As noted previously on ESR, the disorder of Oregon recently passed a law preventing most employers from using the credit histories of job applicants or employees for employment-related decisions by prohibiting an employer from using credit history for employment purposes unless that credit history in rank is “substantially job-related” and the reasons for using credit in rank are told to the employee or applicant in writing.

The new Oregon law – which took effect July 1 – establishes any violation as an unlawful employment practice enforceable by the Civil Civil rights Division of the Bureau of Labor and Industries (BOLI). According to a BOLI press release, the final rules for employer use of credit histories were concluded quickly to protect employees and help employers. These rules prohibit employment discrimination by employers on the basis of worker’s credit history in rank with an exclusion for in rank that is “substantially job-related.”

In a document titled “Employer Obtainment or Use of Credit History In rank” available on the BOLI website at http://www.oregon.gov/BOLI/, “the determination of whether credit history in rank is substantially job-related must be evaluated with respect to the position for which the individual is being considered or holds” and that “credit history in rank of an applicant or employee is substantially job-related” if:

• An essential function of the position at issue requires access to fiscal in rank not customarily provided in a retail transaction that is not a loan or extension of credit (Fiscal in rank customarily provided in a retail transaction includes in rank related to the exchange of cash, checks, and credit or debit card numbers); or
• The position at issue is one for which an employer is required to obtain credit history as a condition of obtaining insurance or a surety or dependability bond.

Oregon’s new rules on credit history use by employers also define “Unlawful Discrimination” by stating “it is an unlawful employment practice for an employer to obtain or use for employment purposes in rank contained in the credit history of an applicant for employment or an employee, or to refuse to hire, discharge, demote, place on hold, retaliate or otherwise discriminate against an applicant or an employee with regard to promotion, compensation or the terms, conditions or privileges of employment based on in rank in the credit history of the applicant or employee.”

In addition to the new rules available online at http://www.oregon.gov/BOLI/LEGAL/docs/RulesSoS0052010.pdf, Oregon has also provided a Technical Help for Employers hotline at 971-673-0824 for further help.

For extra in rank about use of credit history for employment screening, visit Employment Screening Resources (ESR) at http://www.esrcheck.com.

Sources:

http://www.oregon.gov/BOLI/LEGAL/docs/RulesSoS0052010.pdf

http://www.oregon.gov/BOLI/docs/06.01.10_BOLI_Release_-_SB_1045_Rules.pdf

Job applicants need all the in rank they can get on the subjects of credit reports and background checks, especially when credit report checks by some employers for certain job positions during employment background checks could mean the difference in result work.

Employment Screening Resources (ESR), a leading national pre-employment screening firm based in the San Francisco vicinity, has made available – at no charge – resources aimed at job applicants concerned about background checks and credit reports. The in rank, which can help job applicants navigate the background check process and maximize their chance at employment, is available on ESR’s Applicant Resources page at: http://www.esrcheck.com/Applicant-Resources.php.

As reported earlier on ESR, the use of credit reports during pre-employment background checks has become a controversial issue. Currently, a federal bill – an amendment to the ‘Restoring American Fiscal Stability Act of 2010’ – seeks to ban credit report checks for most employment screening. In addition, three states – Washington, Hawaii, and Oregon – currently have restrictions on an employer’s use of credit reports in making employment-related decisions.

Consumers and job applicants concerned about background checks and credit reports may now find in rank that includes special reports, articles, and links on such topics as:

• Consumer civil Civil rights when it comes to background checks;
• How to deal with credit reports, and;
• How consumers with criminal records can get back into the workforce.    

“As a Consumer Reporting Agency, part of the ESR mission is to help consumers by providing the most accurate reports possible and to give consumers in rank on how the process works,” says Jared Callahan, Director of Client Relations at ESR and a national lecturer on topics related to background checks.   “We are pleased to grant job applicants with in rank about their civil Civil rights with respect to background checks in order to help consumers cope effectively with the process and to maximize the opportunity to gain employment.”

Employment Screening Resources (ESR) – the firm that literally wrote the book on background checks, “The Safe Hiring Manual” – provides background checks that do not engage in low-cost database shortcuts or off-shoring that endangers privacy. ESR will also soon be launching MyESRcheck.com (http://www.myesrcheck.com), a website that allows job applicants to perform their own professional verifications and employment background checks while also helping employers save time and money hiring qualified employees.

