Banning Employment Credit Reports a Big Mistake
March 4, 2010
Many states are considering legislation to restrict or ban employers’ use of employment credit reports in the hiring process. Credit reports are a valuable tool in the employment screening process and we’ve been vocal in our opposition to such legislation. I found a great editorial piece on this issue in the Herald-Review (a downstate Illinois publication) and I could have said it better myself. See below.
There are two reasons why this sort of legislation is a bad idea.
First, it puts more government regulations between an employee and an employer. Except in cases to ensure fair hiring practices, government should not be involved in how companies hire employees. Employers need to maintain the ability to hire people the way they want to hire. One way of screening applicants is to find out about their background, and their credit history is a part of that background. That’s a tool that should not be taken away by government.
More importantly, the pre-employment credit checks actually protect consumers. Money stolen from companies eventually is paid by the consumers.
Plus, do consumers really want to show their credit card to a cashier who has a gambling or substance abuse problem? Do consumers want to give personal information to a professional who is facing a mountain of debt and looking for some quick income? Do employees want the new local store manager to be someone who has repeatedly declared bankruptcy?
Banning credit checks is a popular idea, but few people are considering its overall impact. Businesses need to run these sorts of checks to protect themselves and the consumer.