A retail store owner wants to hire another employee and believes that applicants with poor credit reports are potential shoplifters. A sales manager has to decide between two candidates for promotion and asks them if they ever had trouble meeting payments on their cars.
Both the retail store owner and the sales manager may be violating state law.
Right now, 17 states are considering limitations on an employer’s use of credit reports during employment background checks: California, Connecticut, Florida, Georgia, Indiana, Kentucky, Michigan, Missouri, Montana, Nebraska, New Jersey, New Mexico, New York, Ohio, Pennsylvania, Texas and Vermont. These states will likely join Hawaii, Illinois, Maryland, Oregon and Washington in limiting an employer’s right to consider the consumer credit report of a job applicant or employee.
The federal government is also working on an act to prohibit (not merely restrict) employers from using credit checks to decide against hiring a job applicant.
Almost every state law has exceptions (for example, the Illinois law exempts banks), but the exceptions vary from state to state. The reach of the law also varies, with Illinois prohibiting both credit reports from an agency and any questions to an employee or applicant about their own credit history.
Do you currently use consumer credit reports or ask questions about a person’s credit history when you make hiring, promotion, reassignment or firing decisions?
With fines running up to thousands of dollars for multiple abuses, companies have to be more careful than ever when conducting a background check. Whether you are filling a position from outside or within your company, ARS is here to help you avoid the pitfalls of changing state and laws about employment background checks. We’re the experts. Call us today.