Time to Rethink Use of Credit Reports

By
May 20, 2014

I read that Vermont was the 8th state to regulate the use of credit reports or credit-related information for doing background checks. It may be time to rethink the use of credit-related information for conducting background checks or making other employment decisions. Eight states have now passed legislation that regulates the use of credit-related information for employment purposes.

Wisconsin has been a leader in establishing protected categories, such as arrest and conviction record or use of lawful products during non-work hours. Employers have to be very careful what they do when conducting a background check to make sure they do not acquire information that can be used against them when challenging an employment decision, particularly in the area of deciding which employee to hire. It may be best to limit the use of credit-related information, because it is hard to show that credit-related information is directly related to the hiring decision. This is like the use of social media as a background check vehicle; you may acquire more information than is necessary and may place you in a difficult position to avoid the use of information you have learned during an aggressive background check.

Employers should be cautious about the use of this credit-related information when making employment-related decisions.

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