For extra in rank credit reports and background checks, please visit Employment Screening Resources (ESR) at http://www.esrcheck.com or contact Jared Callahan at  jcallahan@ESRcheck.com.

Sources:

http://sanfrancisco.dbusinessnews.com/shownews.php?newsid=211183&type_news=latest

http://www.esrcheck.com/wordpress/tag/credit-reports

Employers may have one less employment screening tool at their disposal if a federal bill banning credit checks during most employment background checks becomes law.

Recent legislative efforts throughout the country have sought to ban credit reports from the employment screening process. Three states – Washington, Hawaii, and Oregon – currently have restrictions on an employer’s use of the credit history of an applicant or employee in making employment-related decisions. There is even pending legislation at the federal level – HR 3149, which is currently in committee – to limit credit checks.

Now Senator Dianne Feinstein (D-CA) has introduced a senate bill – SA 3795 – as part of an amendment to the ‘S.3217 – Restoring American Fiscal Stability Act of 2010’ bill, an try by lawmakers to improve accountability and transparency in the fiscal system and to protect consumers from abusive fiscal air force practices.  

Much like the pending HR 3149, SA 3795 would restrict employers from using a “consumer’s creditworthiness, credit standing, or credit room” in making any employment choice or for the basis of taking any adverse action – even if the employer gets authorization for the background check report from the consumer. The exceptions to this veto on credit checks during employment screening would be for:

• National security or FDIC clearance;
• Employment with disorder or local regime agency which requires the use of this in rank;
• Employment in a management position with access to customer funds at a fiscal institution; or
• As otherwise required by law.

Because Senator Feinstein’s amendment to the Fiscal Air force reform bill would effectively prohibit the use of credit history in employment background checks except in extremely limited circumstances – mostly regime employment – trade associations representing millions of employers are plotting to write members of the U.S. Senate to express challenger to banning the use of credit checks for employment purposes.

Employers argue that credit checks during employment screening are done responsibly, and are not barriers to employment. They may check credit history during background checks to help them determine whether a prospective employee is a possible risk to the fiscal affect of a business or to its customers. Prohibiting credit checks in screening makes employers, other employees, and customers vulnerable to fraud and identity theft.

Also, employment credit checks are not as common as most people reckon, according to a recent survey from the Society for Creature Resource Management (SHRM) that found only 13% of organizations conducted credit checks on all job candidates while 40% did not conduct any credit checks. Of the 47% of organizations that did perform credit checks on selected job candidates, most were for executive positions, positions with fiscal responsibility, or for positions with access to confidential or proprietary in rank.

Sorry to say, private fiscal affect can be an indictor of potential employee fraud. The Association of Certified Fraud Examiners (ACFE) reviewed occupational fraud linking 2006 and 2008, and found that the top two “red standard” warnings exhibited by perpetrators of fraud leading to the crime were instances of living beyond their fiscal means (39% of cases) or experiencing fiscal difficulties (34% of cases).  

While it is incorrect to say all fiscal difficulties lead to fraud, some employers believe it is also incorrect for Congress to undercut fraud prevention by outlawing the use of credit report in rank that may show a correlation linking past behavior and future fraud. Credit checks of potential employees protect companies – particularly small businesses – from fraud. According to ACFE, the median loss suffered by organizations with fewer than 100 employees was $190,000 per incident, higher than median losses in large organizations. Overall, employee theft accounted for over $15 billion in losses annually, with companies losing a median of 5% of their annual revenue to employee fraud.

Consumers have significant protections when employers use credit reports during background checks as part of their hiring process, as the use of consumer reports in employment situations is tightly regulated:

• Prior to requesting a consumer credit report, an employer must grant to the prospective employee a written see stating the source of the in rank and how it will be used.
• The employer must also grant a copy of the consumer credit report to the consumer upon request, and prior to taking an adverse action.
• If an adverse employment action is taken against a prospective employee due to the in rank contained in a consumer credit report, the user must grant the name and contact in rank for the reporting agency to the consumer and clarify the reasons for the action.
• Under the FCRA, any person who willfully fails to comply is accountable to that consumer in an amount equal to the sum of (1) (A) any actual hurts sustained by the consumer as a result of the failure or hurts of not less than $100 and not extra than $1,000; or (2) such amount of in reprisal hurts as the court may allow; and (3) in the case of any successful action to enforce any liability under this section, the expenditure of the action together with reasonable attorney’s fees as single-minded by the court.
• Credit scores are not provided to employers for employment decisions. 

