Oregon’s Legislature is considering a bill that would prohibit pre-employment credit screening unless it is relevant to the job. Hawaii and Washington have enacted similar limits.

The proposed bill allows banks, credit unions, and public safety agencies to continue screening applicants’ credit histories; for the rest of the state’s employers, credit checks could be a thing of the past. Other pre-employment background checks, like criminal records, education verification, and reference checks would still be allowed.

Those speaking in favor of the bill’s passage cite the floundering US economy, saying it’s unfair to conduct credit screening during a recession. Proponents also claim no connection between bad credit and unethical workers.

While the recession has certainly increased the numbers of applicants with questionable credit histories, the Oregon bill seems to assume that employers do not consider anything but credit checks when deciding whether or not to hire an applicant. The employers we hear from use credit screening for cash-handling positions, to protect sensitive confidential data, and as an indicator of judgment and responsibility.

Smart employers take into consideration every aspect of an applicant’s skill, education, and character. In many cases, the credit check is the last step before hiring. Many employers use it as a guide and communication tool for applicants that have already passed several steps in the hiring process. A few blips on a credit report due to medical expenses and job loss would be excused by many employers—and a bad economy doesn’t mean the information should not be available to employers who need it.

Employers need all the tools available to them to make good hiring decisions. Credit checks help many thousands of employers protect their companies, their existing staff and the customers they serve by ensuring only properly screened employees handle cash and sensitive data. Banning credit checks will not lead to higher employment.

Firing employees is not easy. For most employers, it’s not something done lightly, either—termination can have many consequences, from a decline in morale to litigation. While the tips presented here should not be considered legal advice, general knowledge and awareness is important, too. For dealing with a specific situation, a human resources professional or employment attorney can always be consulted for expert advice.

If you’re an employer faced with the unpleasant task of terminating a worker, consider the following ideas and tips to make the process a little easier on everyone:

1. Don’t do it alone: have a witness in the room. Whether it’s the HR director, the employee’s supervisor, or a non-management staff member—a corroborating witness will be handy if the employee decides to sue. A witness also discourages any allegations of misconduct, and can help keep anger in check.

2. Don’t fire anyone on their birthday: chances are slim that it would be, but it happens—and nothing makes an employer look more impersonal. During your due diligence and preparation phase prior to terminating, check the employee’s file and avoid the week around their birthday, if at all possible.

3. Compile the paperwork ahead of time: Pull together any agreements or waivers the person will need to sign. Have their final paycheck, or severance pay ready—or a document showing when it will be direct deposited to the employee’s account. Any written warnings or job performance evaluations should be handy, as well—in case you need to refer to them for specific reasons the termination is happening.

4. Be ready to give specific reasons for the termination, listing work performance issues—not personality or personal problems. And, be sure the employee knows for certain that they are being terminated. Then, listen patiently and answer questions. Don’t let the conversation go on for long, or over-explain or debate the issue. Let the employee know that the decision is final. Repeat the reasons you have prepared, if necessary.

5. Have an exit strategy: Disbelief and anger are natural. Some employees are embarrassed, and some become emotional. Allow the employee to vent or cry—and then give them time to pull themselves together. If the employee’s anger becomes unmanageable, have someone ready to step in and remove him or her from the room.

6. Don’t allow the employee to disrupt other workers: let him or her know they have a set amount of time to collect personal items, return company property, and leave. Keep an eye out for any trouble, but don’t feel that you must escort them from the building. It’s fine to end the termination on a pleasant note, if possible, by wishing the employee luck.

7. Inform remaining staff: While it is important to maintain the terminated employee’s privacy, his or her fellow workers need to be told about the situation. Just keep the details to a minimum; if the termination affects any remaining staff, let them know how; and if there is a replacement plan, share it. Don’t allow personal questions regarding the employee or the circumstances surrounding the termination.

No one likes to terminate employees. When it is necessary to do so, make it a little less painful by following these steps—and check with an HR professional for legal advice.

The US Department of Labor announced last month the hiring of 250 investigators, tasked with looking into wage and hour violations by employers. The influx of investigators is partially based on a recent report compiled out of a 2008 survey of over 4,000 low-wage workers in three major U.S. cities: Chicago, Los Angeles, and New York City. Researchers focused on more vulnerable workers, such as immigrants and cash employees, who often slip through the cracks of data gathering.

The goal of the survey was to produce accurate estimates of workplace violations, like minimum wage abuse and unpaid overtime.

According to the report, 26% of workers were paid less than the legal minimum wage; and 60% of them were underpaid by more than $1 per hour.

Of the 25% of survey respondents who worked more than 40 hours in the previous week, 76% were not paid the legal overtime rate. Employees averaged 11 hours of overtime that were underpaid or not paid at all.

