Social Media Advisor – Background Checks The New-Fashioned Way

In increasing numbers, employers are looking at credit histories to make employment-related decisions.   A recent study by the Society for Human Resource Management found that as many as 60% of its members had consulted credit reports of applicants and current employees to make decisions ranging from hiring and promoting to discipline and termination.  

Like with all other types of information, social media affords easier access to employees’ financial and other background information, as online resources (for the employer itself, or a retained third party investigator or agency) exist to obtain driving records, criminal histories, and credit-related reports.   It is only natural to think that employers will continue to want to use such accessible information to get a full and complete picture on someone it considers bringing in to its work environment.   Indeed, third-party investigative firms have been created for retention by employers in order to scour the World Wide Web and create a sort of social media dossier on applicants and employees. Individuals, on the other hand, continue to express a desire to be treated on the merits of their abilities in a process that is free from bias and inaccuracies.

Last week, the United States Equal Employment Opportunity Commission (“EEOC”) held a public hearing to consider the potential discriminatory impacts of employer use of credit histories.   Studies were cited for the proposition that a poor credit history, for example, may not have a direct correlation to the ability to perform one’s specific job, but instead may reflect an adverse bias against women, minorities, or disabled individuals.   The EEOC has not yet announced any immediate course of action it will take at the end of the public hearings as a result of these studies. But one can assume that the federal agency will at some point issue a new policy or position statement on the use of credit and other background checks by employers.

Employer Take Away:   What should you as an employer take away from this development?

While background information and histories are readily accessible, you need to be cautious about the how, when and what of obtaining this type of history, even when it comes from an applicant’s or employee’s own social networking sites. A couple of suggestions:

(1)        Determine whether you want to rely on credit histories and other background information in the first place, and, if so, consider whether to obtain and rely on such information only for certain positions, rather than across the board with respect to all applicants and employees. For example, conducting a credit check for a restaurant chef or file clerk who will have no financial responsibilities may be unnecessary and may not be worth the risk of potential liability.    On the other hand, an auditor or a bank teller may have job duties that warrant certain considerations.

(2)        If you are going to check an individual’s background, make sure you are complying with the strict requirements in existing law.  The federal Fair Credit Reporting Act (“FCRA”), the federal Bankruptcy Code, and even Title VII of the Civil Rights Act, all proscribe the misuse of credit histories.   In addition, FCRA contains very specific disclosure and notification obligations on employers in many cases, even requiring the use of specific forms before and after obtaining certain background information and taking adverse employment action against the applicant or employee.