Six Myths About Using Credit Reports For Employment Screening

Finally we’re getting some factual reporting on the use of credit checks for employee screening.  Erica Sandberg, a Personal Finance Expert / Reporter, wrote an excellent article “6 myths about employer credit checks“.

Here’s a recap:

Myth No. 1: Most employers pull all applicant’s reports.

• Truth: Few do, and usually for specific reasons.

Myth No. 2: Employers and lenders look for the same information.

• Truth: Employers take a longer view on your credit past.

Myth No. 3: Poor credit will immediately disqualify you.

• Truth: Your checkered credit history may be ignored.

Myth No. 4: Employers use credit checks to discriminate.

• Truth: Employers pull reports to protect themselves.

Myth No. 5: All negative information is bad.

• Truth: Some credit report information is more alarming than others.

Myth No. 6: Employers don’t care about your reasons for having bad credit.

• Truth: They care a lot.

Read the entire article here.

Photo Credit: TheTruthAbout…

How To Use Credit Reports For Employment Background Checks

Maryland joins Hawaii, Washington, Oregon and Illinois as states that recently passed laws regulating the use of credit history-related information by employers for employment purposes. The Maryland law restricts the use of credit reports and credit history information unless specified conditions are met.

Employment Practices Solutions, Inc. (EPS), a human resources consulting organization, offers the following tips for employers in an article titled:

To Check or Not to Check: The Pros and Cons of Using Credit Reports in the Hiring Process

If an employer currently uses, or is contemplating the use of, credit histories to evaluate applicants, they should consider the following:

1. Is there a clear policy or practice regarding what positions will include a consideration of credit histories?
2. Are they used consistently for all applicants to those positions?
3. Is there a sound business reason to use the credit information for each of the positions that they are reviewing it for? That is, is it job-related? (i.e., will the position require the handling of money or assets, making fiduciary decisions, access to trade secrets or confidential information?)
4. Are there any applicable laws in the states in which they have employees? If so, is the employer considered a “covered employer” and are their current policies and practices consistent with such laws?
5. Are they getting the credit information from a reliable source?
6. Does the credit information have a record of reliability?
7. Have their HR professionals and/or hiring managers been trained in how to use and/or interpret credit reports?
8. Are applicants being given the opportunity to review and respond to the information contained in the credit reports or are all applicants with a weak credit record screened out?
9. Is the credit history used as a deciding factor between applicants with equal qualifications?
10. At what point in the selection process is it being used?

Related Posts:

• How Credit Checks Affect The Decision To Hire - A poll by SHRM  provides an up-to-date look at the impact of credit checks on the decision to hire. It looks at factors that have the most impact on hiring decisions, the reasons that organizations conduct credit checks, the types of job candidates most likely to be subject to credit checks and more.
• Don’t Ban Pre-Employment Credit Checks - Evil HR Lady (Suzanne Lucas) offers some common-sense advice for employers on how to properly use credit reports.

Photo credit: shawnzrossi

New Hampshire to Reorganize Court System

News reports this week confirmed rumors that New Hampshire plans to reorganize their court system, eliminating approximately 60 court clerks. The money saving effort, will see many clerks dismissed or demoted. In their place, New Hampshire plans to adopt a “circuit court system” with the remaining clerks managing more courts. If passed by the legislature, the reorganization will go into effect on July 1, 2011. New Hampshire’s court system has not reported whether delays are expected as a result of the reorganization.

Read more here.

Photo credit: Zoom Zoom

People With Criminal Records “Need Not Apply”

Hopefully your company doesn’t have this kind of policy…

(Source: yubanet.com) According to the National Employment Law Project (NELP) more than one in four U.S. adults — roughly 65 million people –have an arrest or conviction that shows up in a routine criminal background check, and a new report from NELP finds that these Americans are facing unprecedented barriers to employment. With the rapidly expanding use of background checks, employers are routinely, and often illegally, excluding all job applicants who have criminal records from consideration, no matter how minor or dated their offenses.

The new report highlights the widespread and illegal use of blanket no-hire policies by providing numerous examples of online job ads posted on Craigslist, including some by major corporations, that effectively bar significant portions of the U.S. population from work opportunities. Because of their blunt impact and extreme overreach, these blanket no-hire policies have become the subject of increasing litigation, attracting heightened scrutiny from the courts and concerned policymakers. At the same time, 92 percent of employers conduct criminal background checks, according to a 2010 Society for Human Resources Management survey.

