With layoffs and foreclosures rising, bad employer credit checks can get in the way of landing good jobs. As a result, the federal government and several states are considering new rules to stop employers from unfairly screening out job applicants who fail employer credit checks.

The Equal Employment Opportunity Commission (EEOC) – a critic of employer credit checks – is considering issuing guidelines on how employer credit checks should be carried out. According to the EEOC, employer credit checks are legal, but can be discriminatory if they are not essential to a hiring decision and disproportionately exclude minorities, women, or people over 40.

Meanwhile, five states – Connecticut, Hawaii, Missouri, New York, and Texas – are considering laws that would restrict employer credit checks (Washington enacted restrictions in 2007). These states hope to eliminate many employer credit checks by requiring employers to prove they are vital to hiring, believing that employers do the employer credit checks routinely without showing that there is any connection to the job.

According to the Society for Human Resource Management, approximately 43 percent of U.S. employers check job applicants for overdue payments on mortgages, rent, credit cards, and student loans, a figure up from 36 percent in 2004. But these employer credit checks are under fire from lawmakers who say trustworthy people are being shut out of jobs at a time when the economy is bad and unemployment is even worse.

In addition, the Transportation Security Administration (TSA) – which bars people with $5,000 in overdue debt or any federal or state tax lien from working as airport screeners – is considering requiring credit checks for one million workers with access to secured areas of airports after a recent report found that 22% of applicants from 2005 to 2007 were ruled out for that reason.

While some believe people have bad credit for reasons that have nothing to do with their worth as an employee, employers still need to be vigilant against those employees who may potentially commit fraud, especially people seeking jobs with access to money such as tellers, cashiers, and finance officers.

Pre-employ.com – a nationwide leader in background check services and pre-employment screening solutions – provides employer credit checks as a means to protect against negligent hiring lawsuits and employee fraud. For more information on Pre-employ’s services and solutions, please visit www.Pre-employ.com, email infor@pre-employ.com, or call 1-800-300-1821.

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