints concerning public workforce system entities and programs that allege discrimination
on the basis of race, color, religion, sex, national origin, or disability, among others. More
information about the laws CRC enforces and its external complaint process is available at
http://www.dol.gov/oasam/programs/crc/external-enforc-complaints.htm, (202) 693-6500 (voice)
or 202-693-6516 (TTY); by relay at 800-877-8339 (TTY/TDD), or 877-709-5797 or myfedvrs.tv
(video); or by e-mail at [email protected].

The Equal Employment Opportunity Commission (EEOC) is responsible for investigating
charges of employment discrimination on the basis of race, color, religion, national origin, or sex
under Title VII of the Civil Rights Act of 1964, and disability under Title I of the Americans
with Disabilities Act of 1990. Both laws apply to employers with 15 or more employees. More
information about the laws EEOC enforces and its complaint process is available at
http://www.eeoc.gov/facts/howtofil.html, (800) 669-4000 (voice), or (800) 669-6820 (TTY).

The Federal Trade Commission (FTC) enforces the Fair Credit Reporting Act, which requires
that employers:
      • Tell the applicant that the employer may obtain a credit report and get the applicant’s
         written consent before asking a consumer reporting agency for a credit report.
      • Provide the applicant with a copy of the report and a summary of the applicant’s rights
         before the employer takes an adverse action (such as denying an application for
         employment) based on information in the credit report.

For more information, please visit: http://business.ftc.gov/documents/bus08-using-consumer-
reports-what-employers-need-know.

Attachment 3: https://www.dol.gov/sites/dolgov/files/ETA/advisories/TEGL/2014/TEGL-11-14_Attachment3_Acc.pdf

                                                                                   Attachment #3


Notice to Job Seekers Regarding Job Postings with Hiring Restrictions Based on Credit
Information

Notice: The attached job announcement contains a hiring restriction based on credit
information. You are not prohibited from applying for this job, even though you may have
“bad” credit or a poor credit history. Further, rejecting you for reasons related to credit
may violate federal civil rights laws, depending on the circumstances. Please see below for
more information.

Relevant Information from Federal Agencies

The U.S. Department of Labor, Civil Rights Center (CRC), is responsible for investigating
complaints concerning public workforce system entities and programs that allege discrimination
on the bases of race, color, religion, sex, national origin, or disability, among others. Inquiries
about civil rights issues in the public workforce system should be addressed to CRC by phone at
202-693-6500 (voice) or 202-693-6516 (TTY); by relay at 800-877-8339 (TTY/TDD), or 877-
709-5797 or myfedvrs.tv (video); or by e-mail at [email protected]. Complaints
alleging discrimination by entities in the system may be filed with CRC by postal mail, e-mail, or
fax, addressed to Director, Civil Rights Center, U.S. Department of Labor, 200 Constitution
Avenue, NW, Room N-4123, Washington, DC 20210, [email protected], 202-
693-6505 (fax). Further information about the discrimination complaint process is available on
CRC's website at http://www.dol.gov/oasam/programs/crc/external-enforc-complaints.htm.

The Equal Employment Opportunity Commission (EEOC) is responsible for investigating
charges of employment discrimination on the bases of race, color, religion, national origin or sex
under Title VII of the Civil Rights Act of 1964, and disability under Title I of the Americans
with Disabilities Act of 1990. Both laws apply to employers with 15 or more employees. More
information about the laws EEOC enforces and its complaint process is available at
http://www.eeoc.gov/facts/howtofil.html, (800) 669-4000 (voice), or (800) 669-6820 (TTY).

The Federal Trade Commission (FTC) enforces the Fair Credit Reporting Act, which requires
that employers:
      • Tell the applicant that the employer may obtain a credit report and get the applicant’s
         written consent before asking a consumer reporting agency for a credit report.
      • Provide the applicant with a copy of the report and a summary of the applicant’s rights
         before the employer takes an adverse action (such as denying an application for
         employment) based on information in the credit report.

For more information, please visit:
http://www.consumer.ftc.gov/articles/0157-employment-background-checks.

To obtain a free copy of your credit report, visit www.AnnualCreditReport.com or call 1-
877-322-8228.