Human Resource Blog

Managers Discussing Employees Creditworthiness

The Finance Manager at our company is reporting to our VP when an employee cannot qualify for a company credit card. The result is alot of people find out about an employee’s creditworthiness which is really none of their business. There are many reasons a person may not qualify and it is not known to all and should not be used to judge that person.

What legal liability does the company have in situations like this?

Kind Regards,
Embarrassed by Executive Management Practices

Under the Fair Credit Reporting Act, employers are permitted to use a credit report to assess or judge an employee or potential employee when a) the position involves significant responsibility, such as a manager or b) the employee has cash-handling responsibilities, such as a bank teller. In this case, we are going to assume that the employee has significant responsibilities, since usually lower level employees are not given company credit cards.

Employers are required to keep credit reports confidential. Usually, they are kept in a confidential file where even the employees supervisor is not aware of it. However, the law permits employers to consider credit reports when making decisions about promotions, reassignments and retention.

Unfortunately, employers and others regard poor credit as a sign of irresponsibility. We are not saying that is accurate, it is just a fact.

So it is a legitimate use of the employees credit info for the Finance Manager to be advising the VP when an employee is turned down for a company credit card. (It would even be legal for the company to not hire an applicant who did not qualify.) However, it is not clear how this results in a lot of people learning this information. Presumably, in this age of email, the Finance Manager simply needs to send an email to the VP that the credit card request has been declined, and no one else is involved. Even if the Finance Managers assistant sends an email to the VPs assistant, both of those people should know enough not to discuss confidential information.

If the information is being circulated outside that select circle, that is probably a violation of federal law. You would do well to draw that to the attention of the VP or Finance Manager.

Read more about the Fair Credit Reporting Act at: http://www.ftc.gov/bcp/edu/pubs/business/credit/bus08.shtm

The entire law is at: http://www.ftc.gov/os/statutes/031224fcra.pdf