Priority Personnel Blog

Credit Checks for Texas Candidates and Employees – Legislation Update

October 18th, 2011

Are you familiar with House Bill 449?

House Bill 449, if passed in it’s current form, would prohibit agencies in any branch of Texas state government from considering an individual’s credit information or credit score in deciding whether to hire the individual.  Certain notable exceptions include:

  • a position that involves access to or the direct handling of money or negotiable instruments;
  • a position as a peace officer, reserve law enforcement officer, public security officer, or county jailer;
  • a position as a corrections officer; or,
  • a position that involves investigating possible violations of law or state agency rule.

The National Conference of State Legislature’s (NCSL) website indicates that changes in credit screening legislation are occurring from coast to coast.  Seven states now limit employers’ use of credit information in employment: California, Connecticut, Hawaii, Illinois, Maryland, Oregon and Washington.

Is our state next?

As an employer in Central Texas, you still have the right to check a job candidate’s credit.  The current form of HB449 only applies to state agencies.  Still, it raises the question of whether or not credit screening is smart business practice.  Before screening any applicant’s or employee’s credit, you should consider:

  • how relevant the information you’re collecting is to the available position;
  • the cost involved versus the benefit to be gained;
  • whether or not your internal staff is trained in how to interpret the complex information contained in today’s credit reports;
  • whether or not there may be potential adverse effects to checking an applicant’s credit.

While the use of credit checks has grown over the past several years (with some 60 percent of U.S. employers using credit reports for some or all of their background checks), this practice is now becoming illegal for many employers.  In the future, it will be interesting to see if and how this ban will help people with financial problems find employment.

What is your take on the new credit screening laws?  Will it affect the way you screen and hire candidates?  We at Priority Personnel would like to know.  Please leave your comments below.

 

Are Credit Checks a Legitimate Screening Tool?

June 14th, 2011

The use of credit checks has grown over the last several years.  According to a 2010 survey by the Society for Human Resource Management, 60 percent of employers used credit reports for some or all of their background checks.

Employers use credit reports as a screening tool for a number of reasons:

  • They believe it allows them to predict future behavior based on a candidate’s financial history.
  • They are trying to prevent employee theft and assess the applicant’s trustworthiness.
  • They want to reduce legal liability and negligent hiring.

But checking a job applicant’s credit is not without its potential drawbacks:

  • An applicant who has been unemployed for a long period of time may have no choice but to incur inordinate amounts of debt and fall behind in paying bills.  If the candidate has been out of work for months, that doesn’t necessarily mean he should be disqualified for employment.
  • Credit reports fail to provide context.  For example, if debt problems are the result of expensive medical procedures, a low credit score may not indicate anything about future job performance.
  • Credit reports are not perfect.  Ambiguous, dated, inaccurate and/or redundant data create the potential for credit score errors.  While these errors are generally minor, employers should be aware that they exist.
  • Credit reports may not be relevant for the job in question.  Unless the person you’re hiring will have access to sensitive financial information, make financial decisions or handle money, a candidate’s credit report may be of little significance.

Given the potential benefits, as well as the potential drawbacks, are credit checks a legitimate screening tool?  It depends on whom you ask.

According to Christine Walters, a representative for the SHRM during last October’s EEOC public hearing on the practice, effectiveness and impact of credit checks as a screening tool, “SHRM believes there is a compelling public interest in enabling our nation’s employers – whether that employer is in the government or the private sector – to assess the skills, abilities and work habits of potential hires.”

She and other hearing panelists pointed out that the Fair Credit Reporting Act (FCRA) of 1970 restricts employer use of credit reports to employment purposes.  Under the law, the employer must give a job candidate the right to defend himself against (including refuting, explaining or correcting) any collected credit information that might weigh against him.

Chi Chi Wu, staff attorney with the National Consumer Law Center in Boston, expressed a different opinion.  Given the state of the economy, she said that using credit history as a screening tool is “a practice that we believe is harmful and unfair to American workers.  The use of credit history for job applicants is especially absurd when you are looking at an unemployment rate of 10 percent and have many workers looking for a job.”

