Of all the background checks we conduct at Corra Group none are more controversial than the employment credit report.    I have posted on this a number of times, one such report was entitled,  Follow Up on Credit Background Checks, discussed the ongoing issues of a tough economy and the attempt to limit employer usage of credit reports as part of their preemployment screening program.

When I have posted such articles about the benefits and pitfalls, I have often received negative emails regarding the fact that no studies have ever been conducted where poor  employee credit reports indicate whether or not an employee will have a propensity to steal.  Others claim it is unfair to pick on the less fortunate who have lost their jobs and suffered financial decline in the economic downturn.    some comments have excoriating us for promoting employment credit reports because we are only in it for the money.

Right now laws are being passed limited employer access to credit reports for job applicants.  Recently in Illinois, a new law was passed that was designed to limit employer use of credit reports to only those where the report would be relevant to the job itself.    Washington State, Hawaii, and Oregon, have similar laws on the books.   Here is a synopsis of the bill  known as IL-Public Act  96-1426, the Employee Credit Privacy Act.

“Synopsis As Introduced

Creates the Employee Credit Privacy Act. Prohibits employers from inquiring about or using an employee’s or prospective employee’s credit history as a basis for employment, recruitment, discharge, or compensation with some exceptions. Prohibits an employer from retaliating or discriminating against a person who files a complaint under the Act, participates in an investigation, proceeding, or action concerning a violation of the Act, or opposes a violation of the Act. Contains provisions concerning waiver and remedies.”

However, IL-96-1426 does stipulate the following–

As an exception, the Act allows employers to use credit information where such information is related to a “bona fide occupational requirement” for a particular position or group of employees. The bona fide occupational qualification applies generally to those positions involving money-handling or other confidential job duties. For example, employers may use credit information for employees whose duties require bonding under state or federal law; have unsupervised access to cash or certain assets valued at $2500 or more; or involve access to confidential information, financial information, or trade secrets.

Okay, so now that we know that employers cannot use credit reports to discriminate against job applicants or employees, unless the credit report would somehow show relevance to the position itself, then there are obviously still a good many areas where the credit report would apply.  Any employee in the financial area, or anyone with access to sensitive data or proprietary information could be subjected to a credit report as part of the series of background checks being conducted on that candidate.   Those aware of corporate secrets, presumably in research and development or attached to special projects could be subjected to the credit report as part of their background check.    Employees with access to inventory, warhouse workers, truckers and such, it would seem would also be open to consideration.

So who really do these laws eliminate from the process?  There are some employees, surely.   There are stock people, clerks, perhaps, certain IT people, service and maintenance personnel.   Maybe I am mistaken here, but overall I can’t see where the law is very limiting.  Frankly, I believe this is a good thing.  Many employers have spoken to me, complaining that they have had to spend undesired time on the phone, talking to creditors trying to secure payments from loans in default or outstanding debt from different personnel.  There are the persistent phone calls where credits wish to garnish wages and the paperwork that entails.    Bookkeepers and payroll personnel must address issues of garnishment.

This is a very tough economy.   Employers must focus first on keeping their business afloat.  Otherwise, nobody will be working there, good credit, bad credit, or no credit.

These are demanding economic times for just about every business.   As such the focus must be on moving the business forward rather than addressing employee or job applicants’ financial troubles and lousy credit.   It is a shame that people are in dire straits and personal credit ratings, overall, have been reduced substantially.  Nevertheless, in this economy, especially, that is how it it.   No changing that around.

There is also the issue of an employer’s rights.   It is one thing where employer’s must be equal opportunity employers when it comes to such considerations as ethnic background, sexual preference, or gender.   It is one thing to perhaps not deny a handicapped worker a position.  But every employer is still welcome to make its hiring decisions on the merits of the employment candidate.

They will consider school sets, education history, what school the applicant attended, for what companies they worked for, previously.  Were the prestigious companies?  Did they go to the better schools?

These are all concerns for any employer.  Even one’s social networking profile is being considered as part of the preemployment screening program.  So what not credit?   What would make credit reports so special that they would show discrimination.

As for studies as to whether employees with bad credit  or have a greater propensity to steal, no there are not studies.   But then there are no studies for a great many things.  There are, however, common beliefs, which can even be referred to as common wisdom.  No one sees it as anything remarkable that employee theft has increased with the tougher economic times.  These are not people out of work, but working people who are stealing from the job.   So if in tough times employee theft is on the increase, there is a certain logic regarding bad credit, financial ruin and the increased probability of theft.    Maybe this is delusional, but a great many employers don’t seem to think so.   Which is why, among other reasons, they utilize employee credit reports as part of their background checking process.

