To Check Credit Backgrounds or Not? That is the Question
Millions of Americans are in a credit mess. While half of these people have credit problems due to health problems, divorce, or loss of long-term employment, others simply spend more than they make. Employers argue that using employment credit checks can establish not only workers’ identity, but their fiscal responsibility, honesty and integrity. Insurance companies use credit reports in underwriting Automobile insurance based on the assumption that people with poor credit history tend to get into more accidents, file more false claims, and malinger or create injuries.
Should your company conduct credit background checks? The answer is a resounding “yes” if the employee is in a security position or handling your money or that of a client. Banks and financial service companies run employment credit background checks routinely. As for everyone else, legal considerations will affect your decision. The Fair Credit Reporting Act requires disclosure and consent before a company can use a third-party reporting service. Then there’s the question of privacy. Employees and their lawyers are sure to argue that one’s credit history has such a remote relationship to a worker’s ability to perform that it’s an “invasion” of their privacy. You can counter this argument by severely restricting who gets to see the report information and sharing the information with the employee so that they can guard against inaccuracies caused by identity theft and inaccurate reporting.
Lastly, there is the concern that credit checks may generate a “disparate impact” on protected employee group. Ultimately, unless the worker will be in a financial/security type position, bear in mind that a person’s credit history is only one part of the decision-making that goes into the hiring process.
We encourage you to use such reporting agencies as www.globalhrresearch.com that have the staff expertise to help you properly access and manage sensitive, credit, and other background information.
