Even as states and the EEOC are getting tougher — and talking tougher — on the use of credit checks, more employers are using them, says a just released survey of trends in background screening.
Of the 783 responses to the survey conducted in March by EmployeeScreenIQ, 21 percent of the respondents reported they credit check all their employees. Last year EmployeeScreenIQ found only 15 percent reported doing that.
Whether they check all or just some employees, more companies are checking. The survey found two-thirds of perform credit checks; that’s up from 61 percent last year.
4 states now limit credit histories in hiring
SHRM got similar numbers when it surveyed members in winter 2009. Some 40 percent said they credit-checked no one; 13 percent reported credit checking everyone.
It seems surprising that the number of companies performing universal credit checks is going up, even as the debate over whether they should even be allowed is intensifying.
At least four states — Hawaii, Illinois, Oregon, and Washington — now limit the use of credit histories in hiring. Massachusetts and Hawaii also prohibit asking about criminal records on initial applications.
Doing business outside those states is no safe harbor. The Equal Employment Opportunity Commission has turned up the heat on the use of credit histories, suing Kaplan Higher Education Corp. last December. The suit claims Kaplan denied jobs based on credit histories in such a way that it had a disparate impact on blacks.
The EEOC’s ultimate concern
That suit came not two months after the EEOC held hearings on the use of credit checks in hiring. In opening the hearing, EEOC chair Jacqueline Berrien set the purpose:
As the nation’s leading enforcer of federal laws prohibiting employment discrimination, the EEOC’s ultimate concern is whether these screening practices, devices or tools deny equal employment opportunity to any workers in the country and are keeping qualified and capable people from entering the workplace for unfair reasons.”
It’s no surprise that Nick Fishman, VP and co-founder of EmployeeScreenIQ, blogged a warning: “The EEOC is especially targeting ‘bright line’ hiring decisions that automatically exclude candidates with criminal records, arrest records that don’t result in a conviction, and/or poor credit.”
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Yet, just a few months later, the EmployeeScreenIQ survey — titled Trends in Employment Background Screening — found 8 percent of companies will outright reject a candidate based on adverse background information. In fairness, the report notes that it is possible all those companies are in regulated industries (transportation, for instance) where certain types of black marks are mandatory disqualifiers.
90% say qualifications are most important hiring factor
On the other hand, 92 percent of the respondents said they’d either give the candidate a chance to explain the situation, or would weigh other factors more heavily. Indeed, in another part of the survey, 90 percent of respondents weighed qualifications as most important or important in making a hiring decision. Next, was the interview with 75 percent rating it as important or most important.
The survey had some other interesting tidbits such as despite finding that 53 percent of employers use LinkedIn to source candidates, only 35 percent ever use it for background screening.
Of those who do use social networking and other online sources for backgrounding, most would knock out a candidate only if they discovered the person had lied about qualifications or made discriminatory remarks. But 50 percent would also eliminate a candidate based on the kind of pictures that were posted or details about drinking or drug use.
Those latter two in particular could get you in trouble. As the report points out:
Unfortunately employers who make such judgment calls based on social networking results may legitimately fall into the crosshairs of the EEOC and other regulatory agencies. Employers are encouraged to create a corporate social networking policy that prohibits the use of protected class information found on such sites, and that calls for validating negative information before taking action.”