Karpa: "An Equal Opportunity Employer"

An Equal Opportunity Employer:
Proposed Judicial and Legislative

Solutions to Restrict the Disparate Impact
Caused By Employer Use of Credit
Checks
TAYLORE KARPA*
ABSTRACT
In todays society, prospective employees are subject to many different
evaluative methods by employers when applying for a job. While most
methods are narrowly tailored to the goal of determining whether an
applicant is adequately qualified, studies show that this cannot be said for
the information provided by credit checks. This Note discusses the use of
credit checks in the hiring process and argues that such use is problematic
because it has a disproportionately negative effect on minorities. This Note
argues that action must be taken to strictly curtail an employers ability to
use credit information in making employment decisions. It contends that
the Massachusetts legislative and judicial climates are prime for resolving
this problem through litigation alleging disparate impact, a bill proposing
to restrict the practice significantly, or both. In support of this argument,
this Note outlines the current state of disparate impact law in
Massachusetts and explains the disparate impact created by this practice.
* Candidate for Juris Doctor, New England Law | Boston (2015). B.A., magna cum laude,
Political Science, Northeastern University (2012).
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INTRODUCTION
lthough it is a well-known faux pas to discuss money with

strangers,1 employers have been breaking with etiquette for years
by using job applicants credit histories to make hiring decisions.2
While most employers use methods that are narrowly tailored to the goal
of evaluating prospective employees qualifications and characteristics,3
this cannot be said about the use of credit checks.4 Arguably, credit
information does not reflect an applicants substantive, professional
qualifications, or predict whether an applicant will be a successful
employee.5 Of greatest concern is the fact that credit scores vary across
racial lines, with minority groups generally having lower credit scores than
non-minority groups.6 Credit checks, therefore, have a disproportionately
negative impact on minority job applicants.7 As a result, this practice has
caught the eye of the Massachusetts legal community and efforts have been
made to ameliorate this issue through increased awareness and proposed
legislation.8 These efforts focus on eliminating the discriminatory effect of
credit history on potential employees.9
This Note argues that this practice is problematic because it
disproportionately excludes minorities from being hired. Affirmative
action must be taken to greatly restrict an employers ability to use credit
information when making employment decisions. The Massachusetts
legislative and judicial climates are prime for resolving this problem by
either litigation alleging disparate impact, a bill proposing to restrict the
practice significantly, or both. This argument is supported by the current
state of the law on disparate impact in Massachusetts, statistical
information demonstrating the distribution of credit ratings between
minority and non-minority groups, and information on employers general
hiring practices.
1 See Stacey Bradford, Money and Manners: Are You Offensive?, CBS MONEY WATCH (Sept. 13,
2010, 1:24 PM), http://www.cbsnews.com/news/money-and-manners-are-you-offensive/.
2
See infra Part I.A.

See infra Part I.A.
4 See infra Part I.C.1.
7 See infra Part I.C. This problem is exacerbated by the recent economic recession: loss of
employment or inability to pay for the increased cost of living has caused a general decline in
credit scores throughout the country. See infra Part I.C. A lower credit score means a lower
perception of an applicants employability by the employer. See infra Part I.C.
3
8
9
See infra Part I.E.

See infra Part I.E.1.
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Credit Checks & Disparate Impact
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Part I of this Note discusses the background of disparate impact law

generally; provides a history of employers use of credit checks; explains
the development and expansion of disparate impact case law in
Massachusetts; and outlines recently proposed legislation seeking to
restrict the use of credit checks. Part II explains why using credit checks in
employment decisions is problematic. Part III proposes two possible
solutions to this problembringing a case alleging disparate impact and
proposing a stronger bill sharply restricting the employer use of credit
checks.
I.
Background
A. Description of Employer Selection Practices
For years, employers have used pre-employment testing or other

evaluative practices to vet potential employees.10 These pre-employment
practices and procedures seek to screen and narrow the pool of applicants
in an effort to hire the candidate that is most qualified and least likely to
create problems in the workplace.11 The kinds of evaluative measures used
by employers vary depending on the company and the type of job
offered.12 Common forms of pre-employment evaluation include cognitive,
personality, medical, physical ability, sample job tasks, criminal
background, and credit checks.13
The use of screening methods are subject to federal and state
regulations, namely through Title VII of the Civil Rights Act of 1964 and
chapter 151B of the Massachusetts General Laws.14 These laws outline the
lawful scope of such procedures, stating that employers may test potential
employees as they see fit, so long as the tests are not intended, designed, or
used to discriminate against or disproportionately exclude the applicant on
the basis of race, religion, national origin, disability, age, or gender. 15 In
10
See EEOC, EMPLOYMENT TESTS AND SELECTION PROCEDURES, (Sept. 23, 2010) available at
http://www.eeoc.gov/policy/docs/factemployment_procedures.html [hereinafter EEOC TESTS].
11 See id. The practice of employment testing has increased over the years as a way to
preempt problems in the workplace, such as workplace violence or discrimination. Id.
12 See id.
13 Id. Personality tests are used to determine the extent to which a potential employee
possesses desired traits or dispositions, such as dependability or cooperativeness. EEOC
TESTS, supra note 10. Such tests are also used to predict the probability that an applicant would
engage in undesired conduct like theft or chronic absenteeism. Id. In this way, personality
tests can be used as a method of assessing the integrity of a potential employee. See id.
14
15
Id.
Id.; see 42 U.S.C. 2000e-2(k) (2012); MASS. GEN. LAWS ch. 151B, 4 (2012).
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addition, it is unlawful to use selection practices that are not job-related or

inconsistent with business necessity.16
The use of credit as a test refers to an employers practice of
obtaining and reviewing the financial and credit history of job applicants.17
Employers have used this information to screen applicants with increasing
frequency,18 to the detriment of job-seekers with poor credit.19 Many
applicants with bad credit or unfavorable financial histories have been
denied employment opportunities by employers who asked for such
information.20 The business community argues that credit histories are
helpful to determine the responsibility level of potential employees.21
B. Legal Definition of Disparate Impact and Establishing a Claim
A claim for disparate impact alleges that a particular practice, while
not facially discriminatory, is discriminatory nonetheless due to its
disproportionately negative effect on a protected group.22 In
Massachusetts, race, religion, gender, age, and disability are recognized as
protected groups.23 A disparate impact claim can be brought where there is
a facially neutral employment practice, that, when applied, has an
adverse impact on employees that are part of a recognized protected
group.24 Simply put, disparate impact focuses on employment practices or
policies that are fair in form, but discriminatory in operation.25
16
42 U.S.C. 2000e-2(k).
EEOC TESTS, supra note 10.
18 Beverley Earle et al., The Legality of Pre-Employment Credit Checks: A Proposed Model Statute
to Remedy an Inequity, 20 VA. J. SOC. POLY & L. 159, 16768 (2012) (stating that 60% of
employers use credit checks as a hiring tool, which is a 35% increase from 2001); Sharon Goott
Nissim, Stopping a Vicious Cycle: The Problems with Credit Checks in Employment and Strategies to
Limit Their Use, 18 GEO. J. ON POVERTY L. & POLY 45, 47 (2010).
19 Jonathan Berr, Should Employers Be Barred from Using Credit Reports in Hiring?, CBS (Dec.
17, 2013, 5:12 PM), http://www.cbsnews.com/news/should-employers-be-prohibited-fromusing-credit-reports-in-hiring/; see also Earle et al., supra note 18, at 167. Contra Nissim, supra
note 18, at 4648.
20 See Nissim, supra note 18, at 46; Berr, supra note 19.
21 See infra notes 203205 and accompanying text.
22 Sch. Comm. of Braintree v. Mass. Commn Against Discrimination, 386 N.E.2d 1251, 1254
(Mass. 1979); M. AMY CARLIN ET AL., HOT TOPICS IN EMPLOYMENT DISCRIMINATION LAW 3
(MCLE 2009); GREGORY A. MANOUSOS ET AL., EMPLOYMENT DISCRIMINATION UPDATE &
CUTTING EDGE THEORIES 73 (MCLE 2011).
23 See 45 MASSACHUSETTS PRACTICE EMPLOYMENT LAW 8.35 (2d ed. 2013) [hereinafter
MASS. EMPLOYMENT PRACTICE].
17
24 Lopez v. Commonwealth, 978 N.E.2d 67, 79 (Mass. 2012); Lynn Teachers Union v. Mass.
Commn Against Discrimination, 549 N.E.2d 97, 103 (Mass. 1990). Adverse employment
acts can include: termination, demotion, failure to promote, transfer (in certain cases), and
other changes in terms of employment or employment conditions. MASS. EMPLOYMENT
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Disparate impact claims arise from many different employment

situations, such as appearance standards, education requirements, hiring
or promotion criteria, or employment tests. 26 When an employee brings a
claim for disparate impact, the employee must first make a showing,
supported by statistical evidence, that the practice or policy used by the
employer has a disparate impact on a protected group of which the
employee is a member.27 Once an employee has sufficiently demonstrated
the discriminatory impact, the burden then shifts to the employer who
must prove that the alleged discriminatory practice has a legitimate, nondiscriminatory business purpose.28 This typically means that the employer
must prove that there is a rational reason to use such a policy or practice in
decision-making and that the policy or practice is a business necessity. 29 To
demonstrate this, an employer must show that it is related to job
performance, meaning that it produces information about the employee
that is related to the particular position offered.30 An employer must also
show that there is not a less discriminatory alternative to the practice or
policy, such as a test that is equally effective in predicting a desired quality
that does not have a disparate impact.31
Unlike disparate treatment claims,32 disparate impact claims do not
require a showing of intent to discriminate, but instead focus on the
consequences of the employers policy or practice.33 The purpose of
PRACTICE, supra note 23, at 8.35; see also 18 MASS. PRAC. MUNICIPAL LAW AND PRACTICE 10.5
(5th ed. 2013) [hereinafter MASS. PRACTICE].
25 Lynn Teachers Union, 549 N.E.2d at 103; MASS. EMPLOYMENT PRACTICE, supra note 23, at
8.35.
26 See HOWARD E. BERKENBLIT ET AL., EMPLOYMENT LAW 288 (MCLE 2010) (explaining that
disparate impact analysis can be applied to many types of employment practices, despite the
fact that they may be inherently objective or subjective).
27
See EEOC TESTS, supra note 10.

