Reference no: EM133292168

Assignment:

Articulate your position on whether it is ethical for employers to use credit reports in the hiring process? Why or Why Not?

Would your position change if the job being hired was in the field of accounting, finance, banking, or budgeting? Why or Why Not?

Keep in mind that credit reporting agencies won't provide employers with the actual credit score of prospective hires. Instead, they'll provide a credit report designed specifically for employers. Knowing this and that credit scores are tied to your interaction with debt (see the make up of the FICO Score), is your credit score important to you? Why or Why Not?

You're all set to hire a new employee. You've interviewed the person thoroughly, called their references, and verified their skills. But there's one thing you probably haven't done: checked their credit.

Increasingly, savvy employers are using credit checks as another way to measure the integrity of potential workers. This is really nothing new in the business world. After all, companies have been using credit bureaus for decades to determine the reliability of vendors, suppliers, and other firms they do business with. So it makes sense for companies to do the same with people they're about to hire, especially if those people will be coming in direct contact with cash or sensitive information.

A recent survey by the Society for Human Resources Management found that 60 percent of all employers run some type of credit check on their applicants. By checking the credit of a potential employee, you can see whether that person typically pays their bills on time and how responsible they are when it comes to money. This kind of information can tell you a lot about what kind of employee that person will likely be.

It's illegal in some states for credit reporting agencies to provide a credit report to companies that plan to use the information for employment screening. In particular, Hawaii and Washington ban companies from performing a credit check on potential employees. However, in most states it's perfectly legal under federal law. Specifically, section 604 of the Fair Credit Reporting Act states that it's permissible to use credit information for employment purposes. The one caveat is that potential employees must give you written permission to access their credit report. 

While it may be perfectly legal to use a job applicant's credit report in the hiring process, does that make it ethical? Sometimes there might be good reasons why people fall behind on their payments or can't pay their bills. An unexpected medical procedure, for example, or a long layoff can put normally trustworthy people on precarious financial footing. As a result, it may be unfair to penalize these people even more by denying them a job they are otherwise qualified to do.