Many employers check prospective employees’ credit history in making their decision whether to hire a particular individual. They often state that this is their practice because a credit score is a good indicator of one’s financial responsibility, or they believe hiring people with good credit may help combat employee theft or dishonesty.
Regardless of the merits of these concerns, an employer ordering and viewing an applicant’s credit history is legal in most states. However, there are a few issues with this practice, even though it currently enjoys legal status.
First, employers cannot use credit screening as an ostensible reason to not hire on the basis or race, religion, age or sex. Importantly, if a company fails to hire applicants with poor credit scores, and the population with poor scores correlates with a particular racial, religious, age or gender group, then this is evidence of discrimination, even if the company holds no discriminatory intent and any discrimination that occurred is wholly accidental.
Additionally, there is pending legislation in the Congress, (and in Connecticut,) that would prohibit employers’ credit screening. If this legislation becomes law, companies could no longer order credit reports from bureaus for the purpose of determining hiring. However, there are narrow exceptions under the proposed law. For example, financial institutions that are hiring Supervisory, managerial, professional, or executive positions at financial institutions. If you need further information regarding proper practices when hiring, please contact an employment attorney.