Most people know that if they file for a bankruptcy that it will remain on their credit record for about seven years, but many do not realize that during those seven years, potential employees may see it and be swayed by financial problems.  Many employers are looking for easy ways to thin their enormous piles of applications.  They do this by requiring background checks, and now days, they’ve added credit checks too.  Although technically, they are not allowed to deny someone employment because of a bankruptcy, they can for certain positions factor in bad credit to deny employment.  While a bankruptcy may have saved you financially, it will wreak havoc on your credit score and employers with some companies will be checking it.  If you have a credit score that is below average, they may see you as a below average hire or worse, someone with the potential to commit crimes against them due to financial hardship.

Although the job you’re applying for may not be one in the financial industry, that doesn’t mean the employer won’t want to be allowed to run a credit check on you before hiring.  Statistics show that “employees with debts are among the most likely to steal from their employers.”  With crime on the rise in the recent economy, many companies aren’t willing to take this risk and consequently, are implementing credit checks along with background checks within their hiring processes.  If you have a bankruptcy on your record, it’s important to consider being upfront about it and tell your prospective employer about it.  When they let you know that you’ll need to pass a background check that includes a credit check, that’s the time to let them know what they’ll be seeing and to explain yourself.  It’s a good idea to have a lot of both employer and personal recommendations to show that despite your bad credit, you are an upstanding citizen who works hard at what they do.  You simply might have to limit your job searches to companies who will not require credit checks.  There are still enough out there who have not yet adopted this extra policy.

Companies who want to perform background checks and credit checks on their potential employees often work with organizations like backgroundchecks.com to get access to national databases like US OneSEARCH and credit reports. Although these kinds of checks don’t prove that a potential employee will or will not commit a crime, they can give employers insight and, according to statistics, a pretty good idea of potential issues that could arise should they hire employees with problematic pasts.  This is why it’s so important for people wanting good paying jobs to not only be hard workers, but also good upstanding citizens who pay their bills on time and refrain from committing crimes.

About backgroundchecks.com -

backgroundchecks.com - a founding member of the National Association of Professional Background Screeners (NAPBS®) and cofounder of the Expungement Clearinghouse - serves thousands of customers nationwide, from small businesses to Fortune 100 companies by providing comprehensive screening services.  Headquartered in Dallas, Texas, with an Eastern Operations Center in Chapin, S.C., backgroundchecks.com is home to one of the largest online criminal conviction databases in the industry. For more information about backgroundchecks’ offerings, please visit www.backgroundchecks.com.

Source: http://www.businessinsider.com/why-filing-bankruptcy-might-be-the-worst-thing-you-could-do-for-your-career-2012-5

Tax time is upon on and millions of us will use tax preparers in order to help us get our tax forms ready to send to the government. Have you ever taken a moment to stop and think about who is helping you fill out your forms?  The IRS did and they came across surprising results in the background checks they did on their own tax preparers.

One of the most surprising things found when the IRS decided to run criminal background checks on their employees is that there were 43 IRS certified preparers who were serving life sentences in prison and 962 of the IRS’s certified preparers who got their certification in 2011 were either in prison this year or had been in prison at one time. IRS rules do not that state prisoners cannot get an IRS preparer ID number, but the IRS did state that those prisoners who are currently incarcerated will have their numbers suspended.

The reason these people have been able to get these certification is that the IRS has chosen not to do background checks on their preparers due to cost. They are expected to study the effectiveness of this decision but no time frame has been given for choice.

About backgroundchecks.com -

backgroundchecks.com - a founding member of the National Association of Professional Background Screeners (NAPBS®) - serves thousands of customers nationwide, from small businesses to Fortune 100 companies by providing comprehensive screening services.  Headquartered in Dallas, Texas, with an Eastern Operations Center in Chapin, S.C., backgroundchecks.com is home to one of the largest online criminal conviction databases in the industry. For more information about backgroundchecks’ offerings, please visit www.backgroundchecks.com.