The NELP report, entitled “65 Million ‘Need Not Apply’: The Case for Reforming Criminal Background Checks for Employment,” surveys online job ads posted on Craigslist in five major cities—San Francisco, Los Angeles, Chicago, New York, and Atlanta. The survey found numerous examples in which extreme requirements precluded consideration of anyone with a criminal record, in clear violation of federal civil rights law. Major companies, such as Domino’s Pizza, the Omni Hotel, and Adecco USA, were just some of the employers that listed entry-level jobs on Craigslist—ranging from warehouse workers to delivery drivers to sales clerks—that unambiguously shut the door on applicants with criminal records.

Read the rest of the article here.

Download the NELP report:  “65 Million ‘Need Not Apply’: The Case for Reforming Criminal Background Checks for Employment” (PDF)

How Do You Become a Model Employer and Comply with the Law?

(Source: NELP’s guide to best practices for employers who conduct criminal background checks)

Step 1
Identify positions that require a background check under state or federal law, or that require a background check due to the sensitivity of the job. You are not required by law to perform a background check for most positions.

Step 2
Do not request criminal history information on the initial job application. Inquire into an individual’s criminal history only after the applicant has been selected as a final candidate.
Many cities, states, and even some federal agencies delay background checks because “it is generally more practical and cost-effective.” (U.S. Office of Personnel Management Regulations.)

Step 3
If you conduct a background check, be sure to comply with the legal requirements of the Fair Credit Reporting Act.

First, give notice to the applicant and get the worker’s consent. If the background report includes criminal history information, provide a copy to the applicant and allow the applicant to contest or explain the information included before making an employment decision.

See the Fair Credit Reporting Act (15 U.S.C. 1681 et seq.) and the Federal Trade Commission (www.ftc.gov) for your obligations. Your state may have additional requirements.

Step 4
Consider only job-related and recent convictions when making an employment decision. Consideration of arrest information likely violates federal civil rights law and may violate state law.

See the EEOC Policy Guidance on the Consideration of Arrest Records (www.eeoc.gov/policy/docs/arrest_records.html).

Step 5
Be sure to comply with the legal requirements of Title VII of the Civil Rights Act of 1964 (42 U.S.C. 2000e).

Deny employment only if the conviction is job-related and doing so is consistent with “business necessity.”

Be sure to consider the following factors:

1. The nature or gravity of the offense or offenses;
2. The bearing, if any, of the offense(s) on any specific responsibilities of the job or position;
3. The time that has elapsed since the offense;
4. The age of the applicant or employee at the time of the offense;
5. Any evidence of rehabilitation.

See the EEOC Policy Statement on the Issue of Conviction Records (www.eeoc.gov/policy/docs/convict1.html).

Step 6
Let the community know that you are a model employer committed to considering all qualified candidates and building a diverse workforce.

Reach out to the local Chambers of Commerce, Workforce Investment Boards and other local partners to publicize your model practices.

Download NELP’s guide to best practices for employers who conduct criminal background checks (PDF).

Photo credits: Cosima’s Digital Designs, Zoom Zoom

Is It Legal For An Employer To Charge A Potential Employee For A Background Check?

I recently checked out Quora which is getting a lot of buzz lately (with mixed reviews). What is Quora you ask? The best way to describe it is it’s a Q&A social networking site. I’m not sure if Quora is going to be social media’s newest “it” platform, but I did find some questions on employee background screening that you might find helpful.

Here’s one question that I recently answered:

Q - Is it legal for an employer to charge a potential employee for a background check? If a business requires employees to be screened for past criminal behavior, is it acceptable to charge potential employees for the cost of the screening?

A- There is no federal law that prohibits employers charging a potential employee for a background check but the following states (and Washington, DC) have laws that limit this practice:

• California, Minnesota, Washington,DC - the employee cannot be required to pay for a background check as a condition of employment.

• Vermont - limits an employer charging a potential employee for a background check if they are using specific sources.

• Kansas - employers can’t require potential employees to obtain their own records and give them to the employer.

