Can you NOT hire due to bad credit?

TABHR

We have a candidate for a low level Accounting position, client filed bankruptcy in 2009 relating to credit card debt. Should we tell the candidate?  Can we discriminate against her due to her bankruptcy?

editorial

This reply is a little late in coming.  First, the federal bankruptcy laws prohibit employers from discriminating against a candidate or employee because he or she has filed for bankruptcy.  So, the answer to your question related to the bankruptcy filing is no.  Second, before basing an employment decision on information obtained through a credit history check, you will need to consider whether there is a law in your state that regulates the use of credit reports.  A number of states have laws that prohibit the use of credit reports with a few exceptions.  One exception usually involves individuals who, as part of their job, will have access to cash above a certain amount, customer information including social security numbers or credit cards, etc.   Many states also have exceptions for executive personnel.  An individual hired in a low level accounting position is not likely to fall within one of the exceptions if your state has such a law.  Even if there is no applicable state law, as a general rule, information obtained and used in an employment decision should be related to the position (e.g., credit reports for those who have access to cash, bank accounts, confidential personal information) and use of the reports should be consistent.  When establishing a policy, it is a good idea to speak to local counsel and you can review the topic on HR.BLR.com on Background checks.

Cathy Gray, J.D., Sr. Managing Editor, BLR