The Equal Employment Opportunity Commission recently introduced an initiative dubbed E-RACE, or Eradicating Racism and Colorism from Employment. Through that effort, the EEOC has found that employer policies on criminal and credit histories may have an adverse impact on certain individuals, particularly those of African American or Hispanic descent.

As a result of that initiative, according to an article by Human Resource Executive Online, many employers have seen an increase in EEOC requests for information concerning background check procedures and policies, which has led to an increase in lawsuits.

The EEOC vs. Freeman lawsuit filed in September 2009 alleged that the company's use of credit and criminal history checks continues to have a significant disparate impact on African American applicants, while criminal history checks specifically have an adverse impact on Hispanic and male applicants.

The previously-filed EEOC vs. Peoplemark lawsuit based on complaints from African American applicants alleged that the company's policy denies employment to any person with a criminal record, which has a disparate impact on African American applicants.

Credit reports, which can have an adverse impact on any job seeker, are the focus of the Equal Employment For All Act, a proposed bill sponsored by Rep. Steve Cohen. That bill would amend the Fair Credit Reporting Act to ban employers from using only credit reports to make hiring or promotion decisions.

Two states - Washington and Hawaii - have already adopted laws that restrict the ability of an employer to rely on an employee's or applicant's credit history when making personnel decisions.

In Washington, employers can only obtain credit information for employment decisions if such information is related to the job. In Hawaii, employers can only conduct a credit check if such information has a direct relationship to an occupational qualification and a conditional job offer has already been made.

A bill proposed in Connecticut would require employers to prove the necessity of implementing a credit check. In Wisconsin, a bill has been proposed that would place credit history checks among the unfair discriminatory employment practices prohibited by state law, except when such a check is directly related to an employee's job.

Similar bills have been proposed in New York, Missouri, Ohio, New Jersey and Michigan. A bill passed by both the California House and Senate was later vetoed by Gov. Arnold Schwarzenegger.