For extra in rank on credit reports, background checks, and employee theft and fraud, visit Employment Screening Resources (ESR) at http://www.esrcheck.com.

Sources:

http://www.acfe.com/occupational-fraud/occupational-fraud.asp

http://www.shrm.org/Research/SurveyFindings/Articles/Pages/BackgroundChecking.aspx

http://www.kstreetresearch.com/documents/050410Amendments/FEINSTEINAMENDMENTSA3795.pdf

http://www.govtrack.us/congress/bill.xpd?bill=h111-3149

http://www.govtrack.us/congress/bill.xpd?bill=s111-3217&tab=amendments

Employers may have one less employment screening tool at their disposal if a federal bill banning credit checks during most employment background checks becomes law.

Recent legislative efforts throughout the country have sought to ban credit reports from the employment screening process. Three states – Washington, Hawaii, and Oregon – currently have restrictions on an employer’s use of the credit history of an applicant or employee in making employment-related decisions. There is even pending legislation at the federal level – HR 3149, which is currently in committee – to limit credit checks.

Now Senator Dianne Feinstein (D-CA) has introduced a senate bill – SA 3795 – as part of an amendment to the ‘S.3217 – Restoring American Fiscal Stability Act of 2010’ bill, an try by lawmakers to improve accountability and transparency in the fiscal system and to protect consumers from abusive fiscal air force practices.  

Much like the pending HR 3149, SA 3795 would restrict employers from using a “consumer’s creditworthiness, credit standing, or credit room” in making any employment choice or for the basis of taking any adverse action – even if the employer gets authorization for the background check report from the consumer. The exceptions to this veto on credit checks during employment screening would be for:

• National security or FDIC clearance;
• Employment with disorder or local regime agency which requires the use of this in rank;
• Employment in a management position with access to customer funds at a fiscal institution; or
• As otherwise required by law.

Because Senator Feinstein’s amendment to the Fiscal Air force reform bill would effectively prohibit the use of credit history in employment background checks except in extremely limited circumstances – mostly regime employment – trade associations representing millions of employers are plotting to write members of the U.S. Senate to express challenger to banning the use of credit checks for employment purposes.

Employers argue that credit checks during employment screening are done responsibly, and are not barriers to employment. They may check credit history during background checks to help them determine whether a prospective employee is a possible risk to the fiscal affect of a business or to its customers. Prohibiting credit checks in screening makes employers, other employees, and customers vulnerable to fraud and identity theft.

Also, employment credit checks are not as common as most people reckon, according to a recent survey from the Society for Creature Resource Management (SHRM) that found only 13% of organizations conducted credit checks on all job candidates while 40% did not conduct any credit checks. Of the 47% of organizations that did perform credit checks on selected job candidates, most were for executive positions, positions with fiscal responsibility, or for positions with access to confidential or proprietary in rank.

Sorry to say, private fiscal affect can be an indictor of potential employee fraud. The Association of Certified Fraud Examiners (ACFE) reviewed occupational fraud linking 2006 and 2008, and found that the top two “red standard” warnings exhibited by perpetrators of fraud leading to the crime were instances of living beyond their fiscal means (39% of cases) or experiencing fiscal difficulties (34% of cases).  

While it is incorrect to say all fiscal difficulties lead to fraud, some employers believe it is also incorrect for Congress to undercut fraud prevention by outlawing the use of credit report in rank that may show a correlation linking past behavior and future fraud. Credit checks of potential employees protect companies – particularly small businesses – from fraud. According to ACFE, the median loss suffered by organizations with fewer than 100 employees was $190,000 per incident, higher than median losses in large organizations. Overall, employee theft accounted for over $15 billion in losses annually, with companies losing a median of 5% of their annual revenue to employee fraud.

