In a narrow vote Thursday night, Louisville Metro Council struck down a proposal to bar employers from considering credit scores or credit histories in deciding who to hire.
The body’s seven Republicans were united in opposing the measure, with Democrats Brent Ackerson, Mark Fox, Pat Mulvihill, Cindi Fowler and Madonna Flood joining them. The proposed ordinance, sponsored by District 7 Metro Council Member Paula McCraney, a Democrat, would have codified the use of a job applicant’s credit history in the hiring process as a discriminatory practice. It disproportionately affects people of color and women.
Like other local anti-discrimination laws, Metro’s Human Relations Commission would have been responsible for enforcing the new rule.
At a recent committee meeting, McCraney said her motivation to create the ordinance was, in part, personal. She said she grew up poor and had a bad credit score as a young woman in Tulsa. She went on to eventually become a vice president of a bank.
“People do have bad credit, but it does not indicate their employment importance,” McCraney said. “If a poor, Black girl like me can rise to the occasion today, in the capacity that I sit here…then everyone deserves an opportunity.”
The proposal ultimately failed on a 12-10 vote. District 17 Council Member Markus Winkler, a Democrat, abstained because he said the ordinance would impact his job as a recruiter.
Nearly a third of employers run credit or financial checks on some job candidates, according to a 2018 survey. The thinking generally goes like this: If someone asks for a loan then misses a payment or doesn’t pay it back, maybe that says something about their trustworthiness or how they would handle other responsibilities.
In an interview with WFPL News prior to the vote, McCraney said she believes that sort of reasoning is flawed, especially at a time when many families are financially impacted by the pandemic, through no fault of their own.
“There’s a lot of reasons why people might have bad credit, and heaven forbid they would have to now try to get a job to better their family, to pay their bills and not be able to get one because of their credit report,” she said. “It’s like a perpetual problem they will always have.”
Supporters of the ordinance pointed to recent studies that found the practice of using credit histories this way puts some people of color and women at a disadvantage.
A 2007 report from the National Consumer Law Center and the Center for Economic Justice found that Black and Latino Americans were over-represented among consumers with low credit or no credit at all. The National Partnership for Women and Families also found that U.S. Census data from 2010 showed households headed by single women were 75% more likely to have zero or negative net worth.
The proposed ordinance voted down Thursday night included exemptions for people applying for jobs in law enforcement or a profession that would require regular access to large sums of money.
District 19 Metro Council Member Anthony Piagentini, who heads the Republican caucus, argued that if credit checks are truly discriminatory, there should have been no exemptions to the ban. He voted against the measure.
“A credit rating tells you if somebody borrowed money, made a promise to pay that money, and didn’t fulfill that promise,” he said. “It is not a judgement on their race, it is a judgement on a lot of other factors and their decision-making capacity.”
District 13 Council Member Mark Fox, a Democrat and former Louisville police officer, said he agreed with Piagentini that credit scores were useful information for employers. He drew from his own experience conducting background investigations.
“A credit check gives the opportunity to look into the window of that person’s world and how they’ve delivered upon their word,” Fox said. “If there are things beyond someone’s control, like your ex-spouse ran up the credit cards buying a boat right before you got a divorce, that’s something everyone can understand.”
Fox, Piagentini and other members opposing the proposal said they believed small businesses would have been negatively impacted by it. Unlike large employers, they said small businesses owners could lose their entire livelihoods if an employee makes a mistake with even a few thousand dollars.