See id.
29 See 42 U.S.C. 2000e-2(k) (1964); CARLIN ET AL., supra note 22, at 3.
30 MASS. EMPLOYMENT PRACTICE, supra note 23, at 8.35; see also 42 U.S.C. 2000e-2(k);
MANOUSOS ET AL., supra note 22; EEOC TESTS, supra note 10 (explaining that the policy must
evaluate skills associated with being able to perform the job successfully).
31 See EEOC TESTS, supra note 10.
32 Disparate treatment claims allege that an employer purposefully made a particular
employment decision because of the employees race, religion, gender, age, or national origin.
MASS. PRACTICE, supra note 24, at 10.5. The focus of these claims is to determine what the
employers mind-set was when they made the employment decision in question. See id.
Plaintiffs will seek to prove that their employer made the decision because of discriminatory
animus. See id.
28
33
Lopez v. Commonwealth, 978 N.E.2d 67, 79 (Mass. 2012) (explaining that disparate
impact does not require proof of discriminatory intent because some employment practices,
adopted without a deliberately discriminatory motive, may in operation be functionally
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disparate impact claims is to remove employment barriers and eliminate

employment practices that are discriminatory in their effect.34 With regard
to the disparate impact caused by credit checks, the critical questions are
whether credit history is related to job capability and whether credit checks
create an obstacle to gainful employment for protected groups.35 To avoid
liability, employers should administer practices without regard to any
protected category, be aware of the particular job requirements, and ensure
that the test or procedure is appropriate for the specific position.36
C. Effects of Employers Use of Credit Checks as a Basis for Hiring
Decisions
1.
Use of Credit Checks Strongly Correlates with Race and

Creates a Self-Perpetuating Cycle
Recently, many peoples credit scores have taken a hit due to the
economic recession, making the use of credit scores in the hiring process
especially problematic.37 People with poor credit have difficulty finding
work, perpetuating a cycle of unemployment and financial insecurity
which, in turn, negatively impacts their credit.38 To make matters worse,
this cycle also fuels the disparate impact experienced by those with low
socioeconomic status.39
Since minorities as a demographic tend to have lower credit scores,40
the use of credit scores by employers disproportionately excludes racial
minority applicants (namely African-Americans) from employment.41
equivalent to intentional discrimination); CARLIN ET AL., supra note 22, at 3; MANOUSOS ET
AL., supra note 22, at 73.
34 BERKENBLIT ET AL., supra note 26, at 288.
35 Id.
36 EEOC TESTS, supra note 10.
37 See Nissim, supra note 18, at 47.
38 See Earle et al., supra note 18, at 16869 (This practice is based on flawed assumptions
that have detrimental effects on those who simply want to work so they can pay their bills and
escape the vicious cycle of debt and unemployment.); Nissim, supra note 18, at 47 ([T]he
people who most need a job (generally those already having credit problems) are not able to
get or keep a job, resulting in more credit problems and not way to remedy them.).
39
See Adam T. Klein, Esq., Address at EEOC Meeting on Employment Testing and
Screening (May 16, 2007), available at http://eeoc.gov/eeoc/meetings/archive/5-16-07/klein.html
(When employers dole out jobs based on financial status, they are letting financial inequality
dictate further employment inequality.); Berr, supra note 19 (explaining that employers use
of credit reports unfairly keeps people out of the job market who have a bad financial history).
40
Nissim, supra note 18, at 47. On average, Caucasians have a 21% higher credit score than
African Americans. Klein, supra note 39 (explaining study results showing that African
Americans have a higher rate of bad credit than Caucasians).
41
Klein, supra note 39 (asserting that the use of credit checks as an employment test screens
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Employers today using credit checks are relying on a socioeconomic

statushaving a positive credit recordthat, in todays society, blacks and
whites hold to differing extents due to broader racial inequalities in
society.42 Studies show that credit is correlated with race, meaning that
minority groups, namely African Americans and Latinos, tend to have a
pattern of proportionately worse credit than non-minority groups.43 These
minority groups have an unemployment rate twice the national average
and have far worse credit scores than non-minorities due to factors such as
bankruptcy, lending discrimination, and the effect certain job industries
have on a persons credit.44 Therefore, using credit information to make
employment
decisions
negatively
impacts
minorities
at
a
disproportionately higher rate.45
2.
Critics Argue that Credit History Is Not Related to Most

Jobs or a Business Necessity
Some of the harshest criticism of this practice is that credit history is

wholly unrelated to a persons ability to perform certain job functions.46 In
response, studies show there is no evidence that poor credit is correlated to
an employees success at work, qualifications, or ability to adequately
perform the essential functions of a job.47 Rather, a person may have bad
credit for reasons completely beyond that persons control, such as
disability, divorce, death in the family, illness, identity theft . . . all
out African Americans and certain other races); see also NAACP Opposes the Use of Credit
Reports by Employers When Making Hiring or Promotion Decisions, NAACP, http://www.naacp.
org/action-alerts/entry/naacp-opposes-the-use-of-credit-reports-by-employers-when-makinghiring-or (last visited Feb. 21, 2015) (stating that the use of credit reports in making
employment decisions is very problematic for the African American community) [hereinafter
NAACP].
42 Klein, supra note 39.
43 Id.
44 See Nissim, supra note 18, at 48 (showing that minorities are disproportionately impacted
by the use of credit checks). The Federal Reserve reported that African Americans have credit
scores that are half those of Caucasians. Id. The negative impact of using credit reports on
minorities is exacerbated by the fact that low paying service jobs tend to reduce credit rating,
African Americans are disproportionately affected by bankruptcy, and African Americans
tend to obtain loans on more unfavorable terms than non-minorities. See Klein, supra note 39.
45
See Klein, supra note 39.

See Earle et al., supra note 18, at 164 (stating that studies have shown credit information is
not a valid method to predict employee performance).
47 See id. at 165 (explaining that many employees struggle with difficult financial
circumstances at home, but are still able still able to perform adequately at work); Klein,
supra note 39 (Bad credit is often the result of a variety of factors that bear no relation to
employment suitability.); Nissim, supra note 18, at 49 (asserting that studies have not found
any correlation between quality of credit history and job performance).
46
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circumstances that [have] little to no bearing on how a person would

perform [their] job.48 Regardless, it is patently unfair for employers to
evaluate the quality of a potential employee based on information
unrelated to the job and considered to be private. 49 Therefore, some argue
that the use of credit reports is not a legitimate business necessity.50
D. Development of Disparate Impact Claims in Massachusetts
1.
General Description of the Trend
The largest problem facing disparate impact claims alleging

discrimination based on the use of credit history is that the current judicial
climate is unfavorable for plaintiffs.51 For example, courts rigidly enforce
deadlines for establishing a class of plaintiffs, and they tend to be
deferential to employer autonomy.52
However, all is not lost for Massachusetts job applicants as
Massachusetts discrimination law has expanded its classes of protected
groups in recent years.53 Specifically, the law has grown to include gender,
disability, and age as immutable characteristics protected under the laws
regarding disparate impact.54 The general trend of disparate impact case
law shows the courts attempts to strike a fair balance between the interests
of potential employees and employers.55 To do so, the court must weigh the
importance of an employees right to be free from discrimination against
the employers right to make necessary business decisions.56 Notably, the
U.S. Supreme Court in Griggs v. Duke Power Co. determined that an
employers discriminatory intent in using a practice or policy is irrelevant.57
Rather, a practice that results in a disparate impact and is not shown to
48
Nissim, supra note 18, at 50.

See, e.g., Berr, supra note 19 (This is about basic fairness . . . there is little to no evidence
of any correlation between job performance and credit score.). Senator Elizabeth Warren
believes using credit information is unfair because it excludes people from employment based
on their financial setbacks, which is also not correlated to their potential performance. Id.
50 See supra Part I.C.2.
51 See Earle et al., supra note 18, at 18487.
52 See id.; see also, e.g., EEOC v. Freeman, 2011 WL 337339, at *37 (D. Md. Jan. 31, 2011);
EEOC v. Kaplan Higher Educ. Corp., 790 F. Supp. 2d 619, 61920 (N.D. Ohio 2011).
49
53
See MANOUSOS ET AL., supra note 22, at 80.

Id.; see also, e.g., Sullivan v. Liberty Mutual Ins. Co., 825 N.E.2d 522, 529 n.10 (Mass. 2005);
Cox v. New England Tel. & Tel. Co., 607 N.E.2d 1035, 1041 (Mass. 1993); Sch. Commission of
Braintree v. Mass. Commn Against Discrimination, 386 N.E.2d 1251, 1251 (Mass. 1979).
55 Earle et al., supra note 18, at 175.
56 See id. at 17576. Employment practices that create a disparate impact may also be
problematic because they effectively create barriers to employment. See id.
54
57
401 U.S. 424, 43236 (1971).
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have a significant purpose related to job performance is outweighed by the

interest in protecting employees against discrimination.58 Since Griggs,
courts throughout the country, including Massachusetts, continue to
balance the employers business interests against the alleged resulting
disparate impact and have held in favor of employers. 59 In addition, there
has been increased awareness of the problem created by employers use of
credit checks, as demonstrated by the barrage of media coverage on the
issue.60 As a result, the legal and political community have begun to
brainstorm potential resolutions to combat this problem, such as proposed
legislation seeking to outlaw the practice.61
2.
Development of the Standard for Disparate Impact
One of the earliest cases discussing disparate impact in Massachusetts

was School Committee of Braintree v. Massachusetts Commission Against
Discrimination.62 The plaintiff in this case was a pregnant teacher whose
doctor requested that she be allowed to take sick leave because her medical
condition no longer allowed her to work, but the school denied this
request.63 The Court held that an employer who denies a female employee
the ability to use accrued sick time to extend her maternity leave to recover
from a pregnancy-related disability was unlawful gender discrimination.64
The Court further held that the employment policy prohibiting teachers
from using their sick leave to obtain extended leave, and not compensating
teachers for the sick time used, created a disparate impact. 65
58
Id.
See Earle et al., supra note 18, at 17678; see also, e.g., Sch. Bd. of Nassau County v. Arline,
480 U.S. 273, 287 (1987) (stating that the goal of the burden-shifting framework for
discrimination claims is to protect individuals from discrimination, but also to give
appropriate weight to [the] legitimate concerns of [employers].); Cox, 607 N.E.2d at 1041
(recognizing interests of an employer by stating that an employee claiming disparate impact
as a result of a disability must be able to show that they are otherwise qualified and able to
perform the essential functions of their job).
59
60 See, e.g., Berr, supra note 19; Rachel Farrell, Why Do Employers Care about Your Credit?,
CNN (July 12, 2010), http://www.cnn.com/2010/LIVING/07/12/cb.employers.your.credit/;
Suzanne Lucas, Dont Ban Pre-Employment Credit Checks, CBS MONEY WATCH (Apr. 12, 2011),
http://www.cbsnews.com/news/dont-ban-pre-employment-credit-checks/; Bill McMorris, An
Impactful Policy: Disparate Impact Hurts Businesses, Workers According to Experts, WASH. FREE
BEACON (Apr. 26, 2013), http://freebeacon.com/politics/an-impactful-policy/.
61
See infra Part I.E.