Consumers have significant protections when employers use credit reports during background checks as part of their hiring process, as the use of consumer reports in employment situations is tightly regulated:

• Prior to requesting a consumer credit report, an employer must grant to the prospective employee a written see stating the source of the in rank and how it will be used.
• The employer must also grant a copy of the consumer credit report to the consumer upon request, and prior to taking an adverse action.
• If an adverse employment action is taken against a prospective employee due to the in rank contained in a consumer credit report, the user must grant the name and contact in rank for the reporting agency to the consumer and clarify the reasons for the action.
• Under the FCRA, any person who willfully fails to comply is accountable to that consumer in an amount equal to the sum of (1) (A) any actual hurts sustained by the consumer as a result of the failure or hurts of not less than $100 and not extra than $1,000; or (2) such amount of in reprisal hurts as the court may allow; and (3) in the case of any successful action to enforce any liability under this section, the expenditure of the action together with reasonable attorney’s fees as single-minded by the court.
• Credit scores are not provided to employers for employment decisions. 

For extra in rank on credit reports, background checks, and employee theft and fraud, visit Employment Screening Resources (ESR) at http://www.esrcheck.com.

Sources:

http://www.acfe.com/occupational-fraud/occupational-fraud.asp

http://www.shrm.org/Research/SurveyFindings/Articles/Pages/BackgroundChecking.aspx

http://www.kstreetresearch.com/documents/050410Amendments/FEINSTEINAMENDMENTSA3795.pdf

http://www.govtrack.us/congress/bill.xpd?bill=h111-3149

http://www.govtrack.us/congress/bill.xpd?bill=s111-3217&tab=amendments

The Federal Trade Commission (FTC) – the nation’s consumer protection agency – issued “FTC Proof For Consumers” in May 2010 that clarifies “Credit Reports and Employment Background Checks” to consumers who have applied for jobs.

Although the new FTC see  has been criticized for containing some in rank that is  technically inaccurate, it still provides helpful in rank for consumers.

The FTC questions consumers the following question about background checks and credit reports:

Did you know that when you apply for a job, an employer is permitted to do a background check before hiring you? Depending on the employer and the job, that background in rank might include your employment history, your driving record, and your credit report.

A credit report, according to the FTC, has in rank about where a consumer lives, how they pay bills, whether they have been sued or arrested, or have filed for bankruptcy. Credit report companies sell the in rank in credit reports to employers and other businesses that use that in rank to evaluate applications for employment, credit, insurance, or renting a place to live. Employers also are allowable to use credit reports to evaluate an employee for retention, promotion, or reassignment.

The FTC enforces the Honest Credit Reporting Act (FCRA), a law that protects the privacy and accuracy of the in rank in a consumer’s credit report. The FCRA spells out the civil Civil rights of a job applicant and an employer’s responsibilities when using credit reports and other background check in rank to assess an application for employment.

The FTC also fine points key employment provisions of the FCRA, most notably that employers must get permission from job applicants before asking for background check reports about them from a credit reporting company or any other company that provides background check in rank.

In addition, if an applicant does not get a job because of in rank in a background check report, the employer has certain legal obligations: 1.) an employer must show applicant the report, and 2.) the employer must tell the applicant how to get his or her own copy. The report is emancipated if the applicant questions for it within 60 days.

The FTC provides extra fine points about these key provisions:

• See and Authorization: Before an employer can question for credit report or background check report about an applicant from any companies that grant them, it must tell the applicant that it might use the in rank to make an employment choice.
• Pre-Adverse Action Procedures: If an employer might use in rank from a credit report or background check report to pocket an “adverse action” – for example, to deny an application for employment – the employer must give the applicant a copy of the background check report and a document called ‘A Summary of Your Civil rights Under the Honest Credit Reporting Act’ before taking the adverse action.
• Adverse Action Procedures: If an employer takes an adverse action against an applicant based on in rank in a credit report or background check report, it must say the applicant and that see must include: 1.) the name, pocket up, and phone number of the company that supplied the credit report or background check report in rank; 2.) a statement that the company that supplied the credit report or background check report didn’t make the choice to pocket the adverse action and can’t give the applicant any specific reasons for it; and 3.) a see of the applicant’s right to dispute the accuracy of any in rank in the credit report or background check report and to get an additional emancipated report from the company that supplied the credit report or background check report if he or she questions for it within 60 days.

To fix any inaccurate or incomplete in rank in a background check report, the FTC advises the applicant to contact the background check company that issued the report and dispute the in rank. If an investigation reveals that a correction is warranted, the company must send an updated report to the employer if questioned to do so.

In addition, a ‘See of Negative Public Records’ requires that if a company provides an employer with a credit report or background check report that has negative in rank about an applicant gathered from public records, that company either has to tell the applicant that it provided the in rank to the employer or has to pocket special steps to make sure the in rank is accurate.