Additional violations revealed were workers performing work off the clock, and not being paid for it (25%/70% respectively); workers who received no meal breaks or were required to work during their meal breaks (69%); and workers who received no documentation, such as a pay stub, of their earnings and deductions (57%).

The report goes on to describe employers who stole their workers’ tips, who forced workers to pay for damages to tools, and who retaliated against employees when they complained about working conditions. These are not the types of employers anyone would want to work for!

The report’s first recommendation for a solution is to “Strengthen Government Enforcement of Existing Employment and Labor Laws.” Thus, the hiring of 250 new DOL investigators.

Employers must be fully aware of labor and wage laws; if there is a question regarding a specific situation, researching the answer is pretty simple: the Internet, the IRS and the DOL have loads of information for employers. You can also check with a labor attorney. There is no excuse for breaking labor and wage laws; and violations will result in stiff fines and penalties.

Can employers hire staff if they are in the middle of layoffs? While there is nothing inherently wrong about it, hiring new employees after (or while) letting other staff go can open the door to big problems. Your ex-employees will surely find out—and will look for any holes in your procedures and the reasons they were let go.

Even though it is risky, there is no reason not to hire new staff in spite of layoffs. Proper planning and care in procedures makes a big difference. Microsoft announced big layoffs this year: a decrease of 5,000 jobs over 18 months. But the net loss in jobs was reported to be only 2,000 to 3,000. Why? Because Microsoft planned on hiring for new, key positions at the same time they were eliminating the old ones.

At Dell, recently laid off employees filed a $500 million class-action lawsuit, claiming that older and female staff were targeted in a round of layoffs that affected 8,900 workers. The employees claim performance evaluations were manipulated and that they were told that no other positions were available when job openings existed. Employers must be clear about reasons for reductions and must ensure that no group is singled out—or even appears to be.

But keep in mind, too, that although it is illegal to target older workers for layoffs, it is within an employer’s rights to base reductions on salary—which often means the older, tenured staff members are more likely to be let go.

For most employers, decisions around hiring and laying off employees are necessary to stay viable—and sometimes must be made at the same time. It doesn’t make sense to ignore areas of your business that are currently strong, and need additional staff, just because you must reduce in other areas. If certain sectors of your business have the potential to become profit centers, you should reinforce them as needed.

A reasonable approach might be to eliminate positions, then re-categorize or modify job descriptions, establish the new positions, and hire for them. And as always, the safest way to ensure you are within the law is to consult an HR attorney before taking any action.

What do employers need to know about complying with the Fair Credit Reporting Act (FCRA)? It may seem unlikely that you would have to worry about legislation designed to protect consumers against unlawful use of their credit and personal information. But you must comply with FCRA if you:

• Want to check the credit history of an applicant for a cash-handling position;

• Intend to promote a long-term employee, but want to be certain they have a good credit record;

• Have already obtained a credit history on a job applicant, which is unfavorable; however, it is a lack of experience, not the credit record, that impacts your decision to not hire this person.

Employers are entitled to run consumer credit reports on applicants or existing employees at any time, providing they comply with the FCRA. Employers who use consumer reports have legal obligations under FCRA, which was designed to prevent applicants from being denied jobs or employees being denied promotions unjustly.

You cannot obtain a consumer report until employees or applicants have given their written permission for you to do so. This cannot be accomplished on the employment application.  A separate disclosure must contain the proper notification, and the employee must sign it.  If employees gave permission in the past, you must ensure that they receive a separate notice stating that reports may be obtained over the course of their employment. 

So, what if you didn’t include the disclosure and obtain permission during the hiring process and now you want to run reports on your employees? You must notify employees and get their written permission before you run the reports.

Who can supply pre employment screening reports to ensure an employer is in compliance? To be covered by FCRA, employers must use employee screening reports provided by a Consumer Reporting Agency (CRA). The reports can range from simple credit checks to criminal, housing, employment, and driving record checks. 

The FCRA requires employers to comply with reporting requirements. These include: 

• Certifying that the employer is obtaining information for employment purposes;
• The proper disclosure has been provided to and written authorization has been obtained from the applicant or employee; 
• The applicant or employee will be provided with a copy of the report;
• And the information will not be used in violation of equal opportunity laws.

What happens if you deny an applicant or a promotion based on information you obtained from a CRA? 

Before you take adverse action, such as terminating an employee, or denying a job or a promotion, you must give the individual a pre-adverse action disclosure, including a copy of their consumer report and a copy of “A Summary of Your Rights Under the Fair Credit Reporting Act.” This document can be provided by your CRA.

After you have taken adverse action, you are required to give the individual notice, either orally, electronically, or in writing, that the action has been taken. The notice must include the name, address and phone number of the CRA that supplied the report, as well as a statement that the CRA did not make the decision for adverse action and cannot give specific reasons for it. In addition, the individual must be notified that they have the right to dispute the accuracy or completeness of the information and their right to obtain a free report from the agency within 60 days.