Currently, it is legal to conduct a credit check on a job candidate, except in Wisconsin.
The usual pre-employment testing criteria applies: the candidate must give their written approval, and the check should be conducted after a job offer is extended.
Although attorneys and the courts will ultimately decide the legality of such a check, employers should carefully evaluate whether or not to conduct such a check. My rule of thumb as a best practice is to always make sure all pre-job testing as a valid business reason. (A secretary does not need to lift 100-lb. boxes, for example).
Here are some guidelines to consider before implementing a credit check:
- Is there a business need? If an employee will be handling cash, or managing financial transactions, the answer would be yes. But if the open position is working in a warehouse, or as a telephone operator, my suggestion would be 'no'.
- If you elect to conduct credit checks, you must be consistent: you can't just single out one candidate for a credit check; all candidates applying for the selected positions must be checked.
- Follow the guidelines establish by the Fair Credit Reporting Act (FCRA).
- Notify the candidate when an adverse action is taken (such as not hiring) on the basis of such reports.
- You must also identify the company that provided the report, so that the accuracy and completeness of the report may be verified or contested by the candidate.