Posts Tagged ‘Employee Credit Check’

Nevada Set to Restrict Employer Use of Credit Checks

Friday, June 7th, 2013

employee screening, background check, credit checkPerhaps as a result of fallout after the Great Recession, Nevada’s governor signed a new law limiting employers’ use of credit checks when making hiring and personnel decisions. The law, which takes effect October 1 2013, prohibits employers to ask any employee or prospective employee to submit a consumer credit report or other credit information as a condition of employment.

Further, employers may not use, refer to or inquire about a consumer credit report of discipline or discriminate against an employee or deny employment or a promotion on the basis of a credit report. Employees who refuse or fail to submit consumer credit reports and those who have file complaints in the past cannot be discharged or disciplined, either.

That’s a very broad prohibition of credit checks, denying employers the right to know whether a prospective employee has a history that could negatively affect the employer’s business.

However, Nevada allows certain exceptions, including:

  • The employer is required or authorized under state or federal law to use a credit report for an accepted purpose.
  • The employer reasonably believes the employee or prospective employee has engaged in a specific activity that may violate a state or federal law.
  • The information contained in the employee’s or prospective employee’s credit report is reasonably related to the position for which he or she is applying or being evaluated for.

“Reasonably related” refers to several categories. Employers may conduct credit checks for employees or prospective employees who:

  • Would be handling or responsibility for money, credit and debit cards and financial accounts.
  • Would have access to trade secrets, proprietary information or confidential information.
  • Are being considered for managerial or supervisory responsibilities.
  • Have access to financial information belonging to others.
  • Would be handling or responsible for personal information of others.
  • Would be directly exercising law enforcement authority.
  • Are being considered for employment with a financial institution or a licensed gaming establishment.

The new law contains remedies of up to $9,000 for each violation, along with lost wages, reinstatement, promotion or employment, depending on plaintiffs’ claims.

Joining California, Washington, Oregon, Illinois, Connecticut, Colorado, Vermont and Hawaii, Nevada is making it more difficult for employers to use credit checks in personnel decisions, unless the person falls under one of the above categories.

Employment Credit Checks Prohibited in California

Thursday, December 8th, 2011

employee screening, employee credit checkCalifornia recently became the seventh state to prohibit credit checks in making employment decisions. Effective January 1, 2012, the law outlaws most employee credit checks. It states that employers may only use consumer credit reports when hiring for:

  • Managerial positions
  • Prospective law enforcement officers
  • Jobs that provide access to consumer credit card applications
  • Positions in the state Justice Department
  • Jobs in which the employee would have access to confidential information
  • Positions where the employee would be a signatory on a bank or credit card account
  • Jobs in which the employee would have access to cash totaling $10,000 or more

The U.S. Equal Employment Opportunity Commission held hearings in October around the issue of employee credit checks, which some employers see as a signal that additional legislation could be coming.

One concern is that more people have experienced damaged credit ratings in the wake of the economic crisis. However, employers’ groups said that it is wrong for the government to infringe on the ability to screen out applicants who have the potential to damage or bankrupt a company.

In addition, the patchwork of statutes being enacted by various states makes it more difficult for national companies to stay in compliance, say employer representatives.

Experts say that it’s important for employers to be extremely consistent in how they apply employee credit screening policies. It’s also a good idea to talk to prospective employees about any problems revealed in credit reports.

Employee Theft Rises in Bad Economy

Thursday, December 1st, 2011

employee screening, employee pre-screening, employee credit checkThe stories of trusted, long-term employees charged with embezzling money from their employers just keep coming:

  • There’s the case of the bookkeeper who was charged with stealing over $100,000 from a concrete company. In a plea deal, she pleaded guilty to embezzling $5,000, got a 45-day sentence and was ordered to pay $50,000 in restitution. Then she went to work for a department store and stole $17,000 worth of merchandise and gift cards. Maybe that’s how she planned to pay the restitution.
  • Another bookkeeper took trips, bought expensive cars and had plastic surgery – while making about $20,000 in salary. Still another worked for a couple for 30 years, taking money all the while. His $1 million theft was only found out when the business owners wanted to sell the company and retire.

Unfortunately, these types of fraudulent activities by employees are not unusual. We just don’t hear about the thousands of incidents that go away quietly. Many stories are never reported to the press, because they are not reported to the police. Whether out of embarrassment or fear of harming their business, many companies deal with these crimes on their own.

But the publicity can be helpful to other small businesses, since they are the most likely to be victimized. With one person responsible for writing checks, making bank deposits and reconciling statements, fraud is much more likely. Splitting these duties reduces the risk, but small companies often cannot afford the extra personnel. Hiring an outside bookkeeper is one way to alleviate the problem.

Why do employees steal? They usually have three traits: opportunity, need and rationalization. It could look like this: Your cashier figures out a way to take money that you’ll never notice. He’s behind on his rent and needs cash. And besides, he works really hard and you don’t pay him enough. He gets away with it, so he does it again. And again. And before you know it, you’ve lost $20,000. You never imagined this person would do anything like this. Chances are, he never has before.

