Scrutiny of Employers’ Use of Credit Reports Increases
The heat continues to rise on employers who use credit reports in making hiring decisions.
Workforce Management just ran a piece about stepped up EEOC enforcement actions against employers who use credit reports in a manner that adversely impacts protected classes.
Josh LeTourneau, one of the bloggers at Fistful of Talent, did a great job of arguing against the indiscriminate use of credit reports in an article posted today.
When I was on the HR manager side of the desk, I was always dubious of using credit as a predictor of dishonesty. Now, after more than a decade as the owner of a background investigations firm, I routinely try to dissuade clients from even looking at applicants’ or employees’ credit reports. In many cases, I’ve just refused to sell the reports to employers who I believed were going to use them unwisely.
I have yet to see a study that correlates bad credit and dishonesty.
Like so-called “national” criminal records and other database-based screening products, credit reports are instant, relatively inexpensive, and easy to sell. They are also full of information that is often neither job-relevant or accurate. The problem is that too many HR folks aren’t educated by their screening partners in the appropriate use of these and other selection tools (personality assesments come to mind).
While we would all like to have perfect employees without any financial. personal, or professional blemish, they don’t exist. Employers who paint candidates with less than ideal credit or a criminal history with a broad brush will often miss opportunities to add qualified and committed employees to their organizations.
Smart employers have a plan on how they will evaluate any screening results before they ever order the background check. They make sure the criteria is job-related and that there is a clear business-necessity for any adverse decisions that may be made. That will help keep you out of court and help you build a competitive workforce.
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