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.
