PUBLIC AFFAIRS PERSPECTIVE SPRING 2010

Public policy insight for your business



Legislatures target the use of credit reports for employment screenings

Given the weakened economy, state legislatures have begun to look at ways to help the unemployed find new employment opportunities. Legislators in several states have proposed bills to restrict the ability of employers to look at credit information in making hiring decisions out of a misplaced concern that such information will result in job seekers not being hired.

Currently, legislation to prohibit or restrict employers’ ability to use credit information in making employment decisions is pending in 12 states. The use of credit reports for pre-employment screening is regulated by the federal Fair Credit Reporting Act, state credit reporting statutes and a robust body of employment law. Still, misconceptions about the content of credit reports used for employment purposes have encouraged labor advocates to promote restrictions, if not a prohibition, on the practice.

However, the result of such legislation would be to remove a valuable tool from employers for evaluating and comparing different candidates under consideration for a job. Since employers are going to be held responsible for their employees’ actions, employers should have access to tools that give better insight into whom they are hiring. Using credit information to make employment decisions does not result in fewer employees being hired. Rather, it helps ensure that the best candidates are matched to the available jobs.



 

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