Source: http://www.chicagotribune.com/sns-rt-usa-taxirsl1e7nt8b2-20111229,0,4028590.story

The California Senate has passed, and the governor is expected to sign, AB 22 limiting the use of consumer credit reports for applicant screening and other employment purposes.

Like most bills restricting the use of credit reports in employment decisions, AB 22 includes categorical exemptions, allowing employers to obtain credit reports in situations including the following:

1.     A managerial position.

2.     A position in the state Department of Justice.

3.     That of a sworn peace officer or other law enforcement position.

4.     A position for which the information contained in the report is required  by law

5.     A position that involves regular access, for any purpose other than the routine solicitation and processing of credit card applications in a retail establishment, to all of the following types of information of any one person:

A.    Bank or credit card account information.  

B.    Social security number.  

C.    Date of birth.  

6.     A position in which the person is, or would be, any of the following:

A.    A named signatory on the bank or credit card account of the employer.

B.    Authorized to transfer money on behalf of the employer.

C.    Authorized to enter into financial contracts on behalf of the employer.  

7.     A position that involves access to confidential or proprietary information, including a formula, pattern, compilation, program, device, method, technique, process or trade secret that (i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who may obtain economic value from the disclosure or use of the information, and (ii) is the subject of an effort that is reasonable under the circumstances to maintain secrecy of the information.

8.     A position that involves regular access to cash totaling ten thousand dollars ($10,000) or more of the employer, a customer, or client, during the workday.

Before requesting a credit report in any of these situations, the employer must provide the applicant or employee a notice that:

a.     says that the employer will use the report;

b.     identifies the source of the report;

c.     identifies the specific basis listed above that allows the credit report; and

d.     allows the applicant or employee to request a free copy of the report from the employer by checking a box.

If the employee checks the box, the employer must request a copy for the applicant or employee at the same time as the employer requests the report. The employer may not charge the applicant or employee for the copy.

The law does not apply to any position with a financial institution subject to the Gramm-Leach-Bliley Act.

Assuming that the governor signs the bill into law, it will go into effect on January 1.

Clients should immediately plan on how to change their background screening notices to applicants and employees.

The bill is currently being proof read and edited, however for the most current version, please visit http://www.leginfo.ca.gov/pub/11-12/bill/asm/ab_0001-0050/ab_22_bill_20110901_amended_sen_v96.html. 

With important exceptions, a new Connecticut law prohibits employers from requiring employees to consent to a credit check as a condition of employment. The new law takes effect on October 1, 2011.

The law is available at http://www.cga.ct.gov/2011/ACT/PA/2011PA-00223-R00SB-00361-PA.htm. The most important part of the statute reads as follows:

No employer or employer's agent, representative or designee may require an employee or prospective employee to consent to a request for a credit report that contains information about the employee's or prospective employee's credit score, credit account balances, payment history, savings or checking account balances or savings or checking account numbers as a condition of employment unless

1.    such employer is a financial institution,

2.    such report is required by law,

3.    the employer reasonably believes that the employee has engaged in specific activity that constitutes a violation of the law related to the employee's employment, or

4.    such report is substantially related to the employee's current or potential job or the employer has a bona fide purpose for requesting or using information in the credit report that is substantially job-related and is disclosed in writing to the employee or applicant.

Generally, employment-purposes credit reports do not include credit scores, but do include information about credit account balances and payment history.

The statute defines “substantially related to the employee's current or potential job" as meaning that:

the information contained in the credit report is related to the position for which the employee or prospective employee who is the subject of the report is being evaluated because the position:

A.    Is a managerial position which involves setting the direction or control of a business, division, unit or an agency of a business;

B.    Involves access to customers', employees' or the employer's personal or financial information other than information customarily provided in a retail transaction;

C.    Involves a fiduciary responsibility to the employer, including, but not limited to, the authority to issue payments, collect debts, transfer money or enter into contracts;

D.    Provides an expense account or corporate debit or credit card;

E.     Provides access to (i) confidential or proprietary business information, or (ii) information, including a formula, pattern, compilation, program, device, method, technique, process or trade secret that: (I) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from the disclosure or use of the information; and (II) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy; or

F.     Involves access to the employer's nonfinancial assets valued at two thousand five dollars or more, including, but not limited to, museum and library collections and to prescription drugs and other pharmaceuticals.

