Court Dismisses EEOC Suit Asserting Discriminatory Impact of Credit Checks

An Ohio U.S. District Court has dismissed the EEOC’s lawsuit against Kaplan Higher Learning Education Corp., which claimed that Kaplan’s systematic use of credit reports to screen applications for financial positions produced a discriminatory impact on minority applicants.  The decision provides some validation for a common business practice of identifying applicants whose credit background may warrant additional scrutiny if they are to be placed in a position of financial trust.  Notably, Kaplan did not have a per se exclusion rule for anyone who met certain adverse criteria.  Rather, they assessed screened applicants on an individual basis for the purpose of determining actual risks.

In a twist of irony, the Court permitted defendants to discover the EEOC’s own practices regarding the use to credit checks in employment.   It turned out that the EEOC also ran credit checks on job applicants, requiring credit checks for 84 of the 97 positions at the EEOC.  Mirroring the defense argument, the EEOC handbook based the need for credit checks on the notion that “overdue just debts increase temptation to commit illegal or unethical acts as a means of gaining funds to meet financial obligations.”

EEOC v. Kaplan (N.D. Ohio 2013)