Should Your Business Use Credit Checks on Job Applicants?
Posted by Matt Krautstrunk on July 7, 2011 in Business Management [ 0 Comments ]
Individuals looking for employment often times have a number of hurdles to climb in order to land that new job. A number of employers believe using background checks and credit searches on applicants gives them a feel for if the applicant is honest and good at managing their daily lives. To many individuals, peering at one’s history with credit cards and loans however is going a step too far.
Employers should not assume that because a potential candidate for their company has a bad credit history they will then turn out to be a bad employee.In an effort to be sure that employers do not go too far in using credit history to screen each and every applicant, some states have been discussing and/or passing legislation to limit the reach of businesses.
As federal law reads, an employer is required to get written permission from an applicant to run a credit check. Given that replying no may send up a red flag to a possible employer, how many applicants will actually turn down the request?In Maryland, legislators went as far as to introduce a bill that would place limits on checking the credit of job applicants. As some legislators see it, doing credit checks on job applicants is akin to an invasion of privacy. While only a handful of states have placed limits on how far employers can go with credit checks, another dozen or so are mulling over whether or not to follow suit. Maryland’s proposed bill would permit employers overseeing sensitive data to run credit reports, including running checks on those individuals applying for high-level positions.
The bill would, however, prohibit employers from utilizing a credit check to turn down an applicant for a job, or penalize or discharge someone presently employed. Those companies violating the law are at risk of receiving a $500 fine on a first offense and up to $2,500 for continued violations.
According to a 2010 survey of employers from the Society for Human Resources Management, 60 percent of employers reported running credit checks on a number of job applicants; an increase of 18 percent from a similar survey four years earlier.Given that the recent recession placed record numbers of people in temporary layoff mode and out of work permanently in a number of cases, advocates of a credit history protection bill say it is only right that applicants not be penalized with a damaged credit report.
As more individuals look to return to the workforce in 2011, giving them credit for their workplace experience should trump how much they owe on a credit card or loan.
This post was written by: Dave Thomas, a writer for Resource Nation
Image credit: whatshowsupinbackgroundcheck.com