An amendment to the Fair Credit Reporting Act was introduced in July of 2009, and hearings are being held now. Called the Equal Employment for All Act (HR 3149), the act would prohibit employer use of consumer credit background checking on prospective and current employees unless the job involves national security or requires significant financial responsibility. Employers would still be able to use background screening for a criminal record, etc.
Reasoning behind this was given as “credit checks have a discriminatory impact on racial minorities and violates the letter and spirit of the Civil Rights Act”. The hope would be that the legislation would open up jobs for those who qualify in spite of a poor credit history.
Employers claim that there is no need for this, as there are remedies provided in the Fair Credit Reporting Act. In testimony before the Subcommittee, SHRM representatives said that credit histories are merely a part of the puzzle, and that they are necessary because previous employers are reluctant to give a detailed assessment of former workers’ performance history and the hiring agent has to find other avenues to collect information.
There are other reasons for using credit checks. The National Retail Security Survey estimates that retail lost $14.4 billion in 2009 attributable to employee theft. A report on Occupational Fraud and Abuse said that financial pressures (living beyond financial means) or (experiencing financial difficulties) were the most common warning signs resulting in workplace fraud.
SHRM conducted a survey regarding employer use of credit info. They found that credit checks on all job candidates is the exception – only 13% of organizations do so. Others do so only for select jobs involving financial responsibility. Most use the credit check as a final screen, only after a contingent offer. This gives the candidate plenty of opportunity to explain their credit issues.
One other thing to consider is the current economy, and the resulting credit problems the unemployed encounter. These are unusual times, and that factor has to be considered when interviewing candidates. Overall the objective is just to be fair as we evaluate our candidates or employees.
Credit Checks Usage Limits?
- Posted Oct 19th, 2010
- by Ingrid Baker;
- Categories: Economic Trends, For Employers, Hiring Trends;
- Comments: 1
RSS Subscribe
Email Newsletter
Darnell Wyly
on Jun 17th, 2011
@ 12:47 pm:
I like your website! Better than others I have lately read covering this. Design is actually nice, mind if I copy this? Simply kidding?-Thanks!