Using Criminal Records and Credit Reports for Screening

What are the practical and legal considerations for employers that use criminal records and credit reports for applicant selection? This is the fifth and final installment of the Employment Screening Resources (ESR) Background Check Trends of 2011 Review features the number two trend, using criminal records, and the number one top ranked background check trend of the year, the use of job applicant credit reports. To view previous installments of the 2011 ESR Background Check Trends Review, visit Part 1, Part 2, Part 3, and Part 4.

  • Number 2 ESR Background Check Trend for 2011: Questions about Criminal Records of Job Applicants Become More Difficult for Employers to Ask.
  • Number 1 ESR Background Check Trend for 2011: Controversy over Whether Employers Using Credit Reports for Employment Screening is Discriminatory Increases.

Number 2 ESR Background Check Trend for 2011: Questions about Criminal Records of Job Applicants Become More Difficult for Employers to Ask.

Employers have become increasingly aware of the importance of knowing if a job applicant has a criminal record since they have a legal duty to make reasonable inquiries about who they hire in order to provide a safe workplace. An employer who hires a person with a criminal record can be found liable for negligent hiring if the hiring decision results in harm and could have been avoided by a simple criminal record check. Checking criminal records demonstrates due diligence and is also an important preventative measure to protect against workplace violence. One of the most effective tools an employer has is the use of an employment application form in the hiring process which enables employers to directly ask applicants if they have a criminal record. The advantage is that an employer can use a well worded application form to discourage applicants with something to hide while also encouraging applicants to be open and honest regarding questions about past criminal convictions.

However, the issue of whether employers can use a job application to ask about a job applicant’s criminal record is becoming more complicated. Many states, counties, and local governments have joined the “ban the box” movement removing the “box” job applicants are asked to check next to the question asking about past criminal convictions. In addition, more employers are facing lawsuits accusing them of violating Title VII of the Civil Rights Act of 1964 by rejecting or firing qualified individuals with criminal records even when the criminal history has no bearing on the ability to perform their job. Due to these factors, questions about criminal records of job applicants are becoming much more difficult for employers to ask.

To read a full article about the Number 2 ESR Background Check Trend for 2011, click this link.

Number 1 ESR Background Check Trend for 2011: Controversy over Whether Employers Using Credit Reports for Employment Screening is Discriminatory Increases.

A great deal of misinformation about the basics of credit reports, background checks, and job hunting exists in the current economic climate. The topic has been in the news and states have passed laws or are considering laws to restrict the use of credit reports and employment. Furthermore, the U.S. Equal Employment Opportunity Commission (EEOC) is looking closely at this area and has filed lawsuits alleging discriminatory use.

Most employers are not using credit reports to find ways to eliminate people from jobs. A background check that includes a credit report is usually run only after an employer has gone through the time, cost, and effort to find the right candidate. Employers initiate background checks because they are interested in hiring the applicant and are conducting due diligence to make sure there is no reason not to hire. Under the rules of the federal Fair Credit Reporting Act (FCRA), a credit report is only obtained after the applicant has given consent and after a legally required disclosure has been given. If the employer utilizes the credit report in any way not to hire, applicants are entitled to a copy of their credit report, a pre-adverse action notice, as well as a statement of their rights. Before any employment decision becomes final, applicants also have the right to challenge the credit report before any denial of employment is made final.

However, employers should approach credit reports with caution when using them for employment background checks, and must articulate a clear rationale as to why a credit report is related to a particular job. Employers should also be aware of the potential for errors in credit reports. A debt may be reported incorrectly for various reasons or the applicant could be the victim of identity theft which can also lead to incorrect data. In addition, negative entries may well not be a valid predictor of job performance especially since many job applicants have faced a long period of unemployment that may lead to larger debts.  An overly broad use of credit reports by employers could lead to claims of discrimination from a disparate impact on protected groups such as Blacks and Latinos. The idea that credit reports can be used in a discriminatory manner in the eyes of the EEOC means employers will continue to face controversy with discrimination over using credit reports for employment screening.

To read a full article about the Number 1 ESR Background Check Trend for 2011, click this link.

For the past four years, Employment Screening Resources (ESR)– a nationwide background check provider  accredited by the National Association of Professional Background Screeners (NAPBS®) – has compiled an annual ‘Top Ten Trends in Background Checks’ list of emerging and influential trends in the industry as predicted by ESR’s founder and President Lester Rosen, a recognized background check expert and author of ‘The Safe Hiring Manual,’ the first comprehensive guide for employment background screening.

To view the Employment Screening Resources (ESR) Fourth Annual ‘Top Ten Trends in Background Checks for 2011,’ visit:

About Employment Screening Resources (ESR): Founded in 1997 in the San Francisco area with a mission to help employers and employees maintain safe workplaces, Employment Screening Resources (ESR)is accredited by The National Association of Professional Background Screeners (NAPBS®) and provides industry leading technology, legal compliance, service, turnaround, and accuracy. ESR also wrote the book on background checks with ‘The Safe Hiring Manual’by founder and President Lester Rosen. For more information about ESR, visit