As for what is and what isn’t salient where an employment credit report  can be ordered on a potential employee, I am sure this will eventually go through the courts.   It has to.  Someone will challenge it.   It’s the logical choice.

It should be no secret that with is economic downturn and slow recovery many job applicants have lousy credit.   Even those employment candidates who once had decent to excellent credit scores find themselves wanting, having been laid off or otherwise pressed for cash.   A bad economy can take you from upscale to downscale in a hurry.   If  you don’t believe me, just take a peek at “Real Wives of Orange County,” and you will find the formerly affluent are the currently hurting.

According to an article in the Los Angeles Examiner, if you have bad credit you will be denied a job.   Bad credit according to the article compounds an already bad to desperate situation for those who have had a tough go in this current economic crisis.   It is reported in the article that job applicants can refuse to submit to background checks, but if they do they will almost certainly be rejected for employment.   This is true.   The article also reports that if your background check does return with a lousy credit report, you will also be denied the job.   Well, yes and no.

The article also maintains that each time an employer runs a credit report you are penalized points on your FICO score.   This is not the case.   Simply put, if you are applying to buying a car or loan, yes after several applications then you will be penalized on your FICO score.   This is known as a hard pull.  But employment applications are a soft pull.  By law an employer is not allowed to obtain a credit report with a FICO score.   Employment credit reports are different.   There are no FICO scores listed.   Employment credit reports are especially coded so that the issuing service is aware that the credit report is designated for employment and not consumer considerations.

That being said, yes many employers will not relish hiring someone with funky credit.   A listing of accounts that have been charged off and put into collections is no way to win the hearts of  human resources.   But there are exceptions.   Employers or HR personnel will look at job applicants who were buried with medical bills, single parents especially, with a more favorable perspective.   Young job applicants who have been buried with college loans are also viewed more favorably.   But someone with a $1,200 charge off at the mall jewelry store will not be looked on as favorably.  This is especially true if the candidate is applying for a job in the financial sector.

California is considering legislation that prohibits employers from using are considering credit reports as part of their preemployment screening program.   The state wishes to exclude credit reports as part of the background checking unless the job applicant is in a managerial position and highly salaried.   The employer will be able to run the credit report is the candidate would have access to employee or customer financial or personal information.  If the candidate has fiduciary responsibility or travels, then the employer will also be able to run the credit report as a part of the overall background checking.

U.S. Congressional  Representative, Steve Cohen, (D-TN) and 26 other legislators are attempting to introduce legislation that would prohibit the use of credit reports as a preemployment background checks in most employment considerations.   I would assume the legislation would be similar to that being proposed in California and in place Washington and Hawaii.

To some degree, depending on the reasons, I would agree it is not fair that employment candidates are rejected because of their credit reports.   But then, not everyone is rejected out of hand.  Most employers are willing to consider the extenuating circumstances.  Most employers realize, as they have also suffered, that this recent and somewhat current debacle known as our economic meltdown took its toll on many responsible and diligent employees.   So by no means will bad credit cause the employer to dismiss your application.  Like most other aspects of job application, some of it is negotiable.

Everybody flocks to a fight.   From the schoolyard to the factory, nothing like a fistfight to bring people together.  It must be part of human nature to be attracted to two people going at it in the old school fashion.  Even in the workplace, it gives people something to talk about for weeks.   And when a fist fight breaks out at the Washington Post it not only makes news in the news room, but tongues are wagging around the country and even around the world.

It’s the Washington Post, after all.   One of the big news national voices.   The Nixon Watergate Scandal,  and all that.  So when one reporter slugs another, even if it is a wienie punch, it is still a punch heard around the world.  Or at least some parts of it.

But this is the 21st Century, after all.  People aren’t supposed to fight.  Civilized people anyway.  Nevertheless, what we are supposed to do and what we actually do are often two different things.   In the case of violence in the work place, it costs employers close to $40 Billion, annually.  At least, that’s when a lot more people were working.  The average lawsuit, regarding violence in the workplace, can settle for $1 Million or more.    It is costly.  People do get hurt.  This incident was one single punch.   But people are murdered int he workplace or badly beaten.   There is injury and public embarrassment.

