Some employers use consumer reports or credit checks in considering applicants for employment or when evaluating current employees for promotion, transfer, or termination. However there are considerable federal (e.g., the Fair Credit Reporting Act—FCRA) and sometimes stricter state legal requirements that must be met when using such reports. Employers who use consumer reports should familiarize themselves with the resources found on the FTC’s website at http://www.ftc.gov/bcp/conline/edcams/credit/bizinfo_consmr_reports.htm.

A few tips regarding background checks can be found in HRN’s whitepaper Employee Background Checks: Do You Know Who is Working For You? at http://www.hrnonline.com/tryit/WhitePaper-EmployeeBackgroundChecks.asp

But can these checks discriminate against minorities? Historically minorities have been found to be more likely to have credit problems. And, is an employee with bad credit more likely to be a poor or risky employee? An interesting Christian Science Monitor article discusses the issues: http://www.csmonitor.com/2007/0118/p01s03-ussc.htm