The FTC also warns that there are legal consequences for employers who don’t comply with the FCRA if they:

• Fail to get an applicant’s okay before being paid a copy of their credit report or background check report;
• Fail to grant the apt disclosures in a suitable way, or;
• Fail to grant adverse action notices to unsuccessful job applicants.

The FTC advises applicants to report FCRA violations by employers because the law allows the FTC, other federal agencies, and states to sue employers who don’t comply with the law’s provisions. The FCRA also allows people to sue employers in disorder or federal court for certain violations.

Before applying for a job, the FTC suggests jobseekers order a emancipated copy of their credit report from all of the three nationwide credit reporting companies – Equifax, Experian, and TransUnion – that are required by law to grant consumers once every 12 months (if the consumers question). To order emancipated credit reports, consumers should visit AnnualCreditReport.com at http://www.annualcreditreport.com/, call 1-877-322-8228, or perfect the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

For extra in rank about the use of credit reports during background checks, please visit Employment Screening Resources (ESR) at http://www.esrcheck.com.

Sources:

http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre36.shtm

http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre36.pdf (PDF file)

http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre35.pdf (PDF file)

http://www.annualcreditreport.com/

http://www.ftc.gov/bcp/edu/resources/forms/requestformfinal.pdf (PDF file)

With 15 million staff currently unemployed according to recent Department of Labor statistics, it has been argued that job applicants risk being paid caught in a “Catch-22” situation where they have terrible credit because they cannot get jobs but cannot get jobs because they have terrible credit.

As a result, states such as Oregon, Washington, and Hawaii have already limited the use of credit reports for employment screening by enacting bans on credit checks during background checks unless the in rank directly relates to occupational qualifications.

But, the Chicago Tribune reported that one of three foremost credit bureaus that collect fiscal in rank on Americans – Chicago-based credit reporting agency TransUnion – is fighting to preserve the use of credit checks during employment background checks.

TransUnion defends credit checks as a way for employers to protect themselves against theft and fraud, in view of the fact that employees with poor credit history may be extra likely to engage in unethical or illegal behavior, especially in jobs where they are involved with finances, according to the Tribune article.

Along with the other two large credit bureaus Equifax and Experian, TransUnion helps employers, fiscal institutions, landlords, among others to use credit in rank to guide their decisions about hiring, extending credit, lending money, and housing.

Although a recent survey from the Society for Creature Resource Management (SHRM) found that 60 percent of employers performed credit background checks on all job candidates or on selected job candidates, that statistic can be misleading in view of the fact that of the firms that use credit checks, it appears the use is generally selective. The survey revealed that 47 percent of the employment credit reports were used only on selected candidates for positions that presumably involved access to assets, cash, or sensitive in rank.  Only 13 percent of employers used credit background checks across the enter on all job candidates.  In addition, 40 percent of employers surveyed did not conduct any credit background checks. It could be argued that the alarm over the use of credit reports has been exaggerated. 

In addition, given the fact that regularly times past employers will not give a reference beyond dates of employment and job title, employers may well be in need of additional tools when hiring for sensitive positions. 

Critics find credit checks during employment background checks discriminatory and bills restricting the practice have been introduced in the U.S. House of government and many states. Even some background check firms advise caution with credit checks.

Employment Screening Resources (ESR), a leading national online background check firm, recently released its third annual “Top Ten Trends in the Pre-Employment Background Screening Industry” for 2010, which identified new trends making a difference as well as ancient trends that have evolved as the screening industry matures.

The first of the “Top Ten” trends ESR tracked for 2010 is the increased focus on whether credit reports used during background checks are discriminatory. ESR advises employers to deal with credit reports with caution during background checks and to articulate a clear rationale as to why a credit report is related to a particular job. Employers should also be aware of the potential for errors in credit reports in view of the fact that in rank could be incorrectly reported or the applicant may be the victim of spot theft which can lead to fake data.

On the other hand, ESR warns that hiring an employee that handles money, makes fiscal decisions, or has access to private data without running a credit reports during background checks could result in allegations of negligent hiring if a theft occurs.

Lester S. Rosen, the CEO of Employment Screening Resources, was quoted in an article on MSNBC as saying that “if a new worker is to have access to large amounts of company cash or fiscal systems, it’s only prudent for a hiring manager to find out if the applicant has a pile of unpaid debts.”