While running background checks won’t guarantee against violence int he workplace,  they do go a long way against screening against it.  Criminal background checks and various records, such as motor vehicle driving records, or MVRs, can help determine behavior patterns as well as demonstrate past history.   You can see criminal records that deal with violence and especially domestic violence and spousal abuse.     This could be a red flag that someone who doesn’t particularly like the opposite sex will lash out in the work place.

Professional reference verification and personal reference verification searches can be conducted to obtain former manager’s and coworker’s takes on you employment candidate’s personality.  County Civil Background Searches, can show domestic issues or civil issues where the candiate acted in behavior not in keeping with either his prospective position or your working environment.

There is a lot of workplace violence out there.  Serious workplace violence.   In this economic downturn, workers are frustrated.  Employees burdened with fears of losing their jobs and financial concerns can react  in volatile and violent ways.    People will act out.   Best to sort  it out early, and few tools are better than background checks to help you do so.

Check them out before you hire.

Despite the economic crunch on states and their budgetary constraints, the Nebraska Department of Corrections is expanding its list of background checks to be screen its employment candidates. Undoubtedly, this is a very good thing, as the more background checks

The decision to expand the preemployment screening process came after it was revealed a working guard was wanted in the Czech Republic for drug and fraud charges.    Rather than wait, like some other states and municipalities for more embarrassing situations to arise, regarding employment hires and background checks, the Nebraska DOC decided to move quickly to help assure no mistakes like this would be made in the future.

The Nebraska DOC is learning, as so many private employers have, it pays to check them out before you hire.

Education Verification Background checks having increasingly become part of every recruiter’s preemployment screening program.  Why?  Some of it is the obvious, to qualify a job candidate for meeting the threshold requirements for the position.   Clearly, you want to be sure your employment candidate had at least the minimum skill sets for consideration.

But there is another factor.  More than a few employment candidates will lie about their education background.  They may embellish their employment responsibilities but will fib in claiming graduation status when they either went to the school for a number of semesters or never attended at all.   Yes, they just make up the school and say they went there, hoping the background checking company will not conduct a thorough education verification.   In this economic downturn, with jobs scarce and the recession causing so many layoffs, desperation is increasingly a factor as more candidates apply for fewer jobs.

Sometimes, the college or university may miss the education verification and you need to go back in with additional information.   If the employment candidate graduated some years back then the records may not be in the database, and the school registrar’s office has to do some researching.

At Corra Group we try to eliminate any obstacles at the outset.  We recommend that recruiters and human resources personnel keep these simple tips in mind when ordering education verification background checks.

1. Get the correct spelling of the candidate’s name.

2. When the candidate is female, sometime they forget that they graduated with their maiden name and not their married name.

3. With International students, sometimes they went to school under their former native name and then “Americanized”  it later.   If they forget to mention this, or if you forget to ask, it can delay the verification.

4.Of course you need to know the type of degree.  I.E.– B.S. or B.A.   But listing the major is also helpful.  When a candidate has a common name, you don’t want their degree confused with a graduate with a similar name.

5. Ask for the university campus where the employment candidate attended.  Not all colleges and universities, centralize their databases and knowing he exact campus can save time in getting the education verification completed.

6. Ask for the date school was started and the date school was completed.  Ask for the graduation date.  Sometimes students graduate sometime after they have completed the program.

7. With international education verification searches, you may need additional information.  With India Education Verification Searches, for example, the student should supply the roll number, seat number,  and registration number.  Any one or combination they remember is always helpful.

8.If the school can’t find the record at first, it doesn’t necessarily mean the job candidate is lying.   It is best to request from the student a  copy of his diploma.   The diploma copy can often clarify the mystery and assist the registrar’s office in finding the records.

9.  And remember, almost every school with require a consent form from its former students, before it can release records.  So make sure you get that up front.

10. Finally, sometimes the school will report that the student attended but they cannot verify or will not verify graduation.   Often this is because the student owes them money, and the school will not verify until they are paid.

This should be helpful in conducting education verification background checks.

The professional job reference is increasingly an added background check as part of any preemployment screening program.    The professional job reference can help human resources and hiring managers better assess skill sets for employment candidates.    Sometimes two candidates can be equal in education and seniority, but the professional references will provide the distinction in selecting the best employment candidate.