386 N.E.2d 1251, 1251 (Mass. 1979).
63 Id. at 1253.
64 Id. at 1252.
65 See id. at 1256 n.12.
62
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The central focus in employment discrimination cases is whether an

employee or prospective employee was penalized due to race, religion, sex,
or national origin.66 School Committee of Braintree was brought on a
disparate treatment ground, rather than disparate impact, despite the fact
that disparate impact could have been established.67 The Court expressly
recognized that the schools policy was sex-neutral[], which bar[red] use
of sick leave during all extended leaves of absences.68 The Court ruled
against the employers business interest and in favor of the employee,
finding that the stated policy discriminated against women based on their
sex and that the employers argument that the rule applied equally did not
hold water, as it effectively eliminated womens ability to take maternity
leave.69
In 1993, the Supreme Judicial Court decided Cox v. New England
Telephone & Telegraph Co., a disability disparate impact case and a case of
first impression in regard to employment disability discrimination.70 The
plaintiff was a disabled employee who worked a clerical position at the
defendant company.71 The company required that he pass a pole-climbing
coursewhich he could not do at that time due to his disability, but had
previously passedand was subsequently terminated.72 The plaintiff
brought a disparate impact claim, arguing that the policy requiring an
employee to pass a pole-climbing course was discriminatory in effect
because it discriminated against disabled employees that could not
complete the course and was unrelated to his clerical position.73
One focus of the courts analysis was whether the plaintiff was
qualified and able to perform the essential functions of his job despite his
disability.74 The Court made an important distinction between the rights of
employees who are disabled and unable to perform their job and those that
are qualified in spite of their handicap.75 The Court held that disabled
employees qualified to perform the essential functions of their job can
rightfully bring a disparate impact claim because there can be no legitimate
business reason to terminate a disabled employee who can perform the
66
Id. at 125354.
Id. at 1256 n.12.
68 See Sch. Comm. of Braintree, 386 N.E.2d at 1255.
69 Id. at 1255.
70 607 N.E.2d 1035, 1039, 1041 (Mass. 1993).
71 Id. at 1036.
72 Id. at 103637.
73 Id. at 1036.
74 Id. at 1040.
75 Id.
67
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job.76 However, the Court ultimately held that the plaintiff was not a victim
of disparate impact because he failed to fulfill his burden of proof that the
pole-climbing skill was not an essential function of his job. 77
Lopez v. Commonwealth, decided in 2012, reflects the most current view
of the Supreme Judicial Court on disparate impact claims.78 This case was
brought by African American and Hispanic police officers, employed by
municipalities throughout Massachusetts, who alleged that the use of
multiple-choice exams to determine promotions had an unlawful disparate
impact.79 After the departments graded the exams, the candidates were
then ranked against each other.80 These exams were alleged to be
discriminatorily administered and adversely impacted the African
American and Hispanic candidates because they were ranked lower than
non-minority test-takers, causing them to be denied promotions, despite
the fact that they were equally qualified.81
At the outset, the Court recognized that this case was properly brought
because the plaintiffs adequately alleged that the defendants practice
interfered with the plaintiffs enjoyment of rights protected by
[Massachusetts laws on discrimination], specifically the plaintiffs right to
be free of racial discrimination in opportunities for promotion.82 The
Courts opinion was supported by the intent of discrimination lawsto
prevent employers from using their power over employment to close the
door to individuals on unlawful or irrational grounds.83 The opinion
focuses on the argument that all potential job applicants have the right to
equal-opportunity employment, which means that their opportunity for
promotion, hiring, or conditions of employment will not be influenced by
their protected status.84 This can be shown by employers using factors or
information that are not related to job performance.85 Here, the Court
found that the defendants use of the multiple-choice tests and a ranking
system interfered with the minority police officers right to be equally
considered for employment and to have only their job-related
qualifications considered.86
76
Cox, 607 N.E.2d at 1040.

Id. at 104142.
78 See 978 N.E.2d 67, 67 (Mass. 2012).
79 Id.
80 Id. at 72.
81 Id.
82 Id. at 71.
83 Id. at 75.
84 Lopez, 978 N.E.2d at 77.
85 See id.
86 Id.
77
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E. Proposed Massachusetts Legislation

In addition to disparate impact case law, there is legislative
development expanding the protections of employees from invasive and
discriminatory practices by the employers.87 The most notable example is a
law prohibiting employers from making pre-employment inquiries into a
job applicants potential disabilities.88 The law prohibits employers from
asking applicants if they are disabled and inquiring as to the nature or
severity of their known disability.89
As recently as 2013, the Massachusetts legislature has proposed three
bills making the use of credit checks in employment decisions unlawful. 90
These bills seek to amend either the Massachusetts anti-discrimination
statute or fair business practice statute to include a clause restricting the
use of credit checks as a method of evaluating potential employees.91 While
these proposals demonstrate an awareness of the problems caused by this
employer practice, they have yet to be enacted.92
1.
Bill 3518: An Act Relative to the Use of Credit Reports in

the Hiring Process93
Bill 3518 was referred to committee in January 2011 and seeks to

amend chapter 151B to restrict an employers use of an applicants credit
history.94 Specifically, it seeks to prevent employers from discriminating
based on an applicants credit history and from using credit history as a
basis for hiring or firing decisions.95 However, this bill is not an absolute
ban on the use of credit checksemployers may still consider an
applicants credit history if it relates to a bonafide occupational
87 See, e.g., MASS. GEN. LAWS ANN. ch. 151B 4(16) (2013); MASS. EMPLOYMENT PRACTICE,
supra note 23, at 8.23.
88 See sources cited supra note 87.
89 See sources cited supra note 87.
90 See, e.g., H.R.1731-1234, 188th Gen. Ct., Reg. Sess. (Mass. 2013), available at
https://malegislature.gov/Document/Bill/188/House/H1731.pdf [hereinafter Mass. H.R. 1731];
H.R. 1744-1544, 188th Gen. Ct., Reg. Sess. (Mass. 2013), available at https://malegislature.gov/
Document/Bill/188/House/H1744.pdf [hereinafter Mass. H.R. 1744]; H.R. 3518-1595, 187th

Gen. Ct., Reg. Sess. (Mass. 2011), available at http://www.malegislature.gov/Bills/PDF?billId=
12920&generalCourtId=1 [hereinafter Mass. H.R. 3518].
91 See infra Part I.E.13.
92 See sources cited supra note 90 (indicating that all three bills went to the Committee on
Labor and Workforce Development as of January 2013).
93
Mass. H.R. 3518, supra note 90.

Id.
95 See id.
94
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95
qualification.96 The bill itemizes particular circumstances that would allow

for such consideration and requires that employers prove the existence of
at least one of the following: (1) a state or federal law, or a Department of
Labor regulation requiring such consideration; (2) that the duties of the
position include custody or unsupervised access to a minimum of $2,500 or
signatory power for a minimum of $100 per transaction; (3) that the
position sets or controls direction of business; or (4) that the position
involves access to personal or confidential information that is financial in
nature.97 This bill does not address the issue of employee consent to an
employers request for such information or mention how this practice is
connected to discrimination.98
2.
Bill 1731: An Act Relative to the Use of Credit Reports in

the Hiring Process99
Bill 1731 was referred to committee in January 2013 and also seeks to
amend chapter 151B to limit an employers ability to use credit checks.100
The stated focus of this bill is to prohibit employers from discriminating
against certain employees or potential employees based on [their] credit
history or report.101 To achieve this, the bill regulates the acceptable scope
of the use of credit reports in a similar fashion to Bill 3518.102 Specifically,
this bill uses the same language as Bill 3518, but limits the bonafide uses
of credit to circumstances in which: (i) the duties of the position include
custody of or unsupervised access to cash or marketable assets valued at
$2,500 or more; [or] (ii) the duties of the position include signatory power
over business assets of $1,000 or more per transaction.103 By limiting the
acceptable uses of credit history, this bill subjects employers to greater
restrictions.104 Aside from limiting the permissible use of credit
information, the bill also differs from Bill 3518 by increasing the amount of
money over which an employee must have signatory power from $100 to
$1,000.105
96
See Mass. H.R. 3518, supra note 90.

See id.
98 See id.
99 Mass. H.R. 1731, supra note 90.
100 Id.
101 Id.
102 Compare id., with Mass. H.R. 3518, supra note 90.
103 Mass. H.R. 1731, supra note 90.
104 See id.
105 Compare id., with Mass. H.R. 3518, supra note 90.
97
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96
3.
v. 49 | 83
Bill 1744: An Act Regulating the Use of Credit Reports by

Employers106
Bill 1744 differs from the above two by seeking to amend both the
Massachusetts law on unfair business practices, chapter 93A of the
Massachusetts General Laws, as well as chapter 151B.107 The first provision
focuses on amending chapter 93A to state that no person, employer, or
employment recruiters shall:
(1) use a consumer report in connection with or as a criterion for
an employment purpose, including decisions related to hiring,
termination, promotion, demotion, discipline, compensation, or
the terms, conditions or privileges of employment;
(2) request or procure a consumer report for the purposes
described in clause (1);
(3) ask an employee or applicant about his or her consumer
report or about any information contained therein regarding
credit worthiness, credit standing or credit capacity.108
This bill does provide certain circumstances where an employer is

permitted to review an employees or potential employees credit report,
but limits it to situations where it is required by federal or state law. 109 The
bill also provides a general clause stating that even where employers can
use credit information, they may not do so in any manner that would
create adverse employment discrimination as against federal or state
law.110
In addition, the bill requires that an employer seeking to review an
employees or potential employees credit information must obtain written
consent from the employee after providing, in writing, the employers: (1)
reasons for reviewing the report; (2) intention to take an adverse
employment action due to the report; and (3) reasons for the adverse
action.111 The bill then provides an employee facing adverse action the
opportunity to dispute the relevance of the credit information to the
106

