Sunday 17th of January 2021

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States May Prohibit Pre-Employment Credit Checks

Across the U.S., lawmakers in at least 16 states have proposed legislation that would ban most pre-employment credit checks because the act precludes many job candidates with past financial challenges from becoming employed, essentially trapping them in their debt woes.

The number of employers who run credit checks on job candidates has risen in the last few years, according to Society for Human Resources Management surveys. The organization discovered that 60 percent of employers perform pre-employment checks, up from the 42 percent who did so in 2006.

Employers claim that these measures provide them with helpful information on how a candidate will deal with responsibility and any tendency he/she has toward fraud or theft.

Employers must obtain permission in writing from job candidates in order to run a credit check, but consumer advocacy groups say that many applicants feel like they have no choice but to grant permission.

Washington and Hawaii already have legislation in place that forbids employers from using these measures when hiring for most jobs but leave exceptions for positions where the information is most applicable, such as bank jobs or positions in an accounts payable office.

Most of the laws proposed to state legislatures are highly similar to Hawaii and Washington’s bills. There is also a similar law currently in front of Congress that would alter federal laws, but the bill has languished in committee since last summer.

Capitulating to pressure from chamber of commerce representatives, California Governor Arnold Schwarzenegger vetoed a law that would have curtailed the use of pre-employment credit checks in his state.