Our Human Resources Blog

  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.

 It's no secret that a growing number of employers are searching Facebook and other social media sites for information on potential hires during background checks. The availability of searchable data such as past employment, affiliations, schools, hobbies and pictures makes these sites extremely popular when investigating job candidates.

Recent studies have revealed that 1 in 5 employers have been influenced in their hiring decisions when searching social media sites.  That's a big number. While it's true that these sites can help employers gain additional information on applicants, employers should be aware of the potential minefield when using this information in hiring decisions.

Employers should keep in mind that a majority of these sites are vehicles for casually interacting with others in an informal, personal setting.  When companies use these profiles to find professional information on a potential hire, the data they find may be at a minimum--misleading.

Not only can the information be misleading, it may also be inaccurate or false. Contrary to popular belief, just because it's posted online- doesn't mean its true!  Few networking sites require verification of any kind or prevent users in making up a profile in someone else's name. Consequently, what you see is not always what you get. In addition, many people use the anonymity of the internet to be portrayed as they want to be seen, not necessarily as who they really are.

While there are no laws officially prohibiting employers from searching Facebook and other sites, legal experts warn that companies should be aware of the potential for discrimination or invasion of privacy claims.

So -while it might be tempting to use these sites, given all the potential pitfalls, it might make more sense to use "old fashioned" reliable systems and processes to perform these checks. Background checks that ensure employers are complying with federal and state laws and provide more reliable, accurate information.