Bad Credit + Job Search Could = Employment Obstacle; But EEOC Is Increasingly Targeting Employers For Unnecessary Credit Checks

Online, February 21, 2011 (Newswire.com) - It is no coincidence that one of the EEOC's targeted areas of litigation has become employer credit checks, according to attorney Terry Bonnette of the Detroit-based employment law firm Nemeth Burwell, P.C. Presenting at the firm's "Raising the Bar" program, an educational series that raises employer awareness of current issues in employment and labor law, Bonnette noted that the recent credit check focus comes at a time when employers have been slow to hire following the recession and can be more selective in seeking the best candidates, including those with good credit.

With a pumped up EEOC under the Obama administration and a record number of EEOC charges being filed (99,992 in 2010), employers need to take appropriate precautions to remain compliant with EEOC regulations. In the specific case of credit checks, Bonnette says before using them for prospective or current employees, there are two questions an employer could ask to lessen the likelihood of being the subject of an EEOC investigation.

"1.) Do I have a legitimate business reason for doing a credit check? and 2.) Is there an alternative measure that could be pursued in lieu of a credit check that still meets the goal that credit check information would otherwise provide? These are basic first steps in evaluating the need for employment-related credit checks," offers Bonnette.

While the debate on the use of credit checks in the hiring process continues, Bonnette says the EEOC tells employers to consider the following when using credit checks as a screening tool for potential employees:

• Comply with the Fair Credit Reporting Act. Show that credit report information is essential to the job in question and there is a legitimate need for the information in order for the business to operate safely and lawfully.
• If a business purpose can be shown, cross reference that purpose with any written job descriptions that exist, as well as any written background requirements or job disqualifications.
• If the use of credit information disproportionately screens out racial minorities, women and other protected groups-and it frequently does-do not perform a credit inquiry.
• If adverse information is found on a credit check, it should only be grounds for further exploration and not automatic rejection, especially because credit reports are often riddled with errors and are not necessarily a good predictor of employee performance.

"While credit checks may have a place as an employment screening tool for some types of positions, employers should be well prepared to justify their decision to use them. If not, disgruntled job seekers may take their complaints right to the EEOC," concludes Bonnette.