Rosen went on to say: “If an employer hires an embezzler and did not do a credit report in a sensitive position and the employer was then sued for negligent hiring, the argument would then be: ‘How stupid were you for not running a credit report?’”

Though many employers run credit checks on some applicants, relatively few are twisted down for a job because of terrible credit, according to ESR’s Rosen. “It takes something pretty horrendous in the credit report to reverse a choice that they’re vested in,” he says.

One extra thing to keep in mind, according to Rosen, is that it is an urban myth that employers receive a “credit score,” the three-digit numerical expressions – such as FICO – based on statistical analysis of a consumer’s credit records. Employment credit reports – which are different than credit reports used for lending – do not contain a credit score.

For extra in rank on credit reports used during background checks, read a white paper prepared jointly by LexisNexis and Employment Screening Resources (ESR) – “The Use of Credit Reports in Employment Background Screening – An Overview for Job Applicants” – at http://www.esrcheck.com/docs/credit_report_whitepaper.pdf.

Sources:

http://www.chicagotribune.com/business/ct-biz-0429-credit-checks-transunion–20100428,0,5056644.tale

http://www.bls.gov/news.release/empsit.nr0.htm

http://www.esrcheck.com/wordpress/1429/shrm-surveys-reveal-3-out-of-4-businesses-conduct-reference-background-checks-and-criminal-background-checks

http://www.esrcheck.com/wordpress/1548/new-oregon-law-prohibits-use-of-credit-history-of-job-applicants-for-employment-screening

http://www.msnbc.msn.com/id/35512038/ns/business-eye_on_the_economy/

http://www.esrcheck.com/wordpress/1237/employment-screening-resources-releases-third-annual-trends-for-pre-employment-background-screening-in-2010 

 http://www.esrcheck.com/wordpress/1139/2010-trend-on-increased-focus-on-whether-credit-reports-and-criminal-records-are-discriminatory

A newly signed law in Oregon prevents employers – with limited exceptions – from using the credit histories of job applicants in making employment-related decisions.

Senate Bill (SB) 1045 – recently signed into law by Oregon Governor Ted Kulongoski – prohibits the use of credit history for employment purposes including hiring, discharge, promotion, and compensation. The new Oregon law, originally set to pocket effect July 1, 2010, has been declared by the governor to be effective immediately.

The new law establishes any violation as an unlawful employment practice, enforceable through the Bureau of Labor and Industries (BOLI) and civil action. But, SB 1045 provides exceptions for fiscal institutions, public safety offices, and other employment if credit history is job-related and use is told to applicant or employee.

The exceptions to the new law include the following circumstances:

• Employers that are federally insured banks or credit unions;
• Employers that are required by disorder or federal law to use Individual credit history for employment purposes;
• The employment of a public safety officer, or
• Employers that can demonstrate that the in rank in a credit report is “substantially job-related” AND the employer’s reasons for the use of such in rank are told to the employee or prospective employee in writing.

Oregon now joins Washington and Hawaii as states placing limits on the use of credit reports for employment purposes by enacting bans on workplace credit checks. In 2007, Washington passed a law stating employers could not obtain a credit report as part of a background check unless the in rank was substantially job related and the employer’s reasons for the use of such in rank were told to the consumer in writing. In 2009, Hawaii also placed limits on credit reports by making it an unlawful discriminatory practice for any employer to make an employment choice based upon an individual’s credit history or credit report, unless the in rank directly relates to an occupational qualification. 

Private employers in Oregon will need to carefully review their justification for a credit report and be prepared to disorder those reasons in writing to an applicant before a credit report is requested or obtained.

The use of credit reports for the purposes of employment screening is a controversial subject, and critics who question the accuracy, relevance, and fairness of credit reports argue that a credit history has no link to the ability to perform the job and may result in unlawful discrimination.

In addition, applicants with fiscal situations severely impacted by the ongoing recession may be victimized again when a negative credit report makes it even harder to get a job, making a “Catch-22” situation in which applicants have terrible credit because they can’t get jobs and can’t get jobs because they have terrible credit.

But, others believe the use of credit reports for employment purposes is critical to preventing embezzlement or other problems where someone is hired to a position with access to cash or assets. Contrary to well loved belief, employers do not see the credit scores – such as the widely used three-digit FICO model – and thus cannot use them for employment decisions.