Employers should be wary of literal reliance on part (F), since very few jobs have no access to assets valued at $2,005 or more. Employers may want to embrace a more cautious interpretation of “access” – that the access must be more than the access that a customer or the general public would have.

The statute provides for a civil penalty of $300 per violation.

The use of credit reports in employment decisions has recently become a controversial issue. It has been put up for debate whether or not making hiring decisions based on credit history could have a disparate impact on racial and ethnic minorities with the end result of hiring fewer minority applicants. A recent report from the Federal Reserve Board calls into question the generally held belief that hiring decisions based in part on credit histories have a disparate impact on racial and ethnic minorities. Rather than analyzing the potential disparate impact in hiring decisions, the October 12, 2010 report analyzed a parallel question: whether the use of credit scores in lending would have a disparate impact on applicants for loans. An important distinction between these two questions is that employment-purpose credit reports do not show a credit score; but they do show the types of information that credit bureaus use in their calculations of credit scores.

What makes the new report interesting for employers is:

1. The report found no evidence that credit scores create a disparate impact based on race or gender. Since credit scores generally add information not available on the face of an employment-purposes report, a reasonable inference is that credit history does not create a disparate impact either.
2. The report did find limited evidence that credit scores create a disparate impact based on age. Usefully, it identified the variable that caused the credit scores to create a disparate impact. That variable was the average age of the person’s credit accounts on file. Inclusion of this variable lowered credit scores with age, causing younger people, foreign nationals, and recent immigrants to have lower credit scores and older people and native-born citizens to have higher scores. This means that the average age of credit account is potentially misleading and might cause a disparate impact if used in employment decisions. For users of employment-purpose credit reports, a reasonable precaution would be to avoid placing any weight on any available information about the age of accounts. (The age of the oldest account appears on sample reports we reviewed; average age did not.)

We strongly urge that our clients have their equal employment opportunity lawyers review this paper (available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1726601) and the criteria they use for making decisions based on credit history.

The Federal Reserve Board has issued a new report entitled “Does Credit Scoring Produce a Disparate Impact?”

The use of credit reports in employment decisions has recently become a controversial issue. It has been put up for debate whether or not making hiring decisions based on credit history could have a disparate impact on racial and ethnic minorities with the end result of hiring fewer minority applicants. A recent report from the Federal Reserve Board calls into question the generally held belief that hiring decisions based in part on credit histories have a disparate impact on racial and ethnic minorities. Rather than analyzing the potential disparate impact in hiring decisions, the October 12, 2010 report analyzed a parallel question: whether the use of credit scores in lending would have a disparate impact on applicants for loans. An important distinction between these two questions is that employment-purpose credit reports do not show a credit score; but they do show the types of information that credit bureaus use in their calculations of credit scores.

What makes the new report interesting for employers is:

1. The report found no evidence that credit scores create a disparate impact based on race or gender. Since credit scores generally add information not available on the face of an employment-purposes report, a reasonable inference is that credit history does not create a disparate impact either.
2. The report did find limited evidence that credit scores create a disparate impact based on age. Usefully, it identified the variable that caused the credit scores to create a disparate impact. That variable was the average age of the person’s credit accounts on file. Inclusion of this variable lowered credit scores with age, causing younger people, foreign nationals, and recent immigrants to have lower credit scores and older people and native-born citizens to have higher scores. This means that the average age of credit account is potentially misleading and might cause a disparate impact if used in employment decisions. For users of employment-purpose credit reports, a reasonable precaution would be to avoid placing any weight on any available information about the age of accounts. (The age of the oldest account appears on sample reports we reviewed; average age did not.)

We strongly urge that our clients have their equal employment opportunity lawyers review this paper (available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1726601) and the criteria they use for making decisions based on credit history.