Two companies that fired workers and rejected job applicants based on background checks without informing those people of their rights have settled with the Federal Trade Commission for $77,000 in civil penalties.
The companies -- Quality Terminal Services and Rail Terminal Services -- were charged with violating provisions oaf the Fair Credit Reporting Act (FCRA) which requires employers to get permission to look at individual credit reports. If you don't get a job because of information in your report, the employer must show you the report and tell you how to get a copy from the consumer reporting company. There is no charge for the report if you request it within 60 days of getting notice that you did not get a job.
Employers are conducting job applicant and employee background checks and looking more frequently at credit records, criminal histories and other background information from a consumer reporting agencies lawsuits of this type are bound to grow exponentially.
For better, or worse in many cases, employers are running credit checks on candidates and it's no longer just for positions with access to money such as cashiers, tellers and financial professionals. A report on LongIslandPress.com, said more than 40% of employers are running pre-hire credit reports as part of their due diligence process. Some companies believe they can deduce how a person will handle their job responsibilities based on how they handle their personal finances. Others use the information to gauge how long a person might stay in a position if their debt load is higher than a position pays. It is also used to verify employment history and a social security number, the report stated.
In this case, the FTC said both defendants, who hire workers for railway and other transportation services, contracted with a consumer reporting agency to conduct background checks including criminal record reviews for employees and job applicants, and made hiring and firing decisions based on those background checks. The companies allegedly failed to provide the employees and applicants with pre-adverse action notices and adverse action notices as required by the FCRA.
The settlements require Quality Terminal Services and Rail Terminal Services, LLC to pay $53,000 and $24,000 in civil penalties, respectively, and to provide the FCRA-required notices in the future. The settlements also contain record-keeping and reporting provisions to let the FTC monitor compliance.
In a statement filed with the FTC recently Internet watchdogs at the Center for Democracy and Technology (CDT) said of this case and others: As the use of background checks increase, similar problems are likely widespread and existing examples have been reported to the Privacy Rights Clearinghouse and the National Employment Law Project, and documented in the press. Reports have been received from employees of industries and organizations that use criminal history background as a part of employment proceedings.
Background checks can go too far. The Ninth Circuit Court of Appeals ruled recently against the federal government and in favor of employees at NASA's Jet Propulsion Laboratory in their case which centers on background investigations known as Homeland Security Presidential Directive #12. The finding reaffirms the JPL employees' claims' that the checks threaten their constitutional rights.
The stink stemmed from HSPD #12 which is in part aimed at gathering information to develop a common identification standard that ensures that people are who they say they are, so government facilities and sensitive information stored in networks remains protected. HSPD#12 requires agencies to issue smart cards to federal employees and contractors.
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Racism?
Credit is the new racism and the sad part it is legal.
Racism?
That's ridiculous to say that credit is racism.
Credit is a fair indicator to determine whether or not the facts check out to the resume. It shows an individuals capability to manage finances and their personal lives. I think it's an acceptable way to weed out candidates that are not presenting themselves truthfully.
It does, however, need to be cleared by the individual BEFORE the check takes place. Credit checks without notifying the applicant should be fined - this judgment is absolutely appropriate.
Only the fortunate should work.....
How can anyone in their right minds agree with something like this? What we are doing is creating a permanent underclass with these dumb and utterly useless methods of hiring people. How can you agree with this when you live and work within an economy that pretty much has a guaranteed unemployment rate of 4-6 percent at any given moment? So if you are unfortunate enough to have lost a job for whatever reason, and you and your credit go down the drain for this reason, to make it better for you, we are going to see to it that you cannot recover from this situation, as we don't think you are worthy of another job? I really hate to say this, but people with your mentality scare the living daylights out of me. I just hope you never loose your job for some stupid reason, like your company going bankrupt...or are unlucky enough to be duplicated (i.e identity theft)...see how it feels to be on the other side of the isle than when you can't find a job because of so called poor credit....criminal background check, fine. Credit checks? not outside of the current law, which is obviously being ignored, and should be severely punished.
agreed. everything else is "non-sequitur"
Thank you for this logical and appropriately indignant comment.