See id.
108 Id.
109 Id.
110 Id. [A]n employer shall not use a consumer report in a manner that results in adverse
employment discrimination prohibited by federal or state law, including chapter 151B of the
General Laws and Title VII of the Civil Rights Act of 1964. Id.
111 Id. The employer must provide all of the above in writing at least fourteen days prior to
taking any action. Mass. H.R. 1744, supra note 90.
107
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97
employers decision and explains the procedure to be followed should such

a dispute arise.112
Finally, the bill outlines the remedies that employees are entitled to
after a violation has occurred.113 These remedies allow claims to be brought
for discrimination under chapter 151B; unfair business practice under
chapter 93A; or employees claims of retaliation or adverse actions. 114 Also,
employees or applicants cannot be required or asked to waive their rights
under this bill.115
II. Why Employer Use of Credit Checks Is an Important Problem
A. There Is Currently No Concrete, Effective Solution to Protect
Against the Use of Credit Checks
Notwithstanding evidence of the disparate impact caused by employer
use of credit checks at the hiring stage, no legal cause of action has been
filed and no legislation has passed addressing the issue. 116 Inaction is
problematic because those affected will continue to have difficulty securing
employment.117
1.
The Massachusetts Courts Failed to Resolve the Issue
Massachusetts case law on discrimination, as it currently exists, does

not resolve the issue at hand because it fails to address two key
problems.118 First, the adverse impact on protected groups has yet to be
formally recognized by the court as a discriminatory practice because no
case alleging such discrimination has been brought before a Massachusetts
court.119 Second, discrimination claims have focused on the impact of
certain practices on protected classes, which Massachusetts recognizes
112 Id. If the employee or applicant provides oral or written notice to the employer during
the 14 day period . . . that he or she dispute[s] the accuracy of the consumer report with a
consumer reporting agency, the employer shall not take an adverse employment action until
the resolution of the dispute . . . . Id.
113 Id.
114 Id. The discrimination claims can be brought either before the Massachusetts courts or
the Massachusetts Commission Against Discrimination. Id.
115

See supra Part I.DE.
117 See NAACP, supra note 41 (Using of a potential employees credit history as part of the
hiring process is just one more tool in the arsenal of discrimination which is keeping too many
racial and ethnic minorities from gainful employment.).
119 See supra Part I.D; cf. Earle et al., supra note 18, at 184 (explaining that the judicial climate
has not been ready for credit check disparate impact claims in other state court systems).
116
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98
v. 49 | 83
only as race, religion, gender, age, and disability.120 Socioeconomic status is

not yet recognized as a protected class. 121 In order to protect job applicants,
this employment practice must be greatly restricted by either the
Massachusetts judiciary, the legislature, or both.122
Current chapter 93, 5068 of the Massachusetts General Laws and
the federal Fair Credit Reporting Act allow the use of credit checks as part
of the pre-employment screening process, but impose certain consentbased regulations.123 The statutes require employers to disclose their intent
to obtain a potential employees financial information and obtain the
potential employees prior consent.124 However, these statutes do not solve
the problem because they still allow the practice, and the regulations in
place have not reduced the discriminatory impact of credit checks.125
Specifically, the disclosure and consent requirements do little to reduce the
impact to the potential employee because financially struggling applicants
with bad credit are unlikely to refuse a potential employers request to
review their credit history.126 These requirements do not provide
employees with a meaningful choice about whether to refuse or allow a
credit check.127 It is problematic that case law has yet to provide a solution,
but the expansion of disparate impact law will be helpful in creating a
more workable bill banning the use of credit checks. 128
2.
The Proposed Massachusetts Legislation Does Not

Adequately Solve the Problem
While the proposed bills are a step in the right direction in reducing
the negative impact of credit checks in employment decisions, they either
do not provide adequate protection or fail to recognize the breadth of the
problem.129 However, evaluating the quality of these bills provides helpful
120
MASS. EMPLOYMENT PRACTICE, supra note 23, at 8.15.

See supra notes 1416.
122 See supra notes 11921 and accompanying text; see also infra Exhibits A and B.
123 15 U.S.C. 16811681t (2012); Mass. Gen. Laws ch. 93 5068 (2006); MASS.
EMPLOYMENT PRACTICE, supra note 23, at 13.18.
121
124
See sources cited supra note 123.

See supra Part I.E.
126 See Nissim, supra note 18, at 4748 (explaining that the consent requirement is not an
effective protection because applicants feel that if they do not give consent, they will not get
the job).
127 See id.
128 See infra notes 172, 26770 and accompanying text; see, e.g., infra Exhibit B (proposing
more prosaic bill).
125
129
See infra Part II.A.2.
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99
insight into how to craft a more prosaic bill that provides adequate
protection and sufficiently addresses the issue at hand. 130
i.
Evaluation of Bill 3518
Bill 3518 is effective in that it seeks to prevent an employers use of

credit history as the basis of any decision regarding someones
employmentbe it at the hiring or firing stageand is ineffective in that it
provides too many potential exceptions.131 Providing a long list of
acceptable uses of credit checks provides less protection to employees and
potential employees because employers have more opportunities to argue
that the practice is legitimate. 132 In addition, it is difficult to comprehend
how certain job characteristics or position requirements in the list justify
consideration of an applicants credit history.133 For example, the bill states
that any position that is managerial and involves setting the direction or
control of the business justifies review of an applicants credit history.134
There are several problems with this proposed provision. 135 The first is
its ambiguity.136 A blanket reference to a position that is managerial
provides no specific guidance as to what positions are within this scope,
and it can be argued that managerial roles could include a significant
number of employees.137 To continue using credit checks, employers could
simply argue that a wide range of employees are managerial, including
many who presumably are not.138
Second, it is difficult to understand how a managerial role justifies
inspection of an applicants credit history, or why such information is
relevant.139 The very existence of acceptable circumstances in which the bill
allows credit checks ignores the fact that credit history has no bearing on
an applicants ability to perform his job duties, whether those duties are
managerial, custodial, or otherwise.140
130
Compare Part II.A.2, with infra Exhibit B.

See infra text accompanying notes 13238.
132 See YULE KIM, CONG. RESEARCH SERV., 97-589, STATUTORY INTERPRETATION: GENERAL
PRINCIPLES AND RECENT TRENDS 510, 1617 (2008), available at http://www.fas.org/sgp/crs/
131
misc/97-589.pdf.
133 See Klein, supra note 39.
134 See Mass. H.R. 3518, supra note 90.
136 See KIM, supra note 132, at 510.
137 See Mass. H.R. 3518, supra note 90; KIM, supra note 132, at 510.
138 See KIM, supra note 132, at 510, 1617.
139 See supra notes 4957 and accompanying text; see also infra Part III.A.1.ii.
140 See Klein, supra note 39.
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100
v. 49 | 83
In addition, Bill 3518 does not reference or outlaw the use of

discriminatory credit checks.141 Therefore, employers are permitted to
continue using credit checks under the listed circumstances, to the
detriment of minority job applicants.142 As a result, minorities or people of
low socioeconomic status are forced into jobs that do not trigger the list. 143
A more effective bill would include a provision in the list section stating
that credit checks within these uses cannot be applied to discriminate or
create a disparate impact.144
ii. Evaluation of Bill 1731
Bill 1731 is more effective because it clearly identifies the use of credit
checks as the core issue by prohibiting employers from using credit checks
in a discriminatory manner with regard to the evaluation of potential
employees.145 This bill provides more protection than Bill 3518 because its
list of acceptable uses of credit checks is shorter.146 However, it is only
slightly more desirable because it contains all of the problems previously
identified in Bill 3518.147
iii. Evaluation of Bill 1744
Bill 1744 is the most effective of the three, demonstrating greater
attention to the details of the problem and outlining the remedies available
to employees or applicants hurt by this practice.148 It thoroughly addresses
the problems created by the use of credit checks and attacks the practice
141
See id.
See Kenneth M. Willner, Statement at EEOC Meeting on Employment Testing and
Screening (May 16, 2007), available at http://eeoc.gov/eeoc/meetings/archive/5-1607/willner.html (explaining that enforcement programs play an important role in enforcing
compliance with anti-discrimination laws); cf. KIM, supra note 132, at 1617.
143 See NAACP, supra note 41. Arguably such lists could in effect force minorities, or people
of low socioeconomic status, into positions with lower salaries that carry less responsibility,
perpetuating the cycle of barriers to employment. See generally Andrew Martin, As a Hiring
Filter, Credit Checks Draw Questions, N.Y. TIMES, Apr. 9, 2010, available at http://www.nytimes.
com/2010/04/10/business/10credit.html?pagewanted=all (stating that credit checks are used for
mostly leadership positions). Description of the leadership positions or other categories of
positions credit checks are used for implies that a job applicant could avoid credit checks if
they applied to different types of jobs. See Farrell, supra note 60.
144 See KIM, supra note 132, at 1617.
145 Cf. Mass. H.R. 3518, supra note 90.
146 See id.
147 Compare Mass. H.R. 1731, supra note 90, with Mass. H.R. 3518, supra note 90.
148 Compare Mass. H.R. 1744, supra note 90, with Mass. H.R. 3518, supra note 90, and Mass.
H.R. 1731, supra note 90.
142
2014
101
from both business and employment discrimination standpoints.149 It is

also effective because it clearly statesin terms that employers cannot
misconstrue or argue againstthat credit checks cannot be used to
discriminate.150 It also creates remedies, giving employees additional
safeguards.151
However, the bill mishandles the employee-consent requirement.152
While it was correct to address the fact that many job applicants are
somewhat coerced into consenting to employer review of their credit
information, the procedure it puts forth is unnecessarily complicated. 153 By
requiring an employer to disclose its reasons for obtaining the credit report
and creating an appeal-like procedure for employees to dispute its use, the
bill attempts to deter employers from using credit checks in a
discriminatory fashion.154 However, applicants are unlikely to feel less
pressure to consent to the credit check by the mere disclosure of the
employers reason for requesting it.155 The issue is not so much the reason
for an employers review of their credit history, but rather that employers
should not be able to seek the employees consent in the first place.156
In addition, requiring employers to disclose whether an adverse
employment decision was based on the credit report is unlikely to provide
an employee much protection, even with the potential for employee
appeal.157 Despite the fact that the statute requires disclosure of the creditbased reason for the adverse action, employers can simply provide other
reasons for their decision.158 Further, if an applicant disputes a credit-based
decision by the employer, there is no guarantee that the applicant will get
the job even if the appeal is successful, and if the applicant is hired, he will
have begun his employment relationship on hostile grounds.159
149
See id.
See id.
151 See id.
153 See Nissim, supra note 18, at 4748.
154 See Mass. H.R. 1744, supra note 90.
155 See Nissim, supra note 18, at 4748. Job applicants likely feel pressure to consent to a
credit review to please the potential employer, even though it may not be in their best interest.
Id. In addition, outside factorssuch as prolonged unemployment, mounting debt, or familial
responsibilitiesmay increase the likelihood that an applicant will consent. Id.
150
156
See id.
See infra notes 16770 and accompanying text.
158 See Lucas, supra note 60.
159 See Mass. H.R. 1744, supra note 90; Ian Ayres & Peter Siegleman, The Q-Word As Red
Herring: Why Disparate Impact Liability Does Not Induce Hiring Quotas, 74 TEX. L. REV. 1487,
149193 (1996).
157
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102
v. 49 | 83
In sum, none of these bills adequately resolve the problems created by

using credit checks because each bill allows their use without legal
protection.160
B. Discrimination at the Hiring Stage is Cause for Greater Concern
Discrimination at the hiring stage is especially problematic because it is
so difficult to prove, sharply reducing the number of cases in which such
discrimination is even alleged.161 The proportion of disparate impact cases
focusing on the firing stage filed each year consistently outnumbers those
centering on the hiring stage.162 As a result, employers focus their attention
and resources on reducing the threat of liability for discrimination at the
firing stage, while potentially discriminatory practices at the hiring stage
go unnoticed to the detriment of job applicants.163
This issue is exacerbated by the lack of direct evidence of the
discrimination.164 Employees who face discrimination as a result of their
race, gender, age, or membership in another protected category rarely have
direct evidence of discrimination, because employers are unlikely to tell
an employee that it is making an adverse decision [on the basis of their]
legally-protected characteristic.165 Instead the vast majority of
discrimination cases involve indirect or circumstantial evidence of
disparate treatment.166
160
See supra Part II.A.2.

