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Debate continues over using consumer reports when hiring

June 10, 2011

Since the FCRA was first enacted in 1970, it has been amended on numerous occasions.  Many of those amendments were attempts to address an issue nationally after one or more states had addressed it locally.

The latest of these issues appears to be whether employers should be able to use consumer reports (which can include prior addresses, past credit history, past criminal history, or all of these things and more) when deciding whether to hire someone.

An Ohio legislator has introduced a bill that would ban all Ohio employers from using consumer reports when hiring someone.  The story about his efforts does a nice job of summarizing the arguments for and against such a ban.  On the one hand, advocates for entry-level employees argue that using consumer reports can discriminate against people who have made past mistakes but have turned their lives around.  On the other hand, employers can tell numerous stories in which using an employment report helped them avoid hiring someone who lied on a job application.

My guess is that states will continue to consider such bans.  I doubt that many if any states will impose an outright ban, but a number of states may well limit the ways in which an employer can use consumer reports in making hiring decisions.  If enough states pass enough different laws, the FCRA may well be amended again, so that employers and reporting agencies can follow a national standard instead of a bevy of local rules.

It’s worth noting that this issue seems to be coming up because there is a lot of unemployment these days.  A few years ago, when unemployment was much lower, employers needed people and were willing to overlook negative information in a consumer report.  Now, employers have the luxury of being choosy, and they are exercising that luxury through the use of consumer reports.

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Categories: Uncategorized
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