Employment Law - Credit Checks on Job Applicants

Credit Checks on Job Applicants

Under new changes to the federal Fair Credit Reporting Act (FCRA), an employer is no longer allowed to use a job applicant's credit history to make hiring decisions without telling the applicant. The employer now is required to tell the applicant that his credit history will be used in the hiring process and to inform him of his rights under the FCRA. The applicant must then give permission before the employer can obtain the credit report. Of course, the applicant may refuse to give consent to obtain the report, but the employer can simply refuse to hire the applicant based on the refusal.

Before getting the report, the employer must certify the following to the credit reporting agency: (1) that it has obtained permission from the applicant to receive a credit history; (2) that the credit history is being used for hiring purposes only; and (3) that if the applicant is being rejected based upon the credit report, the employer will advise the applicant of this fact.

If an applicant is rejected, the FCRA also requires that the employer give the name, address, and telephone number of the credit reporting agency. This will allow the applicant to obtain a free copy of the credit report. The applicant is free to dispute the information on the report if he believes that it is wrong. However, the employer must tell the applicant that the credit reporting agency did not make the decision to reject the applicant.

While an employer is "getting the goods" on an applicant, the applicant can make sure that the employer is following the proper procedures and rules under the FCRA and that the applicant's rights are not being compromised or abused in any way.

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