Ayres & Siegleman, supra note 159, at 1493. The author puts forth an argument as to
why it is more difficult for an employer to avoid unlawful disparate impact upon discharge,
stating that:
The racial composition of hired workers forms a clear baseline against
which disparities in firing rates can easily be compared . . . By contrast,
an employer whose flow of newly hired workers is ten percent black in
an area where the population is fifteen percent black can [argue] that
the relevant[,] [qualified, and interested] population has a different
racial composition.
161
Id.
162
Id. at 1494 (explaining the proportion of the two types of cases and stating that [t]he
bottom line is that disparate impact firing cases have outnumbered hiring cases in every year
since 1986).
163
See id.
See id.
165 MANOUSOS ET AL., supra note 22, at 73.
166 Id.
164
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103
ANALYSIS
III. Proposed Resolutions
Something must be done to end the disparate impact created by
employer use of credit checks and to protect job applicants from this
practice.167 Since employers, and the business community in general,
continue to advocate for autonomy in their employment policies and
decision-making procedures,168 it is unlikely that applicants can count on
them to independently facilitate change.169 Therefore, current and potential
employees must turn to the law.170
There are two realistic legal options to ameliorate the negative impact
of using credit checks on potential employees: bringing a case, with the
hope that the court will declare the practice unlawful, or proposing a
statute that would render this practice illegal.171 Both options have
strengths and weaknesses in terms of their likelihood of success and
resulting protective scope.172 Fortunately, these potential resolutions are
not mutually exclusive and can be combined to achieve the goal of
reducing the discriminatory impact of an employers use of credit checks.173
A. A Disparate Impact Claim Alleging Credit Checks as the Cause Is a
Viable Potential Resolution and Could Provide Protection to Job
Applicants in Protected Groups
Given the fact that case law in Massachusetts has expanded to accept
new causes of disparate impact as legitimate claims,174 there is a sufficient
foundation to bring a case alleging that the use of an applicants credit
167 See Blake Ellis, Employer Credit Checks Keep Jobless Out of Workforce, CNN MONEY (Mar. 4,
2013), http://money.cnn.com/2013/03/04/pf/employer-credit-checks/index.html (stating that
studies of middle to low-income families have shown that, [o]ne in four Americans have
been required to go through a credit check when applying for a job, and one in ten have been
denied jobs due to information in their credit report, even for entry-level positions).
168
See, e.g., id.

See Farrell, supra note 60; Ellis, supra note 167.
170 See supra notes 16869 and accompanying text.
171 See supra Part II (discussing that this practice is problematic and the two legal avenues
used to remedy discrimination to date, namely legislation and court cases).
172 See infra Parts III.A.23, B.12.
173 See infra Parts III.AB (discussing that the cause of action would be based on disparate
impact and the proposed law would directly focus on outlawing the employment practice to
prevent discrimination actions which do not conflict or preempt the other).
169
174
See, e.g., Cox v. New England Tel. & Tel. Co., 607 N.E.2d 1035, 103941 (Mass. 1993); Sch.
Comm. of Braintree v. Mass. Commn Against Discrimination, 386 N.E.2d 1251, 125556
(Mass. 1979).
KARPA_NOTE_18_FINAL
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v. 49 | 83
history in the hiring process creates a disparate impact. 175 The following
provides a framework of potential arguments supporting such a
complaint,176 mainly drawing from recent developments in Massachusetts
disparate impact case law.177
1.
Arguments Supporting the Theory

i.
Disparate Impact Law in Massachusetts Supports this

Claim
The judicial climate for disparate impact in Massachusetts is conducive

to such a claim because this area of law has expanded its recognition of the
causes of disparate impact.178 As Massachusetts expanded the scope of its
protections against discrimination by recognizing additional sources of
disparate impact179 and establishing additional protected classes,180 it
provided a foundation for the argument that credit checks are an
analogous source of discrimination and the affected employees are worthy
of protection.181 Massachusetts courts have begun to recognize the
importance of reducing barriers to the workplace, a development that
directly supports the argument that employer use of credit checks to
evaluate applicants must be strictly regulated.182 The instant test case
argues that applicants should only be assessed on their substantive
qualifications by use of non-discriminatory evaluative methods.183 The
175
See, e.g. Cox, 607 N.E.2d at 103941; Sch. Comm. of Braintree, 386 N.E.2d at 125556.
See infra Exhibit A (providing a detailed outline of a complaint alleging disparate impact
based on employer use of credit checks).
176
177
See infra Part III.A.1.i.

See supra Part I.D.1 (describing the development of disparate impact law in the courts).
179 See, e.g., Sch. Comm. of Braintree, 386 N.E.2d at 125356 (finding that restrictive sick leave
policies could be discriminatory as applied to women seeking to take maternity leave); Porio
v. Dept of Revenue, 951 N.E.2d 714, 71619, 723 (Mass. App. Ct. 2011) (finding that
reductions in force for budgetary reasons can be a source of disparate impact).
178
180 See, e.g., Cox v. New England Tel. & Tel. Co., 607 N.E.2d 1035, 1039 (Mass. 1993)
(holding disabled is a protected class).
181
See infra Exhibit A.

See Sch. Comm. of Braintree, 386 N.E.2d at 125356; Porio, 951 N.E.2d at 723 (explaining
the historical trend of applying a broad-brush approach to discrimination claims, meaning
that the court mainly focuses on whether a discrimination has occurred, and does not strictly
distinguish discriminations that occur because of a prospective status and claims that are
based on discriminat[ion] related to that status).
183 See infra Exhibit A. Lopez provides a favorable theoretical basis for bringing a case for the
use of credit checks, as it supports the argument that such interference with job applicants
rights to be free of any discrimination, including against their financial standing, when an
employer makes a decision regarding their employability. See Lopez v. Commonwealth, 978
N.E.2d 67, 7175 (Mass. 2012).
182
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105
understanding that there are many sources of employment barriers is

significant to the proposed case in this Note, see infra Exhibit A, because it
supports the argument that applicants are entitled to protection from
discriminatory bars to employment, such as credit checks.184
The disparate impact arguments in this proposed case follow the
theoretical outline of the arguments in Cox: that the employment practice
(the credit check and pole-climbing test) was facially neutral, but had a
discriminatory impact on the employee based on his or her protected status
(minority status and disability).185 Both employees argue that they are
qualified and able to perform the essential functions of the job, yet were
rejected and the evaluative mechanism used by the employer is
functionally unrelated to the job.186
The use of credit checks is factually distinct from Cox in one important
respectunlike Cox, where the test was related to the essential function of
the job,187 credit history does not reflect a persons mental acuity or ability
to perform job duties and responsibilities effectively.188 Cox remains
persuasive and provides strong support for the arguments in the case
proposed here; it also provides a basis to argue that a candidate qualified
to perform essential job functions, and who is a member of a protected
group, has a viable claim for disparate impact. 189
Further, finding employers use of credit checks as a source of
disparate impact is consistent with the policy of disparate impact law. 190 In
deciding cases that allege disparate impact, the court seeks to ensure that
an individuals rights were not unlawfully infringed upon as a result of
actions that discriminate against a protected class. 191 When applied to
allegations of discrimination in the workplace, the court seeks to ensure
that an employeepast, present, or futurehas not been disparately
184
See infra note 189 and accompanying text.

See Cox, 607 N.E.2d at 104042.
186 See id. The plaintiffs bear the burden of proof that they were qualified as to the specific
requirements of the job. See id. at 1042.
187 See id. at 103839 (explaining that the ability to climb telephone poles is essential to
being a field service cable-man).
185
188
See MASS. GEN. LAWS ch. 151B 4(16) (2012); MASS. EMPLOYMENT PRACTICE, supra note
23, at 8.23.
189 See Cox, 607 N.E.2d at 104042 (noting that whether an applicant is qualified is an
independent inquiry that requires findings of fact); infra notes 19295.
191 See, e.g., Lopez v. Commonwealth, 978 N.E.2d 67, 71, 78 (Mass. 2012) (finding that
African American employees had the right to be free from discrimination in the workplace);
Porio v. Dept of Revenue, 951 N.E.2d 714, 723 (Mass. App. Ct. 2011) (explaining that the
disparate impact cause of action seeks to provide a legal remedy for employment
discrimination against a protected class and should be applied broadly to fulfill this purpose).
KARPA_NOTE_18_FINAL
106
v. 49 | 83
impacted by an employment policy.192 The fact that affected individuals are

