You were laid off from your job of 12 years and given a severance package equaling four weeks pay and your vacation time. It only took six short months to exhaust that money and your savings. You've been unemployed or underemployed for 18 months. Your bills are behind, and many of your revolving credit accounts have gone into collection. You've been restricted to interviews for jobs that are on your city's public transportation route because your vehicle has finally been repossessed, and you've had to choose between buying groceries and paying the minimum installment on your Visa charge card- again. You're low on options when the HR Assistant at ABC Company calls regarding your resume.
You want to get excited, but you've been down this road. You've had three interviews in your field in the past eight weeks, and they've all ended the same way- with a letter in the mail stating that you've been disqualified due to the negative credit history you've built during your time of unemployment.
It's an interesting catch-22... You have a fire to put out but the water company won't give you a glass of the wet stuff because you have a history of pyro-activity. You can't end your pyro-activity because the water company won't give you any of the wet stuff. Job-searchers who have been trapped in this loop will tell you how frustrated and afraid they've become. They will talk about their desires to use their degrees in their fields again, and how they feel that pre-employment credit screenings are often more discriminatory than they are fair.
Companies are ultimately interested in assessing the risks associated with their investments- and human capital is often the most important and expensive recurring investments found in corporations. Companies are concerned with whether or not their prospective employees might be tempted to steal, accept bribes, or even leave abruptly for more pay. But what happens in an economy like ours where one third of employers are relying heavily on credit and our creditworthiness as a nation is suffering due to prolonged unemployment? Should there be a moratorium or a relaxation in these policies? I think so.
Liz Pulliam Weston of MSN Money provides information and tips for job hunters who might be facing this obstacle in her article, "How Bad Credit Can Cost You A Job." In her article, she touches on the inherent ineffectiveness involved in using an applicant's credit history to determine his or her level of dedication or integrity. In her interview with Choicepoint Inc., which performs 6 million credit checks each year, she learns that employers are beginning to agree that there may not be as strong a correlation between poor credit and employment risk as one may think.
Credit has not turned out to be a good predictor of workplace theft. This is what our customers are telling us, anyway... A better predictor is a criminal history involving bounced checks.
While her findings are not explosive in my opinion, they are thought-provoking. It might make sense for a bank to deny employment based on an applicant's credit if he or she had a history of unpaid bounced checks- but to deny employment based on "extreme debt" is to tread on dangerous territory. A columnist named Diane Stafford makes a compelling argument in her article which is titled "Credit Checks A Legal Part of Employment Investigations."
"The employer needs to figure out if the credit-check policy has a disparate impact that keeps a legally protected group from getting employment," Packel said.
For example, a plaintiff's attorney for a rejected job applicant could find that a company's credit-check policy overwhelmingly denies employment to single mothers with children. That opens the possibility for his single-mom client to bring a gender-based discrimination claim.
(I would like to point out that this argument could also be made against organizations with conservative leadership as there are some groups that frown upon divorce, premarital sex, and feminists who reject the need for marriage. The author continues...)
Or, for example, if the policies resulted in a disproportionate share of African-Americans being denied employment, partly because of poor credit histories, there could be a race-based discrimination claim.
Employment law attorneys are advising corporate clients to do their own disparate-impact analysis before opposing counsel or a state agency does it for them.
Of course, her arguments could make a convincing case against the use of credit reporting for the purpose of recruiting, but that's not the purpose of my diary.
I am writing this to state my lone, personal opinion. In light of the condition of our economy, the dry job market, and the decreasing creditworthiness of Americans (as reported by the MSM), I think there should be some relaxation on these policies. Of course, it is not likely that this will ever happen, but it should.