Applicants Cry Foul Over Employment Credit Checks

Brenda Matthews thought she had landed the job of her dreams. After interviewing for a paralegal position in Johnson & Johnson's legal department, Matthews was offered the job. The 27-year-old single mother accepted it immediately. She even informed her current employer of her new position--providing the standard two-week notice.

A few hours later, however, her dream turned into a nightmare. Johnson & Johnson called Matthews to rescind the offer. The company said it had run a background check on Matthews and discovered information it considered unsatisfactory.

In the 1979 case EEOC v. American National Bank, a group of African-American women applying for teller positions at American National Bank in Virginia claimed the bank discriminated against them when it denied them employment based on their credit history.

"In cases like these, the first step in litigation is for the plaintiffs to prove there is an adverse impact as a result of the credit reporting," McGoldrick explains. "Once they've done that, the burden of proof shifts to the employer, who then has to prove there was a legitimate business reason to use the credit reports."

When a company does decide to use a credit report in any hiring decision, it should follow FCRA's guidelines on how to properly and legally obtain the report, and if necessary, deny an offer based on the credit report's results.

First, the company must inform the potential employee in writing that it is planning on conducting a credit check. Second, the applicant must sign an authorization form allowing the company to obtain the information. Third, if the company is planning on making an adverse decision based, even in part, on the report, it has to give the applicant a copy of the report before making that decision. Finally, the company has to send a written notice to the applicant explaining why it made the adverse decision and give him or her the opportunity to correct any errors with the credit-reporting firm.

staff Writer

Bio and more articles

Join the Conversation

Advertisement. Closing in 15 seconds.