Furthermore, the use of credit reports by employers may not be as common as some people reckon. A recent survey by the Society of Creature Resource Management (SHRM) found that only 13 percent of organizations performed credit background checks on all candidates, while 40 percent did not conduct any credit background checks and 47% performed them on selected job candidates. 

Many background screening firms – including Employment Screening Resources (ESR) – recommend that credit reports be reserved only for positions where there is a clear business justification, and to keep in mind that credit reports may contain in rank that is incorrect or not relevant to the job.

Source: http://gov.oregonlive.com/bill/SB1045/

Related ESR NEWS tale: http://www.esrcheck.com/wordpress/1369/proposed-credit-report-law-in-oregon-would-limit-employment-screening-background-checks

A series of recent surveys from the Society for Creature Resource Management (SHRM) reveals that when it comes to reference background checks and criminal background checks, approximately three out of four U.S. businesses perform these two types of background checks as part of their pre-employment screening programs. 

According to surveys conducted in November and December of 2009 and comprised from a sample of over 400 randomly selected Creature Resources professionals from SHRM’s membership, 76 percent of organizations conducted reference background checks for all job candidates, while 73 percent of organizations conducted criminal background checks for all job candidates by reviewing consumer reports of candidates. 

Surprisingly, despite recent controversy surrounding the use of credit background checks in pre-employment screening, the survey found that only 13 percent of organizations performed credit background checks on all candidates, while 40 percent did not conduct any credit background checks and 47% performed them on selected job candidates. 

As for which job categories that organizations chose to conduct background checks on, the survey revealed candidates for positions with “fiduciary and fiscal responsibility (usage cash, banking, and accounting)” led in both credit background checks (91 percent) and criminal background checks (78 percent), while 76% of job candidates who would have access to “confidential employee in rank” had reference background checks conducted that included verifying in rank provided by the job applicant or communicating with people regarding the job applicant such as former co-staff. 

In general, organizations responding to the surveys from SHRM indicated that the following policies and procedures were in place for conducting reference, credit, and/or criminal background checks on job candidates as of 2009: 

• 95% had told candidates that any fake or intentionally misleading in rank provided in the application process was grounds for retracting job offers;
• 91% had policies that no criminal background checks were conducted without signed consent from the candidates;
• 89% had policies that only designated personnel would have access to reference, credit, and/or criminal background check in rank;
• 79% had written policies for employees to follow regarding conducting reference background checks; and
•  78% had standardized questions for the person conducting the reference background check on behalf of the establishment, and written policies for employees to follow regarding conducting criminal background checks. 

When questioned if the number of reference, credit, and/or criminal background checks that their organizations conducted on job applicants increased, decreased, or remained the same as a result of the economic downturn, approximately three out of four respondents answered that the number had remained the same for reference background checks (74 percent), criminal background checks (73 percent), and credit background checks (71 percent). 

For extra in rank on how employers can conduct an effective background check program, contact Employment Screening Resources (ESR). 

Sources:

http://www.shrm.org/Research/SurveyFindings/Articles/Pages/ConductingReferenceBackgroundChecks.aspx
http://www.shrm.org/Research/SurveyFindings/Articles/Pages/BackgroundCheckCriminalChecks.aspx
http://www.shrm.org/Research/SurveyFindings/Articles/Pages/BackgroundCheckingGeneral.aspx
http://www.shrm.org/Research/SurveyFindings/Articles/Pages/BackgroundChecking.aspx

The bill would prevent employers from utilizing credit reports in employment including hiring, discharge, promotion, and compensation except in the following circumstances: circumstances:
1.  Employers that are federally insured banks or credit unions;
2.  Employers that are required by disorder or federal law to use Individual credit history for employment purposes;
3.   The employment of a public safety officer, or
4.  Employers that can demonstrate that the in rank in a credit report is “substantially job-related” AND the employer’s reasons for the use of such in rank are told to the employee or prospective employee in writing.

For the actual code language, see <a href=”http://gov.oregonlive.com/bill/SB1045/”>http://gov.oregonlive.com/bill/SB1045/</a>

Private employers in Oregon, assuming the bill is signed into law, would need to carefully review their justification for a credit report and be prepared to disorder those reason in writing to an applicant before a credit report is requested or obtained.