If your company is victimized by an employee, reporting the crime can protect other businesses. When employees are properly screened prior to being hired, a criminal background check will reveal any previous convictions. And when you’re ready to hire, make sure to run pre-employment background checks and credit checks—especially when you’re hiring a bookkeeper, cashier or any other position that has access to cash or bank information.

Case Shows Importance of Pre-Screening Employees

Friday, July 29th, 2011

employee screening, employee pre-screening, employee credit checkA recent case in Baltimore MD illustrates the importance of screening employees—every employee. An account clerk who worked in the Baltimore County Office of Budget and Finance faces charges related to credit card theft. While unrelated to her job, the charges certainly demonstrate her willingness to use other people’s money to pay for personal expenses.

Her position is one of fiscal responsibility in a public service, taxpayer-funded department. And while it appears that so far, no customer or county funds have been involved, the employee, who has a court history of financial trouble, had been working there while under investigation for credit card theft—until police came to arrest her at her desk.

The employee was hired in December of 2008 to work in the purchasing department, despite a long history of financial and fraudulent misbehavior. She had faced charges for fraud and writing bad checks. She was sued by the state of Maryland and—just months before her hire date—the very same county office for which she was hired.

The recent case involved a person who reported his wallet and credit cards had been stolen. The investigation led to the county employee. She allegedly told investigators she “has major money issues” and is “late on my bills and needs whatever money she can come across.”

What level of trust is being created by the management team of the Baltimore County Office of Budget and Finance? Especially among the people who pay its salaries? Would you hire someone you sued just a few months before? Did they run a pre-employment background and credit check on this person, and hire her anyway? Or was there no check of her civil and criminal history?

This case leaves many unanswered questions, but does perfectly illustrate that knowing who you’re hiring, before you hire, is the best way to protect your business and even your customers from potential losses. Thorough, professional pre-employment credit checks and background checks are an easy way to gain peace of mind. And in the case of Baltimore County, it might have helped them avoid looking completely inept!

Getting Ready to Hire? Don’t Skip the Background Check!

Thursday, May 12th, 2011

employment screening, employee background checkFederal jobs numbers show that employers are adding jobs again. That’s great news for the millions of Americans who are still out of work. If you’re gearing up to make someone’s day by offering them a job, don’t go too fast and skip the background check before you make the final offer. Doing so leaves your company open to loss of time and money and possible lawsuits.

Even if the candidate looks great on paper, and even if they interviewed better than anyone you’ve ever met, you still don’t know this person. 46% of job seekers lied on their applications, according to ADP’s 2009 Hiring Index. That’s nearly half—so if you’ve had ten applicants for a position, chances are at least four of them lied on their resume or application. The only question is: which four?

Of course, if a candidate isn’t outright lying about their credentials or experience, they may still be less than honest. Perhaps they didn’t quite finish that master’s degree. Or, they worked at the national retailer for a year and a half—not the two years the resume indicates. These tiny details might not seem like dishonesty in the eyes of the candidate. So what else doesn’t qualify as dishonesty? Taking home a stapler? Clocking in before they actually start working? Calling in sick when they’re going surfing? You get the idea.

Running a thorough background check, including driving record, criminal history and credit check will give you a more complete picture of a candidate than they will reveal through an interview. If you have company vehicles, do you really want someone with five speeding tickets behind the wheel? And if your employees have access to any amount of cash, don’t you want to be sure you’re not hiring someone who has written bad checks or been convicted of theft in the past?

While checking references is a great idea, former employers won’t always give you anything more than the dates of employment and salary. They usually aren’t willing to give the reason for separation, for fear of reprisal.

Take the next step and order a pre-employment background check. Protecting your business, customers and entire staff is your responsibility when hiring. While you can’t prevent every possible scenario from occurring, you’ll sleep better at night knowing that every candidate you make a job offer to has checked out to your satisfaction. It’s well worth the short investment of time!

Screening Every Employee

Friday, February 4th, 2011

Business owners and hiring managers usually stand in one of two groups when it comes to screening employees: either they are all for it and believe every single job candidate needs to be pre-screened prior to the job offer; or they make that decision on a case-by-case basis. Here are a few examples from the news this week that shed some light on why the latter is not such a great idea:

  • An executive director of a non-profit, the West Wisconsin Land Trust, allegedly stole thousands of dollars from the organization by using its credit card to purchase things like nutritional supplements, coffee and hotel rooms. While this might not sound excessive, it is when you consider the nutritional supplement purchases totaled over $13,000 and the hotel was over $1,600. If you can’t trust the ED of a non profit, who can you trust?
  • A non profit sled dog organization in Alaska realized too late that an employee had failed to pay $20,000 in gaming taxes, instead keeping $15,000 of it for herself. She was arrested and convicted of a felony.
  • In California, a Macy’s employee was accused recently of stealing a whopping $60,000 in makeup over the course of a year. The stocker had access to storerooms where makeup was kept, and took bags of high-end merchandise out of the store in bags. He then sold the high-end makeup at street fairs.
  • Even the federal government is not immune from employee theft. This week, a U.S. Forest Service employee was charged with stealing and pawning $4,500 worth of tools. The employee stole chainsaws, air compressors and generators. His thievery went unnoticed until a repairman noticed Forest Service numbers etched into a chain saw bought in to his shop.

