You Can Pull an Applicant’s Credit Report, But Be Very Careful

If you are looking to hire a new employee, you may want to get some information on that employee’s credit history. You can debate how much a credit tells you about whether the potential hire is trustworthy, or a hard worker, but whatever your reason, you are not alone; many employers in many different fields, are routinely pulling applicants’ credit histories, and basing hiring decisions on the results of those credit pulls.

But credit pulls, and credit decisions, are heavily regulated by the federal government, under the Fair Credit Reporting Act (FCRA). The Act not only regulates how and when someone can pull and view credit, but if you break the law, the person whose credit you pulled (the employee or applicant, in this case), can sue you for money damages.

Pulling Credit Reports

As a general rule, it is legal to pull someone’s credit, before hiring them, and to base your hiring decision on the results of the credit pull. But there are certain requirements that have to be met.

The credit pull must be a condition to being hired in the first place. That is, the person cannot already be an employee. So, for example, you couldn’t just routinely check an employee’s credit, or fire an employee because something showed up on his or her credit report one day that you didn’t like.

Getting Consent

To pull credit before someone is hired, you will need their written consent to do so, and that consent must be clear.

That means it must be in a separate writing—not included as part of a larger disclosure or contract. The consent to pull credit must specifically say that you are using credit as part of your hiring decision, and that the employee could be rejected, based on the contents of his or her credit.

If a potential hire refuses to give consent you can legally refuse to hire him or her.

If consent is given, the consent is good for however long it takes you to pull the credit. However, again, once the employee is hired, you cannot then pull credit. Additionally, the consent is on a “per pull” basis; it is not a blanket authorization to pull credit whenever and for as many times as you want to pull it.

Refusal to Hire

You can, legally, refuse to hire someone for something on their credit you don’t like. Your reason can be subjective; there is no list of things on a credit report that you can, and cannot, take into account in hiring.

However, if you do refuse to hire someone, you must notify them in writing, and they must be informed that they weren’t hired, because of something in the credit report. They also must be given a copy of the report itself, that the decision was based upon.

Call the West Palm Beach business litigation lawyers at Pike & Lustig today if you have questions about your employees or what you can or cannot do in the workplace.

Sources:

ftc.gov/legal-library/browse/statutes/fair-credit-reporting-act

ftc.gov/legal-library/browse/statutes/fair-credit-reporting-act