Nevada has just joined
the ranks of 9
other states that have outlawed the use of credit history to discriminate
against potential employees. However, they're still a minority. Still, there's
a clear trend in the states. According to the National
Conference of State Legislators, "42 bills in 24 states and the District of
Columbia have been introduced or are pending in the 2013 legislative session
relating to the use the credit information in employment decisions. Out of the
total 42 bills, 39 address restrictions on the use of credit information in
In most states, pre-employment credit checks are legal. Employers argue that
bad credit are an indication that the person may embezzle or be dishonest. I
say nonsense. People with good credit embezzle all the time. People with bad
credit may have just had a run of bad luck, a nasty divorce, uninsured medical
bills, or some other unavoidable financial disaster. Being poor is not the same
as being dishonest.
The recession brought this issue to a head. Suddenly 10% of the population was
unemployed. People with stellar credit found themselves in trouble. While
government tends not to pay attention to issues affecting the poor, when it
hits the middle class, suddenly everyone cares.
There have been multiple
attempts to address this situation in Congress. All have failed. In my
opinion the current Congress won't do anything until the problem starts to
impact the upper class. We have a very anti-employee majority in office. The
only way things will change is if voters speak up and tell their
representatives to make employers butt out of their finances.
So, what do you do if you're in the unlucky majority of states that still
allow this invasion of your privacy?
I suggest honesty. If you have bad credit, be ready to explain your situation.
Tell the interviewer your plan to address the situation. While being "in over
your head" may be considered an indicator of potential dishonesty, it doesn't
mean you're going to become an embezzler. If you can demonstrate that you have
a plan to get out from under the debt, the HR department might feel reassured.
What are your rights if an employer runs your credit history?
If your potential employer is going to run a credit check, then they must
comply with the Fair
Credit Reporting Act. This requirement covers anything the employer is
getting from a consumer reporting agency that covers personal and credit
characteristics, character, general reputation, or lifestyle, but not the HR
department running your name on Google, checking out your Facebook page, or
reading your blog.
If they are going to run a credit check, they have to give you a document
solely for the purpose of telling you they intend to conduct a credit check. It
was probably shoved in with a stack of papers they handed you with your
application or pre-employment forms. They need your permission in writing.
They must also tell you if they're about to deny a job, reassign, or terminate
you because of what was disclosed in a credit report. They must give you
written notice with a copy of your credit report and a document called "A
Summary of Your Rights Under the Fair Credit Reporting Act." This process does
not apply to truckers.
Once the employer decides to use the report against you, they must then give
another notice, this time telling you the name of the agency that did the
credit report, saying the agency isn't the one that made the adverse decision,
and telling you how to dispute the information in the report with the agency.
This notice can be verbal or in writing, unless you're a trucker, in which case
it must be written.
If an employer runs your credit history without permission, they've broken the
law. If they don't jump through all the hoops required under the Fair Credit
Reporting Act, you have potential claims against them. In that case, contact an
employment lawyer in your state to discuss your options.
The EEOC views the use of employment credit checks as potentially
discriminatory against women and minorities. If you've been denied a job or
had other adverse action taken against you by an employer based on bad credit,
you might want to explore the possibility that you have a discrimination claim
with an employee-side employment lawyer in
See more employment law posts on Donna
Ballman's blog, Screw You Guys, I'm Going Home.
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