Employment Screening and Credit Reports - AutoSuccessOnline

Employment Screening and Credit Reports

Pulling credit reports on a customer makes sense when determining the credit worthiness of a person who may be financing a car or other item. However, pulling a credit report based upon a person seeking employment with a company is a whole different matter.

Pulling credit reports on a customer makes sense when determining the credit worthiness of a person who may be financing a car or other item. However, pulling a credit report based upon a person seeking employment with a company is a whole different matter. Employers should be very wary of pulling credit reports on an applicant for employment purposes and using said reports to make a hiring decision unless the position oversees, handles or manages money.

When the financial markets crashed in 2008, commonly referred to as the Great Recession, millions of hardworking and responsible people lost their jobs, their homes and their dignity. Home valuations were bloated; people were provided credit with little to no financial backing or collateral, resulting in John Q. Citizen becoming overleveraged. When the crash occurred, inflated home values plummeted, hard-working people could not pay their mortgages, some had their homes foreclosed or were forced to sell their homes for less than the mortgage owed. 

As a result, many people took a financial hit, which was reflected on their credit reports. It has taken years for most people to recover from that experience and some residual of that period of time can still be seen on people’s credit. Therefore, generally speaking, pulling an applicant’s credit as part of the background screening process usually will not assist the employer with making an informed hiring

decision. A blemish on a person’s credit report is not indicative of a person’s work capabilities and ethic.

Employers should only pull a credit report on an applicant if the position’s responsibilities include overseeing, handling or managing money. When pulling a credit report on an applicant, the reasons for the pull should be related to the job they are being hired for and for business necessity. 

For example, a car detailer at a dealership will not handle or manage money, therefore there is no job relatedness or business necessity

to review the applicant’s credit history. Conversely, a position that requires a person to oversee or manage money satisfies the job-related criteria for having credit pulled on the applicant. Similarly, business necessity and job relatedness would suggest a credit report be pulled on an applicant who is applying for the comptroller position for a car dealership.

The Equal Employment Opportunity Commission (EEOC) has spoken out against running credit reports on employment applicants as a general course of conducting background checks. The EEOC has suggested such a practice might be discriminatory against minorities and women, unless the position has a business necessity and job relatedness requirement to do as such. 

Overall, there are many components to hiring applicants for your company, one such component involves conducting background checks. As a rule, pulling a credit report

on all employment applicants may not be appropriate, particularly if the position does not oversee, handle or manage money. Understanding a person’s credit history if they have the responsibility of managing or handling money is the correct utilization of credit reports in the hiring process.

The author of this article is not an attorney and offers no legal advice. The contents of this article should be reviewed by your corporate attorney before taking any action based on its content. 

Click here to view more solutions from Andrew Scott and Scott-Roberts & Associates, LLC.

You May Also Like

Unlocking the Value of Your Data. Don’t Let it Go to Waste.

Explore expert Bobby Gaudreau’s insights on overcoming data challenges in auto dealerships, focusing on CRM and DMS optimization for marketing success.

Unlocking the Value of Your Data. Don't Let it Go to Waste.

The effective utilization of data is essential for driving successful automotive marketing strategies and fostering strong customer engagement. However, many dealerships encounter a significant challenge: their marketing campaigns often fall short due to disorganized and incomplete customer data.

Traditional Dealer Management Systems (DMS) and Customer Relationship Management (CRM) systems, while vital, are not inherently designed as marketing systems. They lack the necessary functionalities for easy list generation and segmentation, and are not equipped to share, understand or react in real-time to information. This limitation is especially evident when dealing with records that include customer interactions and behaviors, which are crucial for integrating with a marketing system. This gap in capability is where Customer Data Platforms (CDP) become crucial.

Latest Toyota Data Breach: Evidence of an Industry Under Attack

Hackers have identified the auto industry as ripe for the picking. Attackers often share information regarding potential targets and methods.

Latest Toyota Data Breach: Evidence of an Industry Under Attack
Don’t Be ‘Nice’ to Your Team — Be Caring

Here are four steps to take to lead a team that minimizes critical actions and will put our team members on the path to success.

team leadership
The Top 3 Reasons You’re Missing on Used Vehicles

As front-end profits tighten, misses on used vehicles hurt more. To tighten up acquisition and pricing, you need a different way of operating.

The Top 3 Reasons You’re Missing on Used Vehicles - AutoVision
Everyday Actions, Monumental Outcomes

It is in the quiet moments of consistent work that our skills are sharpened and our goals are realized.

True success is the product of a daily grind, forged from focus, dedication and perseverance.

Other Posts

Ashlee Church: #NotLikeTheOtherGuys

This dealer is following her arrow and bringing change to the auto dealer industry.

Vehicle Care RockStar Ashlee Church
Used Car Sourcing and Predictable Appraisal Accuracy

Trade-ins remain essential, so when their owners walk through the door, give them the fairest offer you can — and be sure the spread you need isn’t diluted by appraisal oversights.

Used Car Sourcing and Predictable Appraisal Accuracy
You Want Me to Pay for WHAT?!

Arming yourself with this firsthand knowledge will let you make informed decisions and allocate your budget toward increased profitability in ways you simply cannot hope to when you’re playing telephone with your manager charged with executing on marketing.

Wikimotive, trade shows, marketing,
Crafting a Cohesive Brand Identity

Upholding a cohesive brand image is vital. Learn how photography plays a pivotal role in reinforcing a dealership’s professionalism.

Crafting a Cohesive Brand Identity The Impact of Professional Photos in Maintaining Consistency Across Marketing Materials