Michigan

Employers ? be careful about pulling credit reports on prospective employees.

Hiring competent and honest people for your business can be a very tricky thing today. Employees are keenly aware of their rights under federal laws and the questions that you can ask of them. Gone are days of asking a candidate how old he is or whether she has kids at home with her husband. While there may be legitimate reasons for an employer to make these inquiries, you just can?t.

When interviewing employees, you have the right pull the employee?s credit report. Under the Fair Credit Reporting Act, with the prospective employee?s permission. No candidate who is serious about landing a job with your company is going to decline your request. But the real question is?..Should you pull that credit report?

YES ? A credit report can tell you some things about the prospect. If the prospect is going to handle money for your business, you should know if he has an immediate need for your cash. Is he largely in default of his obligations? Is he in foreclosure? A credit report will give you this information.

A credit report may also speak to the level of responsibility in one?s personal life. Even if the prospect does not have an immediate need for your money, does he pay his bills on time? For many people, that speaks to personal responsibility. If one sees evidence of personal responsibility in a prospect personal finances, there is a good chance that that person would be responsible in his work to you.

NO - Are you pulling a credit report for someone who is applying for a position that does not involve the handling of your company?s money? If so, you should be aware that credit reports are not the ?end all? for evaluating someone?s future performance. While I spoke of personal responsibility above, if the prospect has had medical bills for a family member, are you really going to penalize him for not being able to pay those bills?
Some companies pull credit reports on all prospects, no matter what their position. Many employment lawyers do not favor this practice. Evaluating someone based on their credit report tends to have a negative impact on minorities. Such a policy opens a company up to claims of discrimination, both privately and by the EEOC.

My advice ? If you are going to pull a credit reports on prospective employees, I would suggest you only do so for very compelling reasons such as the position may involving the handling of money or other valuable property. I would not recommend any employer pulling credit reports on all of their employees.

Attorney Gary Nitzkin is managing attorney of Nitzkin and Associates, Debt Collection Attorneys. You may reach Attorney Gary Nitzkin by email or by telephone at (888) 293-2882

Full post as published by Michigan Collection Law Blog on October 29, 2010 (boomark / email).