The Basics of Pulling a Job Applicant’s Credit Reports

More and more, employers are checking the credit of their potential employees, as a condition of employment. It has become so routine, there is just an assumption that it is always legal. But that’s not the case—in fact, if done improperly, pulling or checking credit can land your business in serious legal trouble under the Federal Fair Credit Reporting Act or FCRA.

Should You and Can You Pull Credit?

Does an applicant’s credit tell you anything about how good or worthy of an employee a potential hire may be? That’s up for debate, and a judgment call on your end.

It is legal to check an applicant’s credit, so long as you comply with the requirements of the FCRA. And yes, you can opt to hire or not hire, based on the results of the credit report that you receive.

But there is an important caveat: notice we said “applicant.” That’s because while it’s legal to pull the credit of an applicant, it is not legal to pull the credit or check the credit of someone who is already an employee, or to conduct routine credit checks as a matter of course for current employees.

And while you can opt to not hire someone based on what you see in his or her credit report, you could not legally fire a current employee for something you may see on his or her credit report.

Disclosures of Credit Pulls

To pull the credit of an applicant, the applicant must agree to having his or her credit checked, in writing, and in a clear and conspicuous disclosure.

This is best done as a separate document—not just buried in a larger contract or application form. You must tell the applicant, in writing, that you are relying upon the results of the credit pull and that the applicant may not get the job based on what may appear in the credit reports that you are pulling.

The applicant can refuse to allow you to pull his or her credit, and you are allowed to not hire the applicant, on the basis of the refusal to give consent.

If consent is given, the consent is “one time only,” it is not a blanket authorization to pull credit over and over again in the future. Additionally, once again, if the employee is hired, and you haven’t already pulled the employee’s credit, it is too late to legally pull the applicant’s credit.

Refusing to Hire

If you do see something of concern in the credit report, and you decide not to hire the applicant, you must send them a letter saying they weren’t hired because of something in their credit. You also must give the applicant a copy of the credit report you looked at or relied upon, in making your decision not to hire the applicant.

Don’t get in trouble with your business or its employees. Let us help you with your business law matters. Call our Fort Lauderdale business lawyers at Sweeney Law P.A. at 954-440-3993 today.