Page 13 - PCCAJournal3rdQuarter2011

hen applying and interview-ing for a job, candidates can count on a couple of things. One is that they’ll need to show off their resume and present an accurate description of their job history. And secondly, once they’ve been hired or are in review for hire, companies will often conduct background checks that can include drug testing. And lately more and more businesses have added another layer to their hiring process: a credit check.

The purpose of a credit check can vary but experts like Brandon Phillips, CEO of Florida-based Global HR Research, say credit history can gauge more than a candidate’s level of responsibility.

“Research shows that in the absence of issues beyond an applicant’s control (natural disasters, illness, and identity theft, for example), trustworthiness can be measured by whether or not he or she makes paying their bills on time a priority,” Phillips said. “For this reason, credit checks have become more com-mon in the hiring process.” Employee credit checks aren’t the same as the ones featured in commer-cials with catchy jingles. They don’t include a credit score or an applicant’s birthday. Employer credit checks are part of a consumer report that shows revolv-ing credit and installment accounts and payments, leaving employers to draw their own conclusions about the appli-cant.

Evan Thomas, a recent college gradu-ate, is working her way up to become a retail manager and eventually aspires to own her own boutique. “When I become a manager, I’m not going to not hire someone because of their credit,” said Thomas, who currently works at a bou-tique in Fort Myers, Fla., and is opposed to conducting credit checks on potential employees. “I don’t have a lot of credit and I don’t know many college students who do.”

Thomas aspires to be a retail manager within the next six months but said knowing her lack of credit could hinder her from getting a promotion, she’s a little worried. “I would be really disap-pointed if I didn’t get the job because I don’t have credit yet,” Thomas said. “I know I have the skills, but if I don’t have the best of credit and don’t get promoted because of that seems unfair.”

Thomas has little reason to worry. For her and other rising graduates, compa-nies are less likely to base hiring deci-sions on credit. Seasoned workers are more suspect to credit checks because they’ve had time to formulate character traits like practicing responsible ﬁnanc-ing. And Phillips said that while candi-dates may worry about the results of a credit check, employers don’t base every hiring decision on credit reports. “Employers and HR professionals like those of us at Global HR Research are always rooting for the candidate’s background to come back free of issues that might preclude a hiring decision,” he said. “But unfortunately, especially for ﬁnancial positions, creditworthiness is an important issue that can get in the way of a positive outcome.”

And in a down economy, bad credit is more common. According to the Fair Credit Reporting Act (FCRA), running a credit check on a current or future em-ployee without their knowledge is illegal. All 50 states require written permission by the employee for the employer to run the check. Some states mandate the execution of a speciﬁc acknowledgement and notiﬁcation prior to including a credit report in a consumer report. To date, Washington, Hawaii, Mary-land, Illinois, and Oregon have enacted legislation that bans the use of credit re-ports (with few exceptions) for employ-ment purposes. Additionally, California is considering legislation that would place it in the same category as these states and would further limit the use of credit reports in the background screen-ing process.

“Some employees and applicants decline to give permission for an employer to run a credit check and in such cases, for FCRA compliance, the employer cannot conduct this check,” said Phillips, who has assembled an expert team of qual-ity assurance professionals at Global HR Research to conduct these searches on a daily basis to ensure compliance. “Although employers in most states do not face restrictions when requesting or running a credit check as a part of a con-sumer report for employment purposes, the risk associated with having a credit check as a part of a background check has deferred many employers from run-ning them altogether.”