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The "New" reality of using Employment Credit Reports
Published by Coeus Global in Risk Management • 9/10/2015 9:03:56 AM
The use of background checks as a part of the hiring process has long been understood to be a valuable component of the on-boarding process.
It is common practice to use a variety of search types when screening a prospective candidate.
Screening for candidate information such as criminal, motor vehicle and education records is rarely questioned as useful when conducting employment background checks.
One common background check component that is currently under a great deal of scrutiny is the use of employment credit reports .
Employment credit reports differ from the traditional type of credit report that is used when obtaining personal credit and they are tailored for use in making informed employment decisions.
Employment credit reports do not include account numbers, do not show an individual's credit score, do not show the date of birth of the person and do not have any negative impact on the credit score of the person being evaluated .
Recently, many states and some cities have been asking the question "Is it legal for an employer to check your credit report and use that information as a basis for making a hiring decision?
As you can imagine, this has caused a great deal of debate and has led to a number of states and some cities to enact new legislation in an attempt to answer this question.
Currently, eleven states limit employers' use of credit information for employment purposes-California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont and Washington- and in their 2015 legislative sessions, seventeen additional states are considering legislation to restrict the use of credit information.
Also, a number of localities have enacted specific legislation limiting the use of credit information including New York City; Madison, WI; Cook County, IL and Chicago.
The majority of the current and proposed legislation does not eliminate the ability of organizations to conduct credit histories altogether, instead they place strict limits on the types of positions for which this information can be used.
So while many people feel that the use of employment credit reports should be banned, the reality is that even the law makers, through their legislative efforts, see the benefit of this type of information when hiring for certain types of positions.
It does not appear that the goal of these laws is to eliminate the conducting of employment credit histories, but to make sure that this type of information is being used only when necessary and in a thoughtful , responsible way.
It is clear that regardless of which side of the fence you are on, pro or con, you must take care to understand where and when it is legal and appropriate to use employment credit histories as a part of your hiring process.
There is no need to be frightened by all of this scrutiny but instead understand that any new legislation may actually help to clarify this complex issue and aid in minimizing your potential exposure to future liabilities.
The best course of action moving forward would be to speak with qualified background screening experts, like those at my company Coeus Global, whenever you feel there may be a need to add employment credit reports to your screening toolbox.
I referenced the "New Reality" in the title of this piece but the "Actual Reality" is that there are still valid and legal instances when an employment credit report should be used and there are still legal methods by which to obtain them.
The only "New" part is that the spotlight is now focused on this topic which will hopefully light the way for more people to find employment while preserving the rights of employers to make informed hiring decisions.
Contact Coues Global today to learn more about our best-in-industry services.
Prevent the unthinkable from happening to your organization and protect your valuable reputation today!
It is common practice to use a variety of search types when screening a prospective candidate.
Screening for candidate information such as criminal, motor vehicle and education records is rarely questioned as useful when conducting employment background checks.
One common background check component that is currently under a great deal of scrutiny is the use of employment credit reports .
Employment credit reports differ from the traditional type of credit report that is used when obtaining personal credit and they are tailored for use in making informed employment decisions.
Employment credit reports do not include account numbers, do not show an individual's credit score, do not show the date of birth of the person and do not have any negative impact on the credit score of the person being evaluated .
Recently, many states and some cities have been asking the question "Is it legal for an employer to check your credit report and use that information as a basis for making a hiring decision?
As you can imagine, this has caused a great deal of debate and has led to a number of states and some cities to enact new legislation in an attempt to answer this question.
Currently, eleven states limit employers' use of credit information for employment purposes-California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont and Washington- and in their 2015 legislative sessions, seventeen additional states are considering legislation to restrict the use of credit information.
Also, a number of localities have enacted specific legislation limiting the use of credit information including New York City; Madison, WI; Cook County, IL and Chicago.
The majority of the current and proposed legislation does not eliminate the ability of organizations to conduct credit histories altogether, instead they place strict limits on the types of positions for which this information can be used.
So while many people feel that the use of employment credit reports should be banned, the reality is that even the law makers, through their legislative efforts, see the benefit of this type of information when hiring for certain types of positions.
It does not appear that the goal of these laws is to eliminate the conducting of employment credit histories, but to make sure that this type of information is being used only when necessary and in a thoughtful , responsible way.
It is clear that regardless of which side of the fence you are on, pro or con, you must take care to understand where and when it is legal and appropriate to use employment credit histories as a part of your hiring process.
There is no need to be frightened by all of this scrutiny but instead understand that any new legislation may actually help to clarify this complex issue and aid in minimizing your potential exposure to future liabilities.
The best course of action moving forward would be to speak with qualified background screening experts, like those at my company Coeus Global, whenever you feel there may be a need to add employment credit reports to your screening toolbox.
I referenced the "New Reality" in the title of this piece but the "Actual Reality" is that there are still valid and legal instances when an employment credit report should be used and there are still legal methods by which to obtain them.
The only "New" part is that the spotlight is now focused on this topic which will hopefully light the way for more people to find employment while preserving the rights of employers to make informed hiring decisions.
Contact Coues Global today to learn more about our best-in-industry services.
Prevent the unthinkable from happening to your organization and protect your valuable reputation today!