only potential employees should not preclude them from availing
themselves of the protections of the law. 193 The Porio Courts use of chapter
151B, 4 (outlawing discriminatory employment practices) to support its
finding of discrimination is of particular relevance because the statute
makes it unlawful for employers to refuse to hire or employ or to bar or to
discharge from employment an individual that is a member of a protected
group unless [that decision] is based upon a bona fide occupational
qualification.194 The policy of using credit checks to assess future
employees fits squarely within the intended goals of disparate impact
law.195
In addition, this statutory provision (as well as the Courts use of it in
Porio, expanding the protected classes to include age) demonstrates the
malleability of both the Courts and the legislatures understanding of what
classes of people are subject to discrimination and infers the possibility of
the court recognizing additional discrimination sources. 196 The contention
that credit checks are a legitimate source of discrimination at the hiring
stage (because they disproportionately exclude minority applicants)
receives foundational support from Porios use of chapter 151B, 4, because
a credit rating can be argued to fall outside the scope of a bonafide
occupational qualification.197
Lastly, plaintiffs can strengthen their argument by making the court
aware of other states that have heard cases on this very issue. 198 Maryland,
Ohio, and Florida courts have heard cases alleging that employer use of
credit history as a hiring mechanism disparately impacted AfricanAmerican and Hispanic applicants.199 While the Maryland and Ohio cases
192 See Sch. Comm. of Braintree v. Mass Commn Against Discrimination, 386 N.E.2d 1251,
125356 (Mass. 1979) (showing support for a cause of action for people who are not yet
employees and demonstrating that courts have favored the policy of protecting access to
employment over the autonomy of employers, even where the policy may be logically related
to the needs of the business); supra notes 7886 and accompanying text (discussing Lopez,
where the court sought to ensure employees rights to be free from discrimination at any stage
of employment).
193
See Sch. Comm. of Braintree, 386 N.E.2d at 125356; Porio, 951 N.E.2d at 723.
Porio, 951 N.E.2d at 719 (quoting MASS. GEN. LAWS ch. 151B, 4(1) (2012)) (emphasis
added).
194
195
See id. at 71920 (Age was not included as a protected status when 151B was first
enacted. However, the Legislature added age [many] years later.).
196 See id. at 71620.
197 See id.
198 See Earle et al., supra note 18, at 18486 (citing and explaining the Maryland, Ohio, and
Florida cases on this issue).
199
See id.
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107
were dismissed for failure to meet the time requirements for assembling a
class, they indicate a need for courts to hear and decide this issue.200
ii. Use of Credit History Is Not Job-Related or a Business
Necessity
To defend against the allegations of the complaint, the defendants can
argue that their policy of using credit checks as a hiring mechanism relates
to the employment positions it is used for and is consistent with business
necessity.201 In order to succeed, plaintiffs counsel must demonstrate that
the credit check is not job-related, a business necessity, or, if neither can be
adequately established, that the practice is merely a pretext. 202
The primary argument is that the credit check is a business necessity
because it provides valuable information regarding potential employees
and is an effective means of comparison between substantially similar
applicants.203 Employers argue that credit checks help them evaluate job
applicants and determine whether a potential employee has the required
qualities to be successful.204 In addition, employers contend that pursuant
to their duty to protect and ensure the effective operation of their
businesses, they must take measures, including using credit checks, to
ensure that they employ quality workers.205
Employers also contend that the impact of using credit checks is not as
extensive as critics claim and that it does not impact a significant number
of job applicants.206 Rather, employers argue that they only consider credit
history for certain positions and disregard certain types of debt, like
medical debt, reducing the negative impact on prospective employees.207
Supporters of the use of credit checks contend that employers only
200
See id.
EEOC v. Steamship Clerks Union, Local 1066, 48 F.3d 594, 602 (1st Cir. 1995).
202 See id.
203 See Farrell, supra note 60 (explaining that companies use credit histories to predict the
future success of two otherwise equally qualified candidates, finding the candidate with the
better credit to be more attractive).
201
204 See id. (stating that supporters of credit checks dont think its any different than
checking a candidates references).
205 See id. (quoting Wendy Powell, an author who writes on hiring practices: Employers
have a responsibility to assure that the proper due diligence is applied. Be prepared for the
possibility of a credit review, not only in the application process, but also throughout the
employment relationship.).
206 See Lucas, supra note 60.
207 See id. (explaining that a 2010 survey showed that 47% of employers use credit checks
only for certain positions).
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consider credit after using other evaluative methods, credit typically being
considered as only one of many reasons not to hire someone. 208
First, the argument that the use of credit checks has a lesser negative
impact than alleged, simply because it is used to evaluate applicants for
only certain positions or only considers certain types of debt, ignores and
misstates the core problem of this practice.209 The importance of the
discriminatory impact on applicants with poor credit, whether they are
minorities or people of low socioeconomic status, is not lessened simply
because employers use the information only in certain circumstances. 210
Circumstances in which employers do use credit checks, even if rare, have
a disproportionately negative impact on applicants with bad credit. 211
Secondly, employers are only able to view information on the types of
debt incurred by the applicant, which makes evaluation of the applicants
credit entirely subjective, increasing the risk of disparate impact. 212
Therefore, employers are able to pick which sources of debt to focus on
(i.e., home foreclosure or medical expenses), meaning that employers are
focusing on debt derived from unemployment, predatory loans, or other
such sources.213 These types of debt tend to disproportionately affect
minority groups, increasing the risk of discrimination of these groups. 214
Lastly, a credit score is often not conclusive proof of an applicants
integrity, loyalty, or commitment to professional responsibility.215 Even if it
were conceded that credit history does provide such information, there are
208 See id. (explaining a survey that showed that employers ranked credit checks lowest in
the types of evaluative methods used).
209 See Ellis, supra note 167 (stating that some employers use credit checks for entry-level
and low-paying positions as well as more senior level positions).
210 See Statement of Roe T. Vann, EEOC Meeting on Employment Testing and Screening
(May 16, 2007), available at http://eeoc.gov/eeoc/meetings/archive/5-16-07/vann.html (arguing
that the problem with many employment tests is that employers use tests that are not valid or
suitable for the actual job and recommends that employers conduct audits to ensure that the
tests are actually valid, are not outdated, and most importantly, that they do not cause
disparate impact); supra Part I.C.
211
See Willner, supra note 142 ([U]nlawful practices affect large numbers of applicants and
employees.).
212 See Ellis, supra note 167 (explaining that employers who use credit checks view only the
information within the credit report, such as debts and payment histories, making their
evaluation of an applicants credit subjective).
213
See Lucas, supra note 60; Ellis, supra note 167.

See Ellis, supra note 167 (stating that, [o]n average, African-American and Latino
households have worse credit scores than white households, which is partially attributed to
higher unemployment rates in those communities. In 2012, studies showed that 14% of
African Americans, 10% of Hispanics, and 6% of white Americans were unemployed).
214
215
See supra Part I.C.2.
2014
109
many less discriminatory alternatives available to employers.216 Employers

can use other forms of employment testing, such as personality tests or
sample position hypotheticals, to determine the same type of information
credit checks are alleged to provide.217 These alternatives reduce the risk of
disparate impact on protected groups or on those with low socioeconomic
status and are more tailored to identifying the presence of certain
characteristics.218
The problem with credit checks is not that they are used for certain jobs
or considered as a last resortit is that they are used at all.219 Any use of
credit history as an evaluative method risks disparate impact on minority
groups or those of a low socioeconomic status.220 Employers do not have an
absolute right to use any criteria as a means of making an employment
decision; and they cannot subject their employees to practices that have a
disproportionately negative impact on certain groups. 221
2.
Advantages of Bringing a Disparate Impact Cause of

Action
i.
Protection to Applicants and Further Expansion of

Disparate Impact Law
Should the court determine that the employers use of credit history
caused a disparate impact, that case would likely provide lasting
protection against employer use of credit checks in a way that creates
disparate impact.222 Once a court finds a particular practice to be
discriminatory, a subsequent holding in which disparate impact (resulting
from the use of credit history) is not found, would serve to distinguish the
facts of this subsequent case from the initial one; however, it would not
necessarily overrule the courts core recognition of the fact that credit
checks can cause a disparate impact.223
216
See EEOC TESTS, supra note 10; supra Part I.C.2.

See supra Part I.A.
218 See Klein, supra note 39 (arguing that credit checks have not been validated as a test for
any job or demonstrated a meaningful relationship to successful performance). Contra Farrell,
supra note 60 (explaining business reasons for using credit checks: [e]nsuring that your
employees are responsible and ethical is a must).
217
219
See Farrell, supra note 60; Ellis, supra note 167.

See Ellis, supra note 167; Klein, supra note 39; Nissim, supra note 18, at 48.
221 See BERKENBLIT ET AL., supra note 26, at 288.
222 See id.
223 See, e.g., Cox v. New England Tel. & Tel. Co., 607 N.E.2d 1035, 104043 (Mass. 1993)
(explaining that while the court did not find that there was discrimination against the
employee in this case, it does not overrule the bare fact that certain employment requirements
can have a disparate impact on disabled employees).
220
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An affirmative holding for disparate impact would also be generally

advantageous to disparate impact law in Massachusetts because it would
further expand the courts recognition of credit information as a source of
discrimination at the hiring stage. 224 This would continue the expansion of
disparate impact law by clearing the path for recognition of new sources of
discrimination.225
ii. Improved Awareness of the Issue
One major advantage of bringing a case is that even in the event that
the case fails, it will have drawn attention to the issue. 226 Since the media is
already a part of the credit check conversation, 227 the case will, at the very
least, generate more media attention and may encourage those negatively
affected by the use of credit checks in hiring decisions to come forward and
retain counsel.228 The coverage may grab the attention of employers and
encourage them to take proactive steps to change their policies with regard
to the use of credit checks, reducing their discriminatory impact and
avoiding potential future litigation.229 In addition, bringing a case would
expose the weaknesses this claim may have, so that a stronger claim can be
filed in the future.230
3.
Potential Disadvantages of Bringing a Disparate Impact

Claim
i.
Limitations of Protective Reach and Recovery
The potential disadvantages of a disparate impact claim emanate from

the elements of the cause of action and the required evidence.231 In order to
224 See supra Part III.A.1.i.; see also Porio v. Dept of Revenue, 951 N.E.2d 714, 720 (Mass.
App. Ct. 2011) (explaining that age was not originally included as a protected status in
Massachusetts when the laws barring discrimination were first enacted, but has since been
amended to include age).
225
Cf. Sch. Comm. of Braintree v. Mass. Commn Against Discrimination, 386 N.E.2d 1251,
1256 (Mass. 1979) (recognizing a new employment discrimination cause of action to promote
protection against discrimination).
226 See infra note 22930 and accompanying text.
227 See, e.g., Berr, supra note 19; Farrell, supra note 60; Lucas, supra note 60; McMorris, supra
note 60.
228
Cf. supra note 60 and accompanying text.

See Willner, supra note 142 ([C]ourt-ordered resolution . . . can benefit not only the
immediately affected individuals, but also applicants and employees of other companies
which may revise their practices in light of a systemic enforcement effort.).
230 See, e.g., Earle et al., supra note 18, at 18486 (describing disparate impact cases on credit
checks that have been brought and dismissed for administrative reasons).
229
231
2014
111
successfully argue disparate impact, the employers practice must have a

disproportionately negative impact on a recognized, legally protected
class.232 Therefore, such a cause of action must narrow its alleged
discriminatory impact to applicants in the protected groups.233 As a result,
job applicants that do not fit within these categories are excluded from
mention in the cause of action.234 If the court ruled against the use of credit
checks in hiring decisions by determining that such a practice does create a
disparate impact, this holding would be specific to people of that protected
group.235 By placing the focus on the effect of this practice on minority
groups, the court effectively excludes the impact this practice has on the
entire population that has poor credit and does not allow those of low
socioeconomic status to be recognized as victims.236
ii. Difficulty in Finding and Selecting At-Risk Plaintiffs
One of the greatest challenges of bringing this case would be in finding
a group of plaintiffs who: (1) are within the minority, protected group; (2)
applied to the same or similar job at the same company; (3) have bad credit;
(4) were subjected to a credit check; (5) that credit check was not
reasonably related to that position; (6) that were otherwise qualified for the
position; and (7) were not offered the job.237 This could be extremely
difficult and time-consuming.238 This option, therefore, runs the risk of not
having viable plaintiffs for many years, leaving no protection for applicants
in the meantime.239
In addition, there is the challenge of getting past a motion to dismiss
and advancing to the discovery stage. 240 This would likely rest on the
232
See EEOC TESTS, supra note 10.

