SA 3795 Threatens to Ban Credit Reports at Federal Level


We’ve written extensively about legislative efforts throughout the country to ban credit reports from the employment screening process.  Well, the Senator Dianne Feinstein has now introduced a senate bill (SA 3795) that would effectively ban the use of this important screening tool for most employers. We picked this up from Seyfarth Shaw’s One Minute Memo.

Employers may be aware that three states (WA, HI, and OR) currently have restrictions on an employer’s use of applicant or employee credit history in making employment decisions, and that there has been pending legislation at the federal level t0 do the same since July 2009.  On March 30, 2010, we (Seyfarth Shaw) issued a One Minute Memo on this topic, “Further Restrictions on Use of Credit Information in Employment Decisions: Oregon Joins Washington and Hawaii in Restricting Use; Legislation Pending at the Federal Level.”

In a new development, Senator Dianne Feinstein of California recently introduced SA 3795 as an amendment to Fair Credit Reporting Act.  She submitted this proposal as part of an amendment to bill S. 3217 “to promote the financial stability of the United States by improving accountability and transparency in the financial system, to end ‘too big to fail,’ to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices.”

Similar to the pending HR 3149 which is currently in committee, Senator Feinstein’s bill proposes to restrict an employer from using a “consumer’s creditworthiness, credit standing, or credit capacity” in making any employment decision or for the basis of taking any adverse action—regardless of whether a consumer gives an employer consent to use such information.

The only exceptions to this prohibition would be for:

1) national security or FDIC clearance;

2) employment with state or local government agency which requires the use of this information;

3) employment in a management position with access to

customer funds at a financial institution; or

4) as otherwise required by law.

Given Senator Feinstein’s particular commitment to consumer protection legislation in the past, the introduction of SA 3795 gives added momentum to this hot button topic, and we encourage all employers to monitor this legislation.

  • 70+ Million Americans Suffered “Bad Credit” (Previous to July ’09) long before the full economic collapse – that’s more than 1/3 of the entire population between 20 and 75 years old

    379,000 Bankruptcies Filed Q1, 2010, (17 percent increase over Q1, 2009 during a year in a year which they soared upward by 32%)

    35% Increase in Foreclosures and a 16% Increase in Foreclosure Notices Q1, 2010 (over Q1, 2009) and 1 in every 4 Homes in America are at least 10+ % “underwater.”

    In survey after survey, including a recent MSNBC survey, more than 90 percent of Americans say that workplace discrimination based upon someone’s personal credit report is wrong and should be illegal. ZERO statistical evidence exists to tie bad credit reports to fraud! It’s already illegal in 3 states and HR3149: The Equal Employment for All Act would make it illegal in every state, but most Americans don’t even know the legislation exists. Please support the overwhelming will of the people and the rights of highly qualified American workers to compete on a level playing field during this horrible economic disaster. Join our FB PAG at: or shoot us an e-mail at with”sign me up” in the subject line.

  • Justin Fishbein

    Credit reporting agencies have been protecting the shady practices of their credit card company clients with their 24, 29, or 32% interest rates.

    Now, you expect that people should be open and helpful to them meddling in people’s job searches, oh and making more money off the misery of other people?

    You are obviously a person with no soul.

    How are people out of work supposed to find jobs?

    Where is your evidence that persons with bad credit are more likely to commit fraud or other financial-related crimes?

  • Debbie

    I agree with the law. If you want people to pay their bills they need to be employed. Most of the debt collectors are unscrupulus and will post to peoples credit reports incorrect information. They need to be regulated and this attempt to keep them from affecting employment is just what this country needs since the banks were allowed to run the economy into the ground and get bailed out while they refuse to help the taxpayers.

  • Just read and will re-post. Thanks for the clarity. Appreciate that this article is written so that the common man’ can understand. We do have one small typo in #10…It reads: Maybe your hoping. Should read: Maybe you’re hoping.Thanks.