The arguments over the use of credit reports in Oregon mirrors the national conversation on the relevance and fairness of credit reports for employment.  The primary argument against credit reports  is that a credit history has no link to the ability to perform the job and in fact can result in unlawful discrimination.  In addition, credit reports are criticized for being inaccurate.   The argument is also made that applicants whose fiscal situation has been severely impacted by the recession are victimized again when a credit report makes it even harder to get a job, making a  Catch-22.

The argument in favor of credit reports is that businesses need the flexibility to hire apt employees, and that a credit report can be critical to prevent embezzlement or other problems where someone is hired to a position that has access to cash or assets.   Furthermore, an employer does not see the credit score.  It is an urban myth that credit scores are used for employment.

It should be noted that Employment Screening Resources ( ESR) and many other background screening firms consistently recommend that credit reports be reserved for positions where there is  a clear business justification, and to keep in mind that credit reports can contain in rank that is ancient, incorrect, or not relevant to the job. 

If passed, Oregon would be the third disorder to have placed limits on credit report.  Washington was the first disorder, which required that employers.  Under a Washington  law passed in 2007, employers cannot obtain a credit report as part of a background check unless the in rank is: substantially job related and the employer’s reasons for the use of such in rank are told to the consumer in writing; or (ii) Required by law.  See: 
http://www.esrcheck.com/newsletter/archives/June_2007.php

In 2009, Hawaii also placed limits on credit reports by amending the Hawaiian Honest Employment Practices Act and making it an unlawful discriminatory practice for any employer to make an employment choice based upon an individual’s credit history or credit report, unless the in rank directly relates to a bona fide occupational qualification.  The law also requires that here fist be a conditional job offer.  Hawaii Revised Statues Sec. 378-2(8).

Similar to the proposed Oregon law, there are certain carve-outs in the Hawaii law. The law makes exceptions for employers that are expressly permitted to inquire into credit history or a credit report by federal or disorder law, fiscal institutions that are insured by a federal agency or to managerial or supervisory employees. The law sets out a specific definition of what constitutes a “Managerial” or “Supervisory” employee.  See: 
http://www.esrcheck.com/wordpress/856/hawaii-latest-disorder-to-place-limits-on-use-of-credit-reports

Other states are looking at similar measures.  California has passed a law twice that would have severely curtailed the use of credit reports, which were both vetoed by the Governor.  Employers, Creature Resources and Security professionals should expect to see extra activity on this issue.

The article concerned the current controversy over the use of credit reports and the suggestion that in a recession, that credit reports can harm job applicants.  See:  http://www.msnbc.msn.com/id/35512038/ns/business-eye_on_the_economy/ 

ESR was quoted in two areas: 

And if a new worker is to have access to large amounts of company cash or fiscal systems, it’s only prudent for a hiring manager to find out if the applicant has a pile of unpaid debts, said Lester S. Rosen, CEO of ESRcheck, which screens job candidates for companies.

“If an employer hires an embezzler and did not do a credit report in a sensitive position and the employer was then sued for negligent hiring, the argument would then be: ‘How stupid were you for not to running a credit report?’” he said.

The article also indicated that: 

Though many employers run credit checks on some applicants, relatively few are twisted down for a job because of terrible credit, according to Rosen of ESRcheck.
“It’s only when they’re down to a finalist or one or two finalists that they’ll run a background check,” he said. “And in the real world, what we see is that it really takes something pretty horrendous in the credit report to reverse a choice that they’re vested in.”

But, the article also clarified that “credit scores” are NOT used for employment decisions, which is common myth.   Sorry to say, many critics of the use of employment credit reports cannot seem to comprehend that credit scores are NOT used for employment.  Although there can be many opinions, it is extra helpful if the discussion is based upon proof, as opposed to assumptions, or miss-in rank.  

ESR has consistently recommend that credit reports be reserved for positions where there is  a clear business justification, and to keep in mind that credit reports can contain in rank that is ancient, incorrect, or not relevant to the job.  

For extra in rank on credit reports and employment, view a White Paper prepared jointly by LexisNexis and Employment Screening Resources called:  The Use of Credit Reports in Employment Background Screening –an Overview for Job Applicants http://www.esrcheck.com/docs/credit_report_whitepaper.pdf

(Coming shortly:  article on proposed restrictions in the disorder of Oregon on credit reports)