States moving to bar some types of job-applicant checks
August 11, 2009 by Jim GiulianoPosted in: Hiring, In this week's e-newsletter, Latest News & Views, policies
Advocates for the unemployed say in this tough economy, using certain types of background checks for job applicants is unfair. Some state state legislatures agree, and are taking steps toward barring those checks.
According the Society for Human Resources Management, about 40% of employers use credit checks as part of the hiring process. Much of the time, the checks are done on applicants vying for jobs involving the handling of money.
But other times, the checks are done just to gauge the applicant’s general reliability and decision-making. And that’s where the problem arises.
Or as advocates for the unemployed insist: If someone is jobless and has credit problems as a result, how is that person supposed to climb out of debt when jobs are being denied because of poor credit?
The argument is making a degree of sense to some lawmakers:
- New York State requires that any background check be directly related to the job being sought.
- Legislators in Ohio and Michigan — a state especially hard-hit by unemployment — are weighing bills that bar credit checks altogether from being used as a basis for hiring.
- In July, Hawaii approved a measure that allows employers in that state to review a credit history only after making an offer and requires the credit check to be “directly related” to job qualifications.
- Similarly, in Washington State, there’s been a law on the books since 2007 that mandates credit checks can be done and used only when they are “substantially related” to the job.
As has been the case for years, federal law requires employers to get the consent of job applicants before running credit checks. And if you’re considering denying someone a job based on a check, you have to notify the applicant, who must be given a chance to explain the circumstances and point out erroneous information.
Tags: credit check, Hawaii, Michigan, New York, Ohio, Society for Human Resources Management, washington
August 17th, 2009 at 10:41 am
We have always used the credit history as a part of the screening process. For the last year we have placed less emphasis on it. Especially if the history shows debt issues only for the last 2 years. I think though that we are leaning towards phasing it out completely. I honestly have not seen a indicator that credit issues have a direct impact on the worthiness of an applicant. Especially if we do not know and can not ask for detailed information on their personal lives. I think everyone just gravitated towards using it to see if someone was responsible but there are so many factors that can affect a credit history. I think we should not be able to use it and neither should insuramnce companies to determine your house or car insurance rates!
August 17th, 2009 at 10:48 am
I had my credit report was pulled when I bought a new house. Wasn’t I surprised to see I had cosigned for a loan at a horse betting track in Vegas for my ex-husband. You can’t trust all the information so why would you want to use it?
August 17th, 2009 at 10:49 am
Cindy… thank you.
I refuse to work for a company that does credit checks. It is none of my business… and frankly even if the job involves money, a background check is sufficient. Otherwise, it would be saying “you have bad credit, therefore you are going to rob the company”. And I don’t want to hear about the whole nonsense about if you can’t handle your own money then how can you handle company money… ridiculous. Most positions with that much responsibility hire in people with proven track record anyway.
August 17th, 2009 at 11:45 am
I agree Josh, how someone handles their personal finances is not an indication of how they will act on the job. I have known people (myself included) that have mangled their personal finaces badly, but have shown to be excellent employees. I have no problem with a company looking at the credit report; it is part of your background, I do have a problem with a company using that as a sole reason to not hire someone.
August 17th, 2009 at 2:54 pm
We do credit checks for several positions, one of which is for property managers and maintenance personnel for high end condos and townhouses. Since we have our employees entering our tenants’ homes, sometimes when the tenant is not present, we feel we need to do this form of due diligence. We’re not saying that bad credit means that someone will fall to temptation but for the sake of our tenant population we need to limit as much risk as possible.
August 18th, 2009 at 5:12 pm
Whats the point of interviewing candidates if we resort to credit checks. Whats next lie detector? An employee’s performance should not be based on their credit score.
August 18th, 2009 at 5:42 pm
Our society has moved to reliance on quantifiable numbers. Unfortunately, those numbers tell only a small part of the story and relying on them too heavily will disqualify an entire pool of highly qualified candidates. If you must, use a credit check only as a tiny part of the evaluation process — better yet, don’t use it at all. There are better ways to determine a candidate’s fitness for the position.
August 20th, 2009 at 9:19 am
Also, companies need to be consistent when it comes to credit check policies. The company I work for has an internal policy that they will not hire a candidate with a low score. Since I’ve been working here, they have not been consistent. Based on who you are, your credit score could be 300 with collections from non-medical entities and still land the job. While others are not selected with the same credit score. It is so unfair…….