Micromanaging in the Wrong Direction

Credit buying is much like being drunk.  The buzz happens immediately, and it gives you a lift.  The hangover comes the day after.         -- Dr. Joyce Brothers

Many of us have felt the effects -- both positive and negative -- of a buying binge.  Sometimes, we spend wisely.  At other times, our decisions are rational, but circumstances change, or we just get in a bit too deep.  Regardless of the reasons or the outcomes, we make these decisions voluntarily, ourselves.  No one puts a gun to our heads and says, "Buy this fridge on credit or else!"

Our credit histories can affect us in many ways, not least of which is in our efforts to find new employment.  Over recent years, employers have grown more sophisticated in screening employment applications and using all of the tools available to them, include credit reports.

Apart from the ongoing attack on using criminal histories to screen applicants, about which I will write more in the near future, there is a new bill pending in the Michigan House of Representatives, sponsored by the usual suspects, that would prohibit employers from using credit histories to screen potential employees.  Well, some employers would be prohibited.  The bill's drafters have apparently discerned that, in some cases, it might be a bad idea to have an employee with credit problems.

Under the bill, HB 4363, banks, credit unions, accounting firms, casinos, and insurance companies are largely exempted and thus able to use credit histories to screen employees.  All other employers are prohibited from doing so.

Why?

There are a couple of reasons supporters of this type of legislation will give.  The first is that a person's credit history is irrelevant to her job performance.  Is it really?  If so, why the exemptions for certain employers?  And since when does the government get to decide what is deemed relevant for a particular job?  Granted, certain broad categories related to personal characteristics (mostly involuntary) are prohibited bases for employment decisions under our civil rights laws -- sex, age, race, creed, national origin, religion, height, weight, etc.  But credit history?  That's usually the result of a voluntary act -- assuming credit obligations and the risk that payment will become difficult.  And if an employer determines, for example, that credit history is a good indicator of an employee's judgment and reliability, why shouldn't she be able to use it as a hiring tool?

A second reason offered by credit history opponents is that it has a disparate impact on minority applicants, presumable because they tend to have worse credit histories than white applicants.  Again, if this is true, why the exemptions?  Putting an exemption in the law does not wash away the discriminatory aspects of the hiring process, if there are any -- it enshrines them for those sectors who benefit from the exemptions. 

The exempt industries regularly handle cash or information pertaining to other persons' credit.  By exempting them, the law assumes that people with poor credit histories can't be trusted around money or others' personal financial information.  So why isn't there an exemption for cashiers? or lawyers' offices? or doctors' offices? or pharmacies? or any other business that handles money or confidential information?

To be consistent, this law should have no exemptions whatsoever.  As drafted, it is internally inconsistent and contradictory.  As conceived, it is simply stupid.

This is what happens when political hacks micromanage the millions of basic, everyday decisions made by employers and business owners.  They get it wrong.  In fact, they are incapable of getting it right, so they just need to get out.

Have You Hired a Criminal Today?

What do elections in Washington state, census workers, and employment discrimination have in common?

Criminals. Specifically, convicted felons.

There's a new trend emerging in our country, a trend that is as misguided as it is dangerous. The trend is to file lawsuits challenging the use of criminal background checks as discriminatory, based on the theory that certain minorities are represented disproportionately among convicted felons.

The scary thing is that some of these challenges are actually succeeding.

Washington state's constitution bars convicted felons from voting. Six felons, who also happen to be minorities, claimed that although this felon disenfranchisement law may not have been enacted with a discriminatory purpose, it interacts with a racially discriminatory criminal justice system and, as a result, racial minorities are disproportionately denied the right to vote.

The trial court twice dismissed these claims, but twice the Ninth U.S. Circuit Court of Appeals (the most reversed circuit court in the country) reversed the district court. The second time, the appeals court ordered judgment in favor of the plaintiffs, finding that the "the discriminatory impact of Washington's felon disenfranchisement is attributable to racial discrimination in Washington's criminal justice system" and therefore violates the federal Voting Rights Act. You can read the whole sordid mess here. (The judges in the 2-1 majority were both Carter appointments. Read more about the Carter legacy here.)

Across the country, a class action was filed in the U.S. District Court for the Southern District of New York, alleging that the U.S. Census Bureau unlawfully discriminates against minorities in its hiring process by conducting criminal background checks and requiring applicants to provide information regarding their arrest and conviction histories. So, in the view of the plaintiffs, there is nothing wrong with permitting murderers and rapists to go door-to-door to count heads, all in the name of good government.

This approach will soon spread to the employment context. In fact, there have been a few such scattered cases over the last five or six years, but that trickle will soon become a serious wave. Aside from attempting to force employers to disregard criminal history as a factor in hiring decisions, this trend will put employers in a terrible fix, due to another social justice-inspired concept, negligent hiring.

Although they may vary somewhat from state to state, negligent hiring claims generally go something like this -- (1) an employee performs a bad act; (2) the employee is inherently unfit or has committed previous acts from which unfitness can be inferred; (3) the employer has actual or constructive notice of the employee’s unfitness; and (4) injury results from the employee's actions. Where an employer fails to perform an adequate background check and, as a result, hires an unfit -- perhaps even violent or criminal -- employee, you have a classic example of negligent hiring.

When this latest trend takes hold, however, the employer will be faced with the Morton's fork of either performing background checks, thus risking a discrimination lawsuit, or not performing such checks and risking negligent hiring claims.

This is what happens when liberals and the courts attack everything -- soon the attacks are turned upon themselves. But the trial lawyers don't care because they don't get hurt. Employers get hurt, and when employers suffer, so do their employees or the prospective employees who will never get hired.

The most galling aspect of this entire mess is that it centers around and is intended to benefit people who deliberately broke serious laws and were convicted. Why bother sending them to prison? If employers cannot choose not to hire convicted felons and states cannot bar them from voting, is there any basis on which choices can be made? And what's next -- you can't discriminate on the basis of education level? experience? work history? Aren't all of these susceptible to the same challenges as criminal history?

In National Review's first issue, William F. Buckley said of his creation, "It stands athwart history, yelling Stop, at a time when no one is inclined to do so, or to have much patience with those who so urge it." To the trial lawyers and all those who so diligently work to make sure convicted felons stop by our houses and populate our workplaces, I say, Stop!