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.