Post job credit checks

Shadowfax

A colleague told me yesterday, that during an insurance audit (they'd had some embezzlement) the insurance guy told them they should be doing credit/character checks annually on all employees, and terming anyne with problems. Now, mind you I don't have any idea what this 'expert' (the guy from out of town w/o a nickel invested in your operation) had in mind as a definition of 'problem', and I havn't had time to really ruminate on the issue, but I was wondering if anyone is doing this, and if so, how you handle it. I can alsmost see the wisdom for folks directlyinvolved with cash or accounting, almost...but..everyone? I can personally attest to the fact one can be cash poor and painfully honest! And surely, the secretary with a credit problem or the machinist who takes fish out of season isn't a risk to the business? Is it? Even if it is, how do you justify the discharge? I just had never heard of such a concept, and thought it might be good grist for the group to grind up. And if the insurance cos are going to audit all of our personnel policies and reccommedn changes, then we don't need this forum anymore because the ins co will be runing the place, and those buttheads don't listen to anyone or anything but the ka-ching of the premium escalating.

CarrieMP

I have only ever done credit checks on our Accouting/Finance personnel. I don't think it seems to make sense to check all employees, someone can have a credit problem but that doesn't make them a bad employee. I am very suprised that the insurance company told you to do this...

System

IMHO, I think this particular insurance guy forgets what is 'reasonable' risk. It's bordering on infringing on employees' privacy. The employees in finance should, of course, be treated with more scrutiny, but even then they are notified that your company may conduct periodic checks. That should be made clear during the hiring process. If you conduct background and reference checks when you hire people, your insurance co should be satisfied with the risk. I'm assuming you have drug testing policies, work rules, EEO statement, and other policies that minimize the company's risk.

The only thing we check periodically is the driving record of all employees since all of us drive employer vehicles. That's reasonable.

cthr

If you decide to run annual credit checks, you need to have your employees permission to do so. Also, bad credit is not an automatic bar to employment and you need to make sure that your policy does not create adverse impact.

Pork

GOOD MORNING SHADOWFAX: I did a quick GOOGLE CHECK WITH MISSISSIPPI LAW ON CREDIT CHICKS BY AN EMPLOYER. The result was the following:

"To obtain a credit report on an employee or prospective employee, the employer must provide a clear and conspicuous written notice that a credit report maybe requested, and obtain written consent from the applicant or employee".

I suggest you do the same for your state and find this type of information real quick. Then follow the law for your state. Unless someone handles money or the direct paperwork pertaining to the flow of money within your operation, I suggest these ees be the one's checked, otherwise, consider their financial affairs to be their private information and stay away from this employer information risk.

May you have a nice day and a Blessed one at that.

PORK

deniseE

Another thing to remember is that if you conduct credit reports on your ee's you are required to comply with the Fair Credit Reporting Act (FCRA)...

I have always had an issue with this because my hubby's ex-wife really ran our credit into the ground and it's taken years to recover. I would have been devestated to lose my job over that.

I think if you're going to do this a firm methodology needs to be in place so that no employee can perceive that the process is discriminatory in anyway.

marc

It is way easy for third parties to criticize and suggest myriad changes for which they are not held accountable. I used to be an financial auditor and one of my favorite definitions of an auditor is "...one who comes in after the battle is over and bayonets the wounded."

Sounds like this insurance auditor could easily fit this definition.

I wonder what percentage of working people in the U.S. have credit problems? With the unemployment rates finally improving, there are very few people out there to fill all of the jobs that would become vacant if we took this advice and fired everyone with credit issues.

And credit checks to expose people in finance with issues that may tempt them to criminal things with cash are no substitue for good old fashioned segregation of duties with proper checks and balances. Even very small companies can institute disciplines that will minimize exposure. The credit check can be a valuable tool, but it falls way short of the real things a company should do to protect itself.

Pricehcs

[font size="1" color="#FF0000"]LAST EDITED ON 05-28-04 AT 11:44AM (CST)[/font][br][br]We are facing the same situation with driving records. Our insurance vendor is suggesting annual driving record checks for basically the same reason as Shadowfax states (restrict or term any driving offenders. S Moll, our employees do not drive for the company anywhere close to full time, but do rent the occasional car for business trips.) I am equally struggling with the concept of spreading this across the organization. My opinion is that it is simply another means of an insurance company trying to shift liability off of themselves and onto their clients. "Well, you knew that ________ had a ticket in 1999, so we're not going to pay for their fender bender in the rental car..." Their questionnaire to me said, "Have you contemplated introducing this process to your organization?" Yes, I contemplated it for about five seconds and then said no...

#1 thing a consultant shouldn't say: "I could tell you the answer right now, but we're committed to a three month project..." #-o

Leslie

As part of the annual state/tribal re-certification all our employees are credit checked. Unless it involves legal issues (or I should say illegal!), no employment action has ever been taken.

Shadowfax

[font size="1" color="#FF0000"]LAST EDITED ON 05-28-04 AT 02:54PM (CST)[/font][br][br]Pork and denise E I am well aware of the FCRA reqwuirements, which is why I question any attempt to do it annually. I theink Pricehcs and Marc are dead on that there are much less risky and more effective ways to insure your co's records and cash. I have lately seen several ins co audits suggesting changes injk policies and procedures, and they know didly squat about the operation. It is probably as you say, just another way for the ins co to shift liability, and if you don't follow their reccommendations, they will deny the claim. I was just ranting on another thread about govnmt intrusion in our business and asking them anything is an invitation to bigger problems, now it's the #**#@ insurance cos too! I shoulda founded an ins co: sit back collect premiums, deny claims cause they didn't run the co the way I told em ta', 100% profit - sounds like the good life! Hug a Vet!
Marc - thanks for the definition of an auditor, it is absolutely priceless!