As a follow-up to the posting a few weeks about credit checks, there are at least 5 states that are challenging the use of employer credit checks for selection. The legislators involved claim that their actions are spurred by the perception that employers are using credit checks inappropriately. If any of these laws are passed, each one would need to be examined carefully to understand its implications, and this would need to be done on a state-by-state basis.

However, it is important to remember that credit checks are a legally defensible selection method if creditworthiness is indeed a job requirement. For example, applicants for  high risk positions, such as intelligence work, are often not hired if they have substantial levels of debt because this is seen as increasing their risk for bribery. However, employers do need to take a second look when they use credit data as an indirect predictor of other behavior such as trustworthiness. While there are a few studies that indicate some relationship between these two factors, there are several well-developed psychometric assessments that have been designed to measure integrity and trustworthiness directly. Additionally, unlike credit data which is often prone to adverse impact, there is a substantial body of literature indicating that integrity tests are not. Here, like in any assessment situation, it is important to first have a clear understanding of what the requirements for a position are and then finding the assessment strategy that is most likely to meet the organization’s goals which limiting unnecessary risks. 

Reid Klion