Lookout Corner: Credit checks used in hiring

Welcome to HR Idiot’s “Lookout Corner,” where I give you a heads up on what employment laws might be coming your way.

Today the topic is everyone’s favorite prescreening tool:  credit checks.

Using credit checks to prescreen and weed out applicants in the candidate pool has long been viewed in a negative light.  But recently – most likely due to the struggling economy – the issue has been getting more attention, both federally and on the state level.

In 25 states, 49 bills have been proposed that would restrict using credit checks in the hiring process.  Most of the bills would not allow credit checks to influence hiring decisions unless financial responsibility is directly related to the position, i.e. the candidate is applying for a position as a bank manager.

And at the federal level, the Equal Employment Opportunity Commission (EEOC) feels credit checks are having an adverse impact on protected classes –­ through what they are calling systemic discrimination.

The EEOC has already filed suit against one company, Kaplan Higher Education Corp., alleging “systemic discrimination” in their prescreening credit checks.  So even though no laws have yet been passed in most states, using credit checks in hiring can still be a risk.

To learn more about the rising opposition to credit checks used in hiring, click here.

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