See id.
234 See MASS. EMPLOYMENT PRACTICE, supra note 23. Since socioeconomic status is not a
recognized protected group, such a holding will not recognize the people outside of the
recognized protected groups that have poor credit scores who are also affected by this
employment practice. See id.
233
235
See id. (stating that a cause of action for disparate impact requires discrimination against
a recognized protected class).
236
See EEOC TESTS, supra note 10 (defining the scope of the disparate impact claim).
See supra Parts I.B.1, III.A.1. (explaining the elements of a disparate action claim and
arguing that employer use of credit checks may provide the basis for such a claim).
238 See Earle et al., supra note 18, at 18486 (discussing cases brought in other states with
the same allegation that were dismissed due to inability to establish a class of plaintiffs within
the appropriate time frame). This provides the lesson that a case should not be filed unless
and until a viable class of plaintiffs is assembled. See id.
239 See id.
240 See Jeffery S. Gutman, Drafting the Complaint, at 4.1.B.1, SHRIVER CENTER (2013), available
at http://www.federalpracticemanual.org/node/24. Employers can defend against a disparate
237
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strength of the facts presented by the plaintiffs to demonstrate a sufficient

probability of a disparate impact upon further discovery and argument.241
If the case reaches the discovery stage, there is also the risk that there will
be little or no documentation supporting the allegations that the use of
credit history created a disparate impact. 242
Despite the potential difficulties of bringing a case, the ultimate goal of
protecting employees can still be achieved even if the case is not
successful.243 The importance of bringing awareness to this issue cannot be
underestimated because, as awareness increases, so will the number of
plaintiffs bringing disparate impact claims.244 This increases the probability
that another case will be brought and may place pressure on employers to
proactively adjust their policies or seek other avenues to preserve their
business interests, such as supporting regulatory legislation like the one
proposed by this Note, see infra Exhibit B.245
B. Passing a Statute Restricting Employer Use of Credit Checks
This is a prime time to bring a proposed bill as set forth in Exhibit B, 246
as the Massachusetts legislature has been amenable to expanding its
protections against discrimination in the past and has proposed bills on
this very issue within the past few years. 247
impact claim by proving: the practice has a legitimate business purpose in light of the facts
and circumstances of the job in question; the practice is implemented uniformly and produces
no disparate impact; or the plaintiff has not sufficiently established a disparate impact case.
EEOC v. Steamship Clerks Union, Local 1066, 48 F.3d 594, 602 (1st Cir. 1995).
241 See Gutman, supra note 240, at 4.1.B.1.
242 See supra text accompanying notes 16466; see also, e.g., Sch. Comm. of Braintree v. Mass.
Commn Against Discrimination, 386 N.E.2d 1251, 1254 (Mass. 1979) (noting the inherent
difficulty of proving disparate impact by stating that the more recognizable instances of
discrimination have been labeled cases of disparate treatment).
243 See Gutman, supra note 240, at 4.1.B.1.
244 See THE FREE DICTIONARY, http://legal-dictionary.thefreedictionary.com/Test+Case (last
visited Feb. 17, 2015) (defining a test case as cases that are brought for the purpose of
establishing new rights and are a helpful foundation to setting new precedent).
245 See, e.g., Willner, supra note 142 ([V]oluntary or court ordered resolution and
remediation of [discriminatory] practices can benefit not only the immediately affected
individuals, but also applicants and employees of other companies which may revise their
practices in light of a systemic enforcement effort.).
246
See infra Exhibit B (outlining a new Massachusetts bill on disparate impact).

See supra Parts I.E.13, III.A.2; see also Porio v. Dept of Revenue, 951 N.E.2d 714, 720
(Mass. App. Ct. 2011) (noting the modification of MASS. GEN. LAWS ch. 151B, 4 (2012) to
include age as a protected status).
247
2014
1.
113
Advantages of Using the Legislature to Protect Against the

Use of Credit Checks
As well as the advantages discussed below, a proposed bill would also

provide the same, if not stronger, deterrent and awareness advantages as
would filing a cause of action.248 Passing the proposed bill, or one
substantially similar, best protects employees because it prevents
employers from using credit checks as a basis for employment decisions
aside from the narrowly tailored, job-related exceptionsregardless of
whether the applicant is a member of a protected group; thus giving
widespread protection.249 Under this law, all applicants not subject to the
exceptions are protected from review of their credit history.250 This
eliminates an employers ability to argue business necessity or non-creation
of a disparate impact.251 In addition, even those applicants or employees
within the exceptions have protections in place to regulate an employers
use of their credit information and contest perceived discriminatory uses.252
2.
Disadvantages of Seeking Protection through Legislation
Like any proposed legislation, there is a risk that it will not pass and
employers will continue to use credit checks lawfully.253 This depends on
how much influence the business community has on the Massachusetts
legislature and how susceptible the representatives are to their arguments
in opposition.254 As discussed, employers have many arguments against
restricting their ability to use credit checks in making employment
decisions255 and members of the legislature whose constituents are mostly
employers or business owners may be reluctant to pass such a law.256 The
legislatures failure to pass three prior bills is another indication of the risk
inherent in seeking change through legislation.257 However, these
proposals may also be indicators that the legislature is realizing the need
for such a law.258 In addition, U.S. Senator Elizabeth Warren of
248
See supra Part I.B.2, III.A.2.

Compare infra Exhibit B, with Mass. H.R. 1744, supra note 90, Mass. H.R. 3518, supra note
90, and Mass. H.R. 1731, supra note 90.
249
250
See infra Exhibit B.

See infra Exhibit B.
252 See infra Exhibit B.
253 See SCHOOLHOUSE ROCK: IM JUST A BILL (ABC 1975), available at https://www.youtube.
com/watch?v=H-eYBZFEzf8.
254 See id.
255 See supra Part III.A.1.ii.
256 See McMorris, supra note 60; SCHOOLHOUSE ROCK: IM JUST A BILL, supra note 253.
257 See supra Part I.E.1.
258 See, e.g., Mass. H.R. 1731, supra note 90; Mass. H.R. 1744, supra note 90; Mass. H.R. 3518,
251
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v. 49 | 83
Massachusetts is providing a strong example for the state legislature

through her proposed bill seeking to ban employer use of credit checks. 259
This is a risk the community should be willing to take in order to provide
protection to job applicants.260
While employers and business owners are free to express their
resistance to potential mandated change, individuals opposed to the
suggested changes must consider the actual effect of such legislation.261
First, the proposed bill is not an absolute ban on the use of credit checks. 262
Employers are free to craft policies and procedures, so long as these
policies fit within the proposed statutes reasonable requirements that
credit checks will be used only for individuals applying for relevant
positions as defined and in a manner that does not create a disparate
impact.263 As such, employers retain their ability to control and protect
their businesses.264 Further, those opposing the bill should find comfort in
the fact that the bills that would have created a more absolute ban on the
use of credit checks, leaving employers without discretion, have not been
passed.265 Any bill that passes will need to defer to employer control to
some reasonable extent.266
More importantly, the changes proposed in Exhibit B are changes that
are likely inevitable.267 The law is becoming more favorable to employees,
meaning that courts may find an employers business reasons for certain
policies unpersuasive when weighing them against the employees
interests, should employees choose to assert their rights in court. 268 Such
supra note 90.

259 See Shira Schoenberg, Sen. Elizabeth Warren Introduces Bill to Prohibit Companies from
Running Credit Checks on Employees, MASSLIVE (Dec. 17, 2013), http://www.masslive.com/
politics/index.ssf/2013/12/sen_elizabeth_warren_introduce.html.
260 See supra Part I.C.
265 See supra Part II.A.2. (discussing the current proposed bills on employer use of credit
checks).
266
See supra Part II.A.2.

268 See, e.g., Sch. Comm. of Braintree v. Mass. Commn Against Discrimination, 386 N.E.2d
1251, 125356 (Mass. 1979) (holding in favor of the employee after balancing the employers
business interest of having a limited sick leave policy against a female employees interest in
being able to take extended leave for maternity reasons). In so holding, the Court effectively
recognized that it was more important to strike down an employment policy that was
reasonably related to the business in order to reduce barriers to employment. See id. The Porio
Court found that there was a cognizable disparate impact claim alleging that the reduction in
267
2014
115
cases, citing employer use of credit checks as the problematic policy, are
viable options for employees,269 signifying that employers should consider
their business decisions contemporaneously with the rights of employees
to be free from disparate impact. 270 As such, employers may want to
reconsider their opposition to bills like the one proposed or take proactive
steps to adjust their policies to eliminate disparate impact. 271
CONCLUSION
The era of employer use of credit checks as a way to evaluate potential
job applicants and make employment decisions must come to an end.
Given the information available on the disparity between minority and
non-minority credit ratingsthe disparate impact created by use of credit
information and the general availability of other evaluative methods
there is simply no need for employers to continue this practice. However,
since many employers believe this practice is job-related or a business
necessity, it is unlikely that they will shift away from using this practice on
their own. Therefore, the law must change, either by way of legislation or
cause of action. The judicial and political climate in Massachusetts is ready
for proposed cases or bills seeking to restrict employer use of credit checks.
The complaint and bill outlined by this Note will pave the way for such
change.
force implemented by the employer had a disparate impact on the plaintiff due to his age,
despite the employers argument that the reduction was due to legitimate budgetary needs.
Porio v. Dept of Revenue, 951 N.E.2d 714, 71619 (Mass. App. Ct. 2011).
269 See supra Part I.D.2.
270 See Vann, supra note 210 (stating that employers need more guidance on whether their
policies are within the law and, if they are not, guidance to help bring these policies into
compliance).
271
See Willner, supra note 142 (arguing that employers need to update their guidelines and
should put systemic enforcement programs in place to ensure their policies are in compliance
with discrimination statutes).
KARPA_NOTE_18_FINAL
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EXHIBIT A
The following is intended to provide a general outline of a complaint
alleging that an employers use of credit history negatively impacted
minority applicants at a disproportionate rate, creating a disparate
impact.272
I.
Nature of the Action
This is an action under Massachusetts General Laws chapter 151B 4

