Human Resource Blog

Hiring Policies and Credit History

	Hiring and Staffing
Complete Business Forms Kit CD Form I-9 Employment Eligibility Verification Employment Application Long Form Substance Testing Consent Form Pre-Employment Reference and Background Check Employment Offer/Acknowledgment Receipt of Employee Handbook New Hire Survey

	HR Management
Confidential Employee Folder Confidential Employee Medical Folder Job File Worksheet Folder Daily EEO Applicant Flow Log Workplace Information Sheets Request to Inspect Personnel Files

We are an accounting agency. We have a candidate for hire in the processing department, putting the paper work together for tax returns. Not preparing the returns but collating the paperwork. Should we not hire someone with bad credit?

In general, employers should consider an applicant’s credit history when a job involves making significant financial decisions, significant access to company funds, or handling cash. From the description provided, neither of those applies to this job.

Significant financial decisions would include choosing vendors, negotiating financial contracts or agreements, and making other business decisions that will have a strong impact on the business’s financial health. The thought process here is that an employee, who makes poor financial decisions in his or her own life, will also make poor financial decisions for the company.

An employee with significant access to company funds might include a staff accountant or comptroller. It also might include a traveling salesperson, who regularly pays for airline tickets, lodging and meals with a company credit card. The concern in this case is that the employee will not be any more responsible with company funds, than with his or her own.

When an employee regularly handles cash, many employers fear that the temptation to steal will simply be too great for workers with significant money problems. For that reason, bank tellers, casino cashiers and others often must have a good credit history.

From the description furnished, the worker is little more than a file clerk. He or she would not make financial decisions or handle cash, so it’s hard to see how the credit rating is relevant in this case.

It’s true that if the worker has access to tax returns handled by the firm, he or she will see stranger’s names and social security numbers. Theoretically, an employee could use that information for identity theft. However, this is equally true of employees with a good credit history. It’s probably not reasonable to assume that every applicant with poor credit is a potential criminal, especially if they have no prior convictions.

By federal law, employers may not consider a bankruptcy in making hiring decisions. Employers are also required to get an employee’s permission (usually in writing) before obtaining a credit report. If a negative hiring decision is made based on a credit report, the employer must inform the worker in writing. The employee must also receive a copy of the credit report.

A number of states have more stringent laws protecting job applicants with poor credit. Some states specifically restrict the types of jobs where an applicant can be denied, due to poor credit.