As an employer, you are within your rights to check a job candidate’s credit.  Before you do so, you should consider:

  • how relevant the information you’re collecting is to the available position;
  • the cost involved versus the benefit to be gained;
  • whether or not your internal staff is trained in how to interpret the complex information contained in today’s credit reports;
  • whether or not there may be potential adverse effects to checking an applicant’s credit.

Ensure Successful Placements with Priority Personnel

Finding the perfect candidates for your organization requires experience, in-depth knowledge of your business and a comprehensive screening process.  Priority Personnel combines all of these to ensure the success of your next hire.  Partner with Priority Personnel today and connect with Central Texas’ top light industrial, office/clerical, technical, professional and retail talent.

Hiring Still Slow? Now is the Time to Review Your Employment Screening Process

March 15th, 2011

The BLS Employment Situation Summary continues to paint an anemic economic picture.

Economists continue to talk about a “jobless recovery,” with many employers focusing on productivity gains, as opposed to hiring, to manage any increases in business.

What’s the upside?

Well, if your company isn’t focused on hiring right now, it may be the perfect time for you to review and improve your employment screening process.  Doing so could help you:

  • increase compliance;
  • reduce theft, fraud and accidents;
  • prepare you to make even better hires when the time comes.

As experts in employment screening, Priority Personnel recommends taking the following steps to reduce the potential for negligent hiring and discrimination:

Consult with your attorney. If you hire on your own, you should have your legal counsel review your screening process to ensure you’re complying with all current legislation and hiring regulations.

Be consistent. Your screening process should be the same for all candidates within comparable job descriptions.  If you do a background check on one manager, you should also conduct the same background check with candidates for all similar positions.  In addition to preventing anyone from “slipping through the cracks,” a uniform process helps minimize your exposure to litigation.

Use social media carefully. Social media has made access to candidate information fast, easy and free.  But if you intend to use this publicly available information to screen candidates, make sure that you obtain written permission and follow all EEOC and FCRA provisions.

Formalize and document your process. If you don’t already have one in place, now is the time to standardize, formalize and document your background screening policies and procedures.  Creating a formal policy makes screening more effective, efficient and consistent.  Furthermore, should a problem arise, your ability to show that you applied fair, consistent and documented screening processes will limit your legal exposure.

Reduce your risks and make better quality hires with Priority Personnel.

Hiring top talent – honest, hardworking individuals who do what they claim they can do – is critical to your organization’s continued success.  Priority Personnel’s Direct Hire Services can help ensure that success.  Here are just a few of the benefits our comprehensive, accurate screening process provides:

  • transfer employment screening risks such as discrimination and negligent hiring;
  • create a safer work environment;
  • build a more productive workforce;
  • save time and eliminate process bottlenecks employment screening creates;
  • hire the best talent available – pre-screened, reference-checked, skills-verified and ready to perform for you.

Work with Priority Personnel and your hiring decisions can be made with confidence – guaranteed.

How to Spot Resume Fraud

December 13th, 2010

Have you ever caught someone lying on their resume or job application?

Unfortunately, it’s become a VERY common problem, and it can lead to big and expensive hiring mistakes!  In fact, more than 30% of resumes are fraudulent!  With all the competition for jobs, people have become more willing than ever to stretch the truth or tell outright lies.

So what can you do to protect your company?  Learn how you can spot resume fraud and more importantly what you should do when it is spotted.

Using Background Checks Can Save You a Lot of Headaches

June 21st, 2010

Did you see the recent study about the kid who faked his credentials to get into Harvard?

Unfortunately, this story is becoming an all too common occurrence. In fact, as many as 30% of job seekers exaggerate or outright lie on their resumes.

So what can you do?

This issue of Great Ideas highlights the importance of doing thorough background checks.