Regardless of whether these four individuals had criminal records when they were hired, they do now. So if you’re a business owner or hiring manager who wants to avoid hiring people who steal from their employers, it’s always a good idea to run a pre-employment credit check and criminal background check.

Difficult Economy Equals More Employee Theft

Thursday, December 9th, 2010

employee background checkCrime statistics show that thefts and burglaries increase during difficult economic times. So it makes sense that employee theft would increase as well. The news is filled with stories like the one from Minneapolis of a man who stole nearly $1 million from his employer, a wrecker company. It took him four years, but he managed to embezzle over $933,000 by cashing checks made out to the business or to vendors.

Theft is not always in the form of cash—but it can cost businesses plenty of that, too. Two Starwood Hotel executives stole information about its brand and used it to develop a competing hotel. Over 10,000 electronic and hard-copy files were stolen in this case, which resulted in a lawsuit against the competitor as well as the two employees.

Even your coffee server could be skimming money from her employer. One Dunkin’ Donuts employee admitted to ringing up sales for less, taking the full amount from the customer, and pocketing the difference. The woman claimed that it was in retaliation for having her hours cut due to the recession. She’s never been caught, although it seems like a few safeguards would make that easy. Requiring receipts would show customers that they are paying $2.00 for a coffee that’s being entered at $1.50. And keeping inventory on coffee cups, comparing them to sales by size, would indicate a discrepancy between what’s being entered on the cash register and what’s going out the door.

Most employers avoid the attention and bad publicity of employee-theft cases, so they don’t always prosecute—which only serves to prevent future employers from knowing the full criminal history on the thief.

Employee theft can happen anywhere, whether your business is “like a family” or a large, more corporate environment. School employees and coaches. Cashiers. Managers. Law firm assistants. Police records are full of scenarios where employers “can’t believe” an employee would steal from them.

The best way to prevent employee theft is to know whom you are hiring. And the best way to know that is to conduct thorough, professional background screening on every potential employee. You’ll know whether they are living among their means with a credit check and whether they have a criminal history with a criminal background check. Even whether they move around a lot to avoid paying back rent, or have evictions on their records—putting together a complete picture of a potential employee is one excellent means of stopping employee theft before it happens to you—especially in this economy.

Pre Screening & Consumer Reports: 10 Mistakes Employers Make

Thursday, July 30th, 2009

law-and-magnifying-glass on employee screening blogAll employers must comply with the regulations of the Federal Consumer Reporting Act (FCRA)–whether you have one employee or one thousand!  Make sure you’re in compliance, and avoid making these common mistakes:

1. Using social media sites or a Google search as a background check: Browsing an applicant’s Facebook or MySpace page, or researching them through an internet search engine does not equal a background check.

2. Performing the background check yourself: Employers must ensure they are in compliance with the FCRA. The best, easiest way to accomplish this is by using the services of a reputable background screening company.

3. Burying the screening approval language in the application: You must provide a separate document to obtain the applicant’s approval for credit and background checks.

4. Failing to obtain the applicant’s signature: Applicant signatures must be obtained before you run any type of credit checks.

5. Improper disclosure when rejecting an applicant: If you reject an applicant because of poor credit history, provide them a copy of their credit report, along with the reason they will not be hired.

6. Failure to obtain permission from online applicants: You cannot simply state online that you will be performing a background screening and/or credit check—you must have an electronic approval from the applicant.

7. Inconsistency: You cannot require a background and credit check for some applicants, but not others. Inconsistent policy enforcement could lead to accusations of discrimination.

8. Believing that FCRA doesn’t apply: Even small employers are subject to the law. There is no distinction made between a one-person business and a huge corporation.

9. Not obtaining permission from current employees: If you decide to run credit checks on your employees after they were hired, you must disclose your intention and get their approval in writing.

10. Improper disposal of information: Employers must comply with the Fair and Accurate Credit Transactions Act of 2003 (FACTA), an amendment to the FCRA. This law requires proper disposal for information contained in or derived from a consumer report. That means no tossing reports in the trash can—they must be shredded or otherwise destroyed so they cannot be reconstructed. Digital information must be destroyed before a computer is sold or donated.

Fair Credit Reporting Act: What Employers Need to Know

Monday, May 4th, 2009

law-and-magnifying-glass on CriminalData.comWhat 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.

For more information on pre employment screening, including everything you need to know about consumer and credit reports, go to