There's no denying that the recession has negatively affected the credit ratings of many individuals and job applicants in the US. As a majority of employers use credit ratings as a tool in their hiring decisions, legislators are now trying to take steps to help the "out of work" constituents in their states.
Currently 16 states, including Maryland, are considering legislation that would ban or limit employers from checking the credit history of job applicants. Lawmakers believe the practice traps people that are in debt- as their past financial problems may prevent them from finding work.
According to a recent survey by the Society of Human Resource Management, 60% of employers run credit checks on at least a percentage of their job applicants. A typical credit check allows companies to gain access to information about an applicant's debt load, late payments, liens and other financial glitches. (It doesn't show the applicant's overall credit score.) Employers believe the credit history provides valuable information about an applicant's sense of judgment and responsibility.
Of course, not all people with bad credit histories are irresponsible or lack judgment. Many get into credit problems through little fault of their own. It's important for employers to exercise judgment and to take into consideration every aspect of an applicant's skill, education and character when making hiring decisions.
Credit reports should be viewed as only a small part of the screening process. They should be used in conjunction with other pre-employment background checks such as criminal records, education verification and reference checks. Focusing only on one aspect of an applicant's background can cause companies to miss out on good employees.
So- while banning credit checks may be a popular idea- I'm not sure it would have much impact on lowering the unemployment rate and it definitely would take away a valuable tool for employers.
On September 8th, the government mandated that all federal contractors and subcontractors are now required to use the E-Verify system to confirm the eligibility of newly hired employees to work in the United States. Although this is a requirement for federal contractors, it remains a voluntary program for state governments and businesses in the private sector.
E-Verify is a free, electronic employment verification system managed by the US Department of Homeland Security and the Social Security Administration. The system verifies the accuracy of social security numbers provided by prospective employees to employers. It compares the information from the Employer Eligibility Form (I-9) against the federal government's database to verify the eligibility of the employee, regardless of citizenship. The program was originally put into place to prove US residency and to ensure that tax dollars were going to legal residents. E-Verify is a highly controversial system, though, and governments and businesses have been slow to embrace it.
Supporters of E-Verify believe it's a smart, cheap and efficient tool that allows for accurate compliance with the federal ban on hiring illegal aliens. They believe it reinforces the government's commitment to working with employers to maintain a legal workforce.
Adversaries of the system call it "half hearted and flawed". One of the biggest problems with the system is said to be its inability to detect identity fraud. Any applicant can present stolen social security numbers, fake certificates and fraudulently obtained photo ids to bypass the system. Many also believe that E-Verify relies on outdated technology and error prone databases, further diminishing its effectiveness.
Is E-Verify the best option available for a nationwide verification system? It's certainly not perfect and there are many areas needing improvement. They have added a photo tool so employers can double check photos against a government database. They are also working on adding a biometric component such as fingerprints? Will these improvements be enough? Hard to say- but for now it's all we have. Hopefully, it is helping to ensure a minimum level of compliance with basic immigration and employment laws?