Credit report

BOSTON — More bosses in Massachusetts are weighing the credit worthiness of job candidates before making a hire — a practice that some lawmakers say unfairly keeps people with bad credit from landing a job.

On Thursday, the Senate takes up a proposal to restrict employers in most cases from using financial information such as credit scores to decide whom to hire, promote or fire.

Lawmakers behind the effort say many people have bad credit through no fault of their own, because of medical bills or an unexpected layoff. There’s little evidence of a connection between someone’s work ethic and creditworthiness, they argue.

“People looking for a job shouldn’t be judged on their past credit history. It’s punitive,” said Sen. Joan Lovely, D-Salem, a member of the Senate Ways and Means Committee, who supports the measure. “They should be judged on their experience and education.”

But the proposal is drawing plenty of opposition from the business lobby, which says credit history checks are appropriate for many jobs in the financial services industry, or professions where employees handle money.

“Our members have employees who deal with sensitive financial information and large-scale transactions,” said Jon Skarin, senior vice president of the Massachusetts Bankers Association. “They want to be assured that the people they are hiring don’t have anything in their credit history, such as large debt and other financial issues, where they might be more likely to do something illegal.”

Chris Flynn, president of the Massachusetts Food Association, said the current proposal lacks safeguards.

“There are many reasons why employers would want to do a credit check to make sure that an employee is appropriate for their operations,” he said. “There need to be protections for companies whose employees handle sensitive financial information.”

Senate Minority Leader Bruce Tarr, R-Gloucester, said he has concerns about restricting hiring practices, especially in the financial services industry, which he noted is one of the state’s major employers.

“We’ve worked hard in the past to protect the business climate for that industry, because it has good paying jobs and opportunities for advancement,” he said.

“We need to make sure that anything we do doesn’t have a chilling effect.”

Candidates for jobs that involve regular access to at least $10,000 during the workday would be excluded from the rules. So would people applying for national security clearance or managerial positions at financial institutions that are exempt from the state’s minimum wage law.

Even in those cases, employers would need written permission from employees or applicants to check their credit.

Tarr has filed amendments to widen the exemption and allow credit checks for jobs with access to at least $5,000 every day, and to expand the list of exempted positions to include those with access to personal financial information or financial accounts.

“If you’re a small business owner, the misappropriation of $10,000 could be severely damaging,” he said.

At least 11 states have passed laws limiting the use of employment credit checks — including Connecticut, Vermont and California, according to the National Conference of State Legislatures. Several more are considering similar bills.

Congress is also considering a bill prohibiting employers from requiring workers to disclose their credit history.

A 2013 study by Demos, a New York-based liberal think-tank, found that about one-third of employers use credit checks to screen applicants. The study found 1 in 10 job-seekers has been denied work because of credit reports.

“Despite their prevalence, little is known about what credit checks actually reveal to employers, what the consequences are for job applicants, or employment credit checks’ overall impact on our society,” the study’s authors wrote.

Federal law allows employment credit checks under the Fair Credit Reporting Act. The law requires employers to get an applicant’s permission before pulling a credit history with one of three main reporting agencies.

The law only restricts the use of certain information, such as old bankruptcies and paid tax liens.

Consumer advocates such as the Massachusetts Public Interest Research Group and National Consumer Law Center, based in Boston, say the federal law doesn’t do enough to protect a growing number of people with bad credit.

“As many as 1 in 3 credit reports have significant errors that could ultimately cost someone their job,” said Deidre Cummings, MassPIRG’s legislative director. “You simply cannot base an employment decision on something so fraught with errors.”

Christian Wade covers the Massachusetts Statehouse for the North of Boston Media Group’s newspapers and websites. Reach him at cwade@cnhi.com.