What's credit got to do with it, anyway?

As we discussed in an earlier post, more than a dozen states are working toward banning credit and employment checks on job applicants. It's a move that has gained widespread support. In fact, in a public meeting held by the EEOC last fall, a group of experts examined whether it's even appropriate to consider credit history as a screening tool. The general consensus? With unemployment reaching record levels throughout the country, credit checks are unfairly excluding otherwise qualified applicants from legitimate job opportunities.They can negatively impact certain protected groups, such as women and people with disabilities; they are a poor, or unreliable, predictor of job performance; and they are often inaccurate or riddled with errors.

Here's the latest on the state front:

Maryland has joined Hawaii, Washington, Illinois and Oregon in curbing the use of employment credit reports. The Maryland Job Applicant Fairness Act prohibits employers from exploring a person's credit history as a condition of employment. Of course, there are exceptions for financial institutions and for a "bona fide purpose that is substantially job-related," such as for positions involving money-handling or other confidential job duties. And in those cases, employers must disclose in writing to the employee or applicant their intent to pull a credit report.

For Maryland employers, the law goes into effect October 1, 2011. Violations of the law are subject to fines up to $500 for an initial offense and up to $2,500 for repeat violations.

For the rest of the nation's employers not affected by state-specific screening guidelines, you may want to revisit your hiring practices - and determine just how essential (or necessary) credit checks are to securing qualified applicants.

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