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Law bans employment credit checks

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Tuesday, July 06, 2010


Oregon has become one of a handful of states to limit most employers from legally obtaining or using credit history information on job applicants or employees.

Especially in the current economic recession, credit checks have come under scrutiny as a way for employers to unfairly discriminate against people with bad credit.

“I think the real root of this is the impact [of credit checks] on minority populations or single parents, or people with divorces who have more problems on their credit history. But there is no indication that because of credit problems they won’t be good employees, or someone who can't be trusted, etc.,” said Amy Angel, an associate attorney at Barran Liebman.

Credit checks could also single out people affected by layoffs or medical bills, but who have otherwise clean employee records.

The Bureau of Labor and Industry (BOLI) held two free seminar sessions detailing the new law on July 1st in Portland, and both were packed with business owners, managers, human resources professionals and attorneys.

The new law means change. But what exactly will change? The credit check doesn't apply to all employees and applicants. Oregon made exceptions for federally insured banks and credit unions, for law enforcement agencies, and for employers that are required by law to use individual credit histories for employment purposes.

However, it gets a little hazy with the more controversial exception stating that a credit check will be allowed if it’s “substantially job-related.”  BOLI tried to define “job-related” by saying a credit check would be allowed if the essential function of the job requires access to financial information that goes beyond what’s done in a normal retail transaction, or if the employer is required to obtain credit history information as a condition of bonding or insuring the employee.

So an employer can’t do a credit check on someone applying for a cash register position, but a credit check would still be allowed if that employee were to deal with large accounts and have access to secure financial information.

The Society for Human Resource management released a survey earlier this year stating that 13 percent of employers said they used credit checks on all job applications, while 47 percent said they used credit checks for certain applicants.

The NY times reported that more than a dozen states have introduced bills similar to Oregon’s and there has even been talk at the federal level, but in some places credit report companies have squashed their efforts.

Credit report companies claim credit checks are essential to reducing theft or embezzlement, but there isn’t any research to correlate poor credit and bad employees.

Jessica Hoch is an online reporter for Oregon Business.



+1 #1 Fred Meyers and ToysRUS run these for cashier positons.Lauralight 2011-10-31 16:35:20
It's commonly still illegally required by major retailers in OR for the jobs detailed protected in this article/by the new law.
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+1 #2 employment credit checkGuest 2013-07-01 09:13:51
There's something that many job hunters ought to know about, namely employment credit rating checks. Yes, they can keep a person from getting a job. However, not every employer performs them, many neglect them and in some states, employer credit checks are illegal.
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+1 #3 Unless...Guest 2014-03-07 18:00:17
Unless the job is in accounting, finance, or a management position where the person has to stay within budget, there is no reason for a credit check. Especially not for say, a data entry job paying $10/hr. Let the people get their jobs so they can pay off their debts. Lisa from http://speedyloansearch.com/
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