The only way to subvert people from coming to the same objective conclusion about this illogical --and thus, curiously conspiratorial in my opinion -- rise in this practice of choosing applicants on the basis of subjective analysis of their credit histories, especially against the backdrop of the turbulent labor market shifts in workforce logistics associated with the imminent and widespread economic contractions of our global trading system, would be to systematically introduce inflammatory stimuli (i.e. "racism" - WTF?) designed to derail our minds from forming any meaningful consensus prerequisite to abolishing this practice in its entirety, as opposed to passively defaulting to providing our tacit consent to some of the more naive or apathetic debtors among us that move foreward with mindless complicity based on some petty convolution of understanding about who's responsible for contributing to the inevitably worsening condition of circumstance...
Unfair and damaging
A person gets laid off after decades of work with an employer and can't pay his bills as well. How can that mean he can't handle his finances? How is he not presenting himself truthfully? If the company would do their job in the first place and check the applicant's background, they'd get a better picture of his/her's suitability. Judging a person's employability based on their financial problems is short-sighted and simply wrong. I hope any companies that do this get their pants sued off 'em.
answer:
absolutely not!
It is certainly unfair
Credit is NOT a fair indicator of your entire life as it is now being used by many of these organizations. A good example is I don't pay my rent or my car the say way I'm going to pay a credit card. My rent is generally vital and my credit card, not so much. So, just because I have a few credit cards that I've gone behind on or even had closed due to delinquency and therefore have given me poor credit, it has no bearing on how I will handle my job which is MY LIVELIHOOD. And as far as crime, which is alot of the concern with these, usually a criminal is going to have good records UNTIL AFTER THEY COMMIT THE CRIME. In other words, if a person's credit is great, the get hired for a security clearance-type job, THEN they can go ahead and commit crime by stealing and selling information etc. It's a biased system and clearly the weight put on it because of the credit bureaus encouragement has become absolutely ridiculous.
People need to Wakeup and smell the stink!
I have lived in four countries. I am a very honest, trustworthy and decent person but due to circumstances beyond my 'single mom' control due mainly to the subprime market got a bad credit score/rating. And along with many others are finding it financially tuff. Banks and others are cherry picking their clients. Question is - for 40 plus years I have had excellent credit. Is it right from any perspective that I get fired from my job just because of my current credit score status? NO! Absolutely not under any circumstances and if employers do not cease poking their noses into people's private lives over and above what is considered acceptable for getting and keeping that job, then we are going to see more litigation, suicides, families destroyed etc etc. It has to stop! For one's life to be precarisely balanced on a number which is controlled by companies for pure unadulterated profit motive and some odd workings of algorithms is proposterous. The government needs to step in a make it illegal, but their already upto their eyes in digging deeper into contravening our remaining privacy rights so why would they care?
For Being A Bunch Of Brains
For being a bunch of supposedly smart individuals, your comments lack intelligence...
Wake Up and Smell the Stink woman:
I have been a good person for 40 years, but then because of some bad friends of mine, I was negatively influenced and I killed a person. After 40 years of being a model citizen, should I go to jail over one stupid person? So you've lived in four countries..big deal. If you want to work, you play by THEIR rules, not yours...for being so well-traveled, you don't have much common sense...Sub-Prime Mortgage or not, YOU made the decision, YOU took the loan out, YOU bought a house that YOU knew YOU could not afford. Quit blaming others and take some responsibility.
Racism guy 1...you are a TRUE IDIOT
Only The Fortunate Should Work Guy: Good Points...but you're talking to morons.
Racism guy 2: You must work at a bank. Let me guess...Bank of America? I bet you have some sweet ass 800 credit score. It's too bad that your employer doesn't, and had to be bailed out by the government...I think companies should be able to check backgrounds, but using their past credit mistakes against them is a bit mundane...like basing your college qualifications on your 6th Grade Math Test. You are a putz.
Kick em while their down
A co-worker's wife developed cancer & everything they had went to medical bills. He ended up filing for bankruptcy.
Using a credit report as a hiring indicator would only restrict his ability to pull himself back up by getting a better job. Credit scores give to much power to credit card companies. How many of your cards have had the interest rate jacked to 25% plus while the prime is under 3%? Call them up & ask why, the answer will be "Because we can."
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