(M.G.L. ch. 151B 4) and Title VII of the Civil Rights Act of 1964, as
amended 42 U.S.C. 2000e-2 (Title VII), to restrict unlawful employment
policies and practices that have a disproportionate negative effect on
applicants of particular race or national origin,273 and to provide
appropriate relief to the class of aggrieved . . . job applicants who were
adversely affected by such practices.274 Plaintiffs allege that since [named
time], the Defendant [employer] has engaged in a pattern of discriminatory
employment practices against [insert race/national origin] job applicants in
violation of M.G.L. ch. 151B 4 and Title VII.275
II. Statement of the Claims
In this section of the complaint, the plaintiff must allege that the
defendant employer, as identified in the parties section of the complaint,
has engaged in unlawful employment practices in violation of M.G.L. ch.
151B 4 and during what time period.276 Next, the complaint must explain,
with sufficient particularity,277 the specific discriminatory practice used by
the employer, its discriminatory effect, and on which particular protected
group.278 In addition, the complaint should allege that credit history is not
272 See infra Exhibit A.I. Note that the jurisdiction and venue and parties sections have
been excluded in order to focus the outline on the substantive disparate impact issues. See
infra Exhibit A.I.
273
See, e.g., Complaint at 1, EEOC v. Freeman, 2011 WL 337339 (D. Md. Jan. 31, 2011) (No.
RWT 09cv2573) [hereinafter Freeman Complaint]; Complaint at 1, EEOC v. Kaplan Higher
Educ., Inc., 790 Supp. 2d 619 (N.D. Ohio 2011) (No. 1:10 CV 2882) [hereinafter Kaplan
Complaint]; see also MASS. GEN. LAWS. ch. 151(b) (2012); 42 U.S.C. 2000e-2(k) (1964).
274
Freeman Complaint, supra note 273; Kaplan Complaint, supra note 273.
See, e.g., Freeman Complaint, supra note 273, at 1; Kaplan Complaint, supra note 273;
supra Parts I.C.12.
275
276
See supra Part I.B.1; see also, e.g., Freeman Complaint, supra note 273.
Gutman, supra note 240, at 4.1.B.1.
278 See supra Part I.B.1; see also, e.g., Freeman Complaint, supra note 273, at 24. For example,
this complaint alleges that the defendant employer has subjected a class of aggrieved Black
job applicants . . . to an ongoing pattern or practice of discriminatory failure to hire, by its use
277
2014
117
related to the position applied for or consistent with the business necessity
of the company; therefore, any use of such information is merely
pretextual.279 The complaint should also allege that there are lessdiscriminatory evaluation mechanisms employers can use to select which
job applicant to hire.280 The following is an outline of the claims:
Since [insert date range of alleged discriminatory use of credit checks],
Defendant [employer] has consistently used an employment practice which
has had the effect of disproportionately excluding plaintiffs [state
race/national origin] from employment. 281 Specifically, the defendant has
used, and continues to use, credit history information as part of its hiring
process, which has had, and continues to have, a significant disparate
impact on [these] job applicants.282 Studies show that [name group]
generally has lower credit ratings than people of other races or national
origin, and that this practice is not related to the job and is not a business
necessity.283 In addition, there are less-discriminatory alternatives available
to the employer.284
III. Prayer for Relief
The complaint should respectfully request that the court find the
employers use of credit checks unlawful because it creates a disparate
impact, and therefore request the court permanently enjoin the defendant
from discriminating against persons within a protected category by using
hiring practices that have a disparate impact on these applicants.285
of credit history as a selection criteria for hiring. Id.

279 See EEOC v. Steamship Clerks Union, Local 1066, 48 F.3d 594, 602 (1st Cir. 1995); see also,
e.g., Freeman Complaint, supra note 273, at 2.
280
See Freeman Complaint, supra note 273, at 34.

See id.
282 See id. In order to prove their claims, the plaintiff will need to provide studies that
demonstrate the disparate impact of employer use of credit checks on their protected class.
281
283
See id.
See, e.g., EEOC TESTS, supra note 10 (outlining the different types of tests used to
evaluate applicants, which are typically specific to the position, including cognitive,
personality, medical, physical ability tests).
284
285
See Freeman Complaint, supra note 273, at 5.
KARPA_NOTE_18_FINAL
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EXHIBIT B
This bill primarily draws from the strongest of the three proposed
Massachusetts bills and seeks to remedy the problematic aspects.286 The
proposed bill is as follows:
A BILL RESTRICTING EMPLOYER USE OF CREDIT CHECKS AND

OUTLAWING THE DISCRIMINATORY USE OF CREDIT CHECKS
PREAMBLE: The purpose of this bill is to prohibit employers from
discriminating against all current and potential employees, based on their
credit or financial history or report.287
SECTION 1. Chapter 93 of the General Laws is amended by
inserting after section 51A the following section:
Section 51B. (a) Except as provided in paragraph (b), no person,
including an employer, prospective employer, employment
agency, employment screener or licensing agency, shall:
(1) use a consumer report in connection with or as a criterion
for an employment purpose, including decisions related to
hiring, termination, promotion, demotion, discipline,
compensation, or the terms, conditions or privileges of
employment;
(2) request or procure a consumer report for the purposes
described in clause (1);
(3) ask an employee or applicant about his or her consumer
report or about any information contained therein regarding
credit worthiness, credit standing, or credit capacity.
(b) The provisions in paragraph (a) shall not apply if an employer
is required by federal or state law to use a consumer report for
employment purposes.
(c) Notwithstanding paragraph (b) of this section, an employer
shall not use a consumer report in a manner that results in
adverse employment discrimination prohibited by federal or
state law, including chapter 151B of the General Laws and Title
VII of the Civil Rights Act of 1964.
(d) If an employer obtains, uses, or seeks to obtain a consumer
286 See supra Parts I.E.13, II.A.2. This proposed bill draws from these prior proposed bills
for two reasons: (1) combined, these bills sufficiently address the disparate impact created by
the unregulated use of credit checks; and (2) using bills that have already received support
from Massachusetts legislatures as a backbone gives this bill a stronger chance at garnering
strong support. See supra Parts I.E.13, II.A.2.
287
See Mass. H.R. 1731, supra note 90.
2014
119
report pursuant to paragraph (b) of this section, the employer

shall:
(1) obtain the employees or applicants written consent, in a
document consisting solely of the consent, each time the
employer seeks to obtain the employees or applicants
consumer report;288
(2) explain which job requirements this report will be used to evaluate;
(3) explain if, and why, an adverse employment action is being taken
against that person based on their credit information;
SECTION 2: Remedies.
[(a)] Any person aggrieved by a violation of [Section 1] shall be
entitled to file a complaint with the Massachusetts Commission
Against Discrimination, under chapter 151B of the General Laws.
[(b)] Failure to comply with the provisions of this section shall
constitute an unfair practice under the provisions of clause (a) of
section 2 of chapter 93A.
[(c)] No person shall retaliate, discriminate, or take any adverse
action against an employee or applicant on the basis that the
employee or applicant has or intends to:
(1) file a complaint pursuant to paragraphs [(a)] or [(b)] of this
section;
(2) allege that the person violated any provision of this section;
(3) testify, assist, give evidence, or participate in an
investigation, proceeding or action concerning a violation of
this section; or
(4) otherwise oppose a violation of this section.
[(d)] No person shall require or request an employee or applicant
to waive any provision of this section. Any such waiver shall be
deemed null, void, and of no effect.
SECTION 3. Subsection (a) of section 51 of chapter 93 of the
General Laws, as appearing in the 2010 Official Edition, is hereby
amended by inserting after the words employment purposes,
in line 12 in clause (3)(ii), the following words: subject to the
provisions of section 51B of this chapter;
SECTION 4. Section 5 of chapter 151B of the General Laws, as
appearing in the 2010 Official Edition, is hereby amended by
inserting after the words and seventy-two, in line 4, the
following words: , or section 51B of chapter 93.289
288
289

See id.

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An Equal Opportunity Employer:

Proposed Judicial and Legislative

New England Law Review

lthough it is a well-known faux pas to discuss money with

See infra Part I.A.

See infra Part I.E.

Credit Checks & Disparate Impact

Part I of this Note discusses the background of disparate impact law

For years, employers have used pre-employment testing or other

New England Law Review

addition, it is unlawful to use selection practices that are not job-related or

Credit Checks & Disparate Impact

Disparate impact claims arise from many different employment

See EEOC TESTS, supra note 10.

New England Law Review

disparate impact claims is to remove employment barriers and eliminate

Use of Credit Checks Strongly Correlates with Race and

Credit Checks & Disparate Impact

Employers today using credit checks are relying on a socioeconomic

Critics Argue that Credit History Is Not Related to Most

Some of the harshest criticism of this practice is that credit history is

See Klein, supra note 39.

New England Law Review

circumstances that [have] little to no bearing on how a person would

General Description of the Trend

The largest problem facing disparate impact claims alleging

Nissim, supra note 18, at 50.

See MANOUSOS ET AL., supra note 22, at 80.

401 U.S. 424, 43236 (1971).

Credit Checks & Disparate Impact

have a significant purpose related to job performance is outweighed by the

Development of the Standard for Disparate Impact

One of the earliest cases discussing disparate impact in Massachusetts

See infra Part I.E.

New England Law Review

The central focus in employment discrimination cases is whether an

Credit Checks & Disparate Impact

Cox, 607 N.E.2d at 1040.

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E. Proposed Massachusetts Legislation

Bill 3518: An Act Relative to the Use of Credit Reports in

Bill 3518 was referred to committee in January 2011 and seeks to

Document/Bill/188/House/H1744.pdf [hereinafter Mass. H.R. 1744]; H.R. 3518-1595, 187th

Mass. H.R. 3518, supra note 90.

Credit Checks & Disparate Impact

qualification.96 The bill itemizes particular circumstances that would allow

Bill 1731: An Act Relative to the Use of Credit Reports in

See Mass. H.R. 3518, supra note 90.

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Bill 1744: An Act Regulating the Use of Credit Reports by

This bill does provide certain circumstances where an employer is

Mass. H.R. 1744, supra note 90.

Credit Checks & Disparate Impact

employers decision and explains the procedure to be followed should such

The Massachusetts Courts Failed to Resolve the Issue

Massachusetts case law on discrimination, as it currently exists, does

Mass. H.R. 1744, supra note 90.

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only as race, religion, gender, age, and disability.120 Socioeconomic status is

The Proposed Massachusetts Legislation Does Not

MASS. EMPLOYMENT PRACTICE, supra note 23, at 8.15.

See sources cited supra note 123.

See infra Part II.A.2.