Professional employment references are the one background check that can drill down deeper into a job candidate’s work experience.  While most employers will only verify the date started, date completed, and position held, the professional reference background check will offer insight into a variety of skill sets.   These skill sets can include existent contacts, relationship building,  and networking capability, which is especially relevant for sales people.   For IT job candidates, professional references will allow hiring managers and human resources to best assess fluency in different software programs and aspects of  related technology.   Communications skills and managerial skills are other key indicators.

When asking an employment candidate for professional references, it is best if he or she provides you with former supervisors.   Former supervisors can best assess the skill sets.  In some cases supervisors and other former associates are, by corporate policy, prohibited from providing professional references.  Some will, anyway, in order to help their former colleagues.   Some will provide references provided it is made clear they are providing personal references as opposed to professional references.  While in some cases the questions may be more limited, there is value in obtaining personal references.  In a great many cases, frankly, the professional reference verifications and the personal reference verifications amount to pretty much to the same thing, anyway.

So with the economy in the doldrums, and with significant  competition for each job that is out there, going the extra mile and including  professional reference checks as part of your background checking system is a prudent move.   It will not only fortify your employment verification check, it will shed light on your job candidate’s skill sets and general character as well.

Check them out before you hire.

It appears the federal government may institute a job credit initiative.   This initiative is rapidly finding favor with legislators.  Overall, it is an excellent idea.   With the economic downturn still evident, and with national unemployment figures listed at close to double digits,  it is time to rethink the hiring programs.   There are cities and states suffering from unemployment figures at close to 20%, and these are only the official estimates.   The real figures are greater than that.

Despite all the stimulus packages, while they have affected Wall Street and some businesses, employment rates are disappointing.   While the rule of thumb projects that employment lags some six to eight months behind an economic recovery, improvement right now is sparse at best.   Neither the consumer nor the employer is particularly secure that the economy has rebounded from the worst recession since the Great Depression.  Employers would receive a tax credit worth twice the annual payroll tax.    Pretty good.

One proposal under discussion is where employers would receive a two year tax credit for expanding their workforce.

It has been argued that the tax credit would not be as effective as some assumed because employers would only be hiring people if they genuinely needed to increase their work staffs.  Well in most instances that  would be exactly the case.   Most employers have laid off employees or have cut some full time workers to part time workers.   This had created an overload on the surviving workforce.  Between being stressed out from salary cutbacks and the fear of being laid off, the work overload has taken its toll on additional stress and employee performance.   It has not done all that much to boost morale, for that matter.

So, bottom line, most employers do need to rehire in order to be productive and efficient.   It is easy to see where the tax credit would have inherent appeal.  However, I have to caution most employers that hiring without conducting adequate background checks for your preemployment screening program could be a grievous mistake.   In the rush to take advantage of the employment tax initiative, an employer may decide to eschew background checks as a way of keeping down expenses.   This can prove a foolish move.

Recruiting the wrong person, if they have a violent past, can endanger your entire workforce.   There are considerations for office theft, especially the theft of sensitive databases and proprietary information.   It is prudent in this economy to conduct either a credit report or bankruptcies, liens, judgments to help assure a job candidate is not in such desperate straits as to commit theft.      Then there are issues of substance abuse.   Employees afflicted with substance abuse can prove costly to employers.  Factor in the cost of dismissal and the cost of recruiting and retraining, and the expense can be considerable, tax credit or not.

The Federal Job Tax  Credit Initiative may serve employers by inspiring them to hire or rehire employees.   But the employer is only well served by the tax credit when they hire productive workers who  are  reliable and competent.  By hiring workers without conducting background checks as par tof your preemployment screening, as an employer you run the risk of bringing on board candidates prone to violence, theft, substance abuse, or  creating for the employer any legal or liability issues.   Not only will you incur the consequent expenses, but you will further reduce the  morale in work staff.

So check them out before you hire.

Among other things, this economic meltdown has called the question in certain industries as to which segments are becoming obsolete.   Perhaps the hardest hit in this manner are the newspapers, followed by the print media, in general.   Old time news outlets are finding themselves out of fashion as public preference is for the digital media.   Another reason that is often cited are the citizen journalists, the bloggers and others who flood the Internet with news bits and political, financial, and social commentary.    When you have amateurs doing the work, then professionals are not in demand.

