I hope
Steve Bucci has his malpractice policy up to date. He published a column on
Bankrate.com that states your "
Employer can Check Your Credit Report." The
Cleveland Plain Dealer ran his column in its October 20, 2007 Career Advice Section. In Ohio, this advice could land employers in deep legal trouble.
Bucci wrote in response to a question from a reader, "Carol." She asked whether her husband's employer can periodically review his employee's credit reports. Mr. Bucci answered that an employer can do so, as long as the employee authorized a consumer credit check. Many employees do so when filling out forms at the time of hire. As far as that goes, Mr. Bucci is correct. Employers can check employee credit, if given permission. The rest of the article, however, is terrible advice.
First, an employer cannot use an employee's credit information to make an adverse employment decision without informing the employee beforehand. Mr. Bucci missed that part of the Fair Credit Reporting Act. Instead, he suggests that employers can legitimately decide who to hire or promote based on a credit history. He speculates that paying a bill late means:
- the employee will come to work late;
- the employee has poor judgment;
- the employee will be distracted by unpaid bills; and
- wage garnishments and creditor calls at work (will have) have an impact on an employee's productivity.
Wow. This guy packed four stereotypical beliefs into two short paragraphs.
Does it not make more sense to believe that having bills to pay will:
- make an employee more productive;
- cause her to get to work on time because she needs the job;
- encourage her to work harder to protect her paycheck; and
- volunteer to work overtime when he gets the chance?
The real problem with Mr. Bucci's advice, however, is that Ohio employers who follow it will probably get sued. First, an Ohio employer cannot discharge an employee because the employee's paycheck is garnished by a creditor. Mr. Bucci's advise, that an employer should refuse to hire the employee in the first place, would violate the public policy embraced by this law. Creative employment lawyers would be very interested in that case.
Second, as noted above, employers must tell employees before they act on a poor credit report that they intend to do so. Mr. Bucci did not mention that in his column. The legal effect of this behavior is to create a claim that the employer acted on that information without telling the employee.
Most importantly, however, the Ohio Civil Rights Commission (OCRC) recently issued a policy guidance that addresses the use of consumer credit reports in making hiring and other employment-related decisions. This guidance "examines the
racially discriminatory impact on minority job applicants and advises employers that the use of consumer credit reports should not be used except when job-related and based upon a legitimate, and objectively verifiable, business necessity."
This is serious stuff. A discriminatory impact lawsuit is a class action. The employer is guilty of discrimination and liable for back pay and other damages if a neutral practice, like checking credit scores, has a discriminatory impact on minorities. So, if minorities have worse credit histories than non-minorities, using credit scores will have a disproportionate impact on minorities. In that event, the employer is guilty of discrimination unless it proves it has a legitimate business reason for using the criteria. This is very difficult to prove.
The OCRC issued its policy guidance because research that compares performance evaluations of employees with high and low credit scores shows no correlation to high and low performance evaluations. Therefore, in Ohio, employment lawyers are looking for employers who use credit scoring to deny promotions or new hire opportunities.
If Carol asked me whether her employer can snoop on employee credit reports, I could answer her question with two words: "call me."