What questions do you have about background checks?

Photo credit: Valerie Everett

How Credit Checks Affect The Decision To Hire

This recent poll by SHRM provides an up-to-date look at the impact of credit checks on the decision to hire. It looks at factors that have the most impact on hiring decisions, the reasons that organizations conduct credit checks, the types of job candidates most likely to be subject to credit checks and more.

The Small Business Owner Background Check Guide

Privacy Rights Clearinghouse, a nonprofit consumer education and advocacy project, recently updated the Small Business Owner Background Check Guide.

This is an excellent guide to help businesses of any size learn the basic information about employee background screening. Here are links to the guide:

Small Business Owner Background Check Guide

1. Introduction
2. Background Check Primer: Know the Terminology
3. Employment Background Checks and Federal Law, the FCRA
4. What Can an Employer Find Out? What Is Off Limits?
5. Should I Hire an Outside Screening Company?
6. Background Checks: Not Just for Applicants
7. The Employer’s Obligations under the FCRA
8. Proper Disposal of Employment Reports
9. Workplace Investigations: New Rules for Employers
10. Special Rules for California Employers
11. Employer Checklist and Tips
12. Resources

Survey Results: Background Checks On Job Candidates

Why do employers conduct background checks?

Which positions require a background check?

What information in a candidate’s background report could have an adverse effect on the decision to hire?

In November 2009, SHRM conducted a comprehensive survey that looked at background checking on job candidates. The survey explored the primary reasons organizations conduct background checks, the categories of job candidates that are checked and other related topics.  Here is the survey in case you missed it when it came out.SHRM Background Check Survey

Best Employee Screening Articles For October & November 2009

In case you missed any of our employee screening articles for October and November, here’s a quick recap of our most popular:

• Florida Lawmakers Pledge Changes To Their Background Screening Program
• Sex Offender Safety Tips
• No Background Check? No Problem - Cracking Down On The Gun Show Loophole
• How A Woman Falsified Her Nursing Credentials For 18 Years
• University Removes New-Hire DNA Testing From It’s Background Check Policy
• Genes and Jobs: Can Employers Use Your DNA For A Background Check?
• 100% Of Companies Will Be Using Social Networks As Part Of Their Employee Screening Program By 2012
• How To Protect Your Company When Googling Job Applicants

Smart, Compliant Hiring Decisions Made Easy

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Genes and Jobs: Can Employers Use Your DNA For A Background Check?

Not anymore

Psychology Today has an excellent article on this subject titled “Genes and Jobs.”

The Genetic Non-Discrimination Act (GINA) comes into full effect this Saturday, November 21st.

Employers need to take note, and employees should be aware of their rights

Congress passed GINA almost unanimously, and President Bush signed it on May 21, 2008. Described by the late Senator Ted Kennedy as “the first civil rights bill of the new century of the life sciences,”

GINA protects individuals from genetic information discrimination in health insurance and employment

Even some well-informed commentators seem to have missed this landmark piece of legislation. So have some employers. The University of Akron (UA), for example, adopted a policy as recently as August that could require any candidate for employment to submit a DNA sample.

Read more about Genes and Jobs.

The Coalition for Genetic Fairness also gives the following guidelines for employers on how to comply with The Genetic Non-Discrimination Act (GINA).

GINA outlines the following activities as unlawful employment practices and discriminatory on the basis of genetic information:

• The use of genetic information in making decisions regarding hiring, promotion, terms or conditions, privileges of employment, compensation, or termination.

• Limiting, segregating, or classifying an employee, or depriving that employee of employment opportunities, on the basis of genetic information.

• The request, requirement, or purchase of genetic information of the individual or a family member of the individual except in rare cases, as outlined in the drop-down section below.

• The use of genetic information in making decisions regarding admission to or employment in any program for apprenticeship or training and retraining, including on-the-job training.

Furthermore, employers should be aware that it is unlawful for an employment agency, labor organization, or training program to fail or refuse to refer an individual for employment on the basis of genetic information, nor may the agency or labor organization attempt to cause an employer to discriminate against an individual on the basis of genetic information.

Related Post From FYI Screening:

• University Removes New-Hire DNA Testing From It’s Background Check Policy.

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