Book publishing is another segment that has taken a hit.  With the advent of Kindle, more books are being produced digitally and being downloaded to the Kindles and Sony Digital Readers.   While some still prefer having  book in their hands, others believe the digital downloads are lot more convenient, especially for traveling.

Certain segments of advertising are becoming outdated, outmoded, if not completely obsolete.   Print media advertising and even some television advertising has been on the decline.  Part of the reason may be the economic downturn, and  part of it is a sign of the shifting market and the advancement of  digital technology.

Now marketing faces its challenges.  As consumer driven marketers and opinion makers increase in influence and presence, there is less need for professional marketers.  At least, that is the opinion of some as expressed in a recent article in AdAge.com.    Whether this prevailing opinion is prevailing wisdom is another story.   Social media is the word of the day, and the impact of social media is remarkable.  But whether social media will sustain itself in setting marketing trends is another issue.   There are mitigating factors, and some will not be resolved for some time.

When it comes to our consumer tastes, we are a fickle nation.  We can grow bored with social media or become overloaded by the surfeit of information.   We may tire of sorting through the mediocre content in order to discern the meaningful content.    Too many false reports, or inaccurate reports, by wannabe marketers, can instill skepticism and lack of credibility.

It is time for marketers, as well as journalists and publishers to reinvent themselves.  It is time for advertising to adapt to the new media and the outlets involved.   Those who do will prevail.   Those who don’t will fall by the wayside.  But to believe as many do that amateur will take over these roles and maintain the disciplines and skill sets of professionals is wishful thinking.   Professionals are usually professionals because they are better trained.   Because they do it better

There is much to be learned from MVRs or Motor Vehicle Driving Reports.   While trucking and transportation companies use them to be sure their drivers are DOT or Department of Transportation Coompliant, other companies will conduct MVRs as part of their background checking package.    The MVRs will not only describe an employment candidate’s driving record but will also indicate behavior patterns.   Seeing DUI’s on a MVR, for example, is but one of several red flags.

Additionally, the Motor Vehicle Driving record can help determine desultory behavior, or at least the type of behavior not befitting a viable job candidate.   Failure to appear in court, or even numerous infractions and accidents can indicate emotional problems.  These are the kind of problems no employer want to bring into its workplace.   Flaky employees can damage morale in the other workers.  Flaky employees are more prone to commit theft or create circumstances that would slow productivity.

Thanks to this economic downturn, states need money.  One means of meeting the budgetary crisis is to raise rates for public services, including business licenses, state criminal records fee, and  Department of Motor Vehicle or DMV records charges.   It seems each week another state is raising its rates.   It is understandable given the lousy economy and the budgetary shortfalls.

Effective October 1, 2009, Oregon has joined other states in increasing fees.   The Oregon Insurance Abstract Driving Records Search has increased from $.50 to $2.00 per record.

We are receiving so much contradictory information about the economy and its recovery it is tough to know who and what to believe.  The other day,  Federal Reserve Chairman, Ben Bernanke, announced the recession may be over.   Other pundits claim we have almost turned the economy around, but not quite.  Still others predict a double dip recession, that is where it recovers and then lapses once again.

According to an article in Yahoo, which quotes a study conducted by Manpower, 70% of the employers are planning no changes in their hiring practices for the fourth quarter.   That is until the end of the year in layman’s talk.   The end of the year is a long time away, and with the holiday season coming up, that isn’t good news for a many laid off workers.   Jobs are scarce, as the article attests.  One woman applied for 80 different positions and received one call back from an employer who wanted to talk to her when the economy turned around.

Recruiters expect to pick up the pace in 2010.   They believe it will be slow going at first and then increasing over the year.   Others we talk to claim they are already busy.   As a background checking service we see definite movement in healthcare and trucking and transportation.   Perhaps it is the depletion of inventory that is causing certain manufacturers to ramp up again and need the truckers to ship their goods around the country.   Other manufacturers are taking advantage of the weak dollar and shipping overseas.  This too requires their contracting with trucking firms to transport their goods to the ports.

We are seeing hiring in certain industrial sectors that have received little attention  in the media.  Some technology firms are hiring, and defense related firms have also been hiring.   But with 7 million lost jobs, our observations may be lest significant than the overall picture.  Factor int hat a lot of employers a rehiring people as consultants or independent contractors, and the figures may be skewed.

As I noted, many predictions with one contradicting the next.   We shall see what the new year will bring.