Could you be fired for bad credit? (good article)

[cassanova]

Could you be fired for bad credit? - 2 - Jobs & credit checks - MSN Money

Credit background checks have become routine among employers, even as soaring unemployment and foreclosures have resulted in black marks on millions of people's credit histories.

Credit checks are required for federal jobs with security clearances, but six out of 10 private employers check the credit histories of at least some of their job applicants, according to a recent survey by the Society for Human Resource Management.

Companies do so primarily to prevent or reduce crime, such as theft and embezzlement, the survey indicated. The idea is that people who have debt problems are more likely to steal or commit other crimes.

I've been reluctant to weigh in against employers using credit checks, assuming companies would use some common sense. The human-resources survey disabused me of that notion. Consider:

Thirteen percent of employers use credit checks for all their employees, including those who don't handle money, have any fiduciary or financial responsibilities, or even access to sensitive information. There's no evidence credit checks are effective in preventing crime even in financially sensitive positions, so how can we justify them for anyone else?
Twenty-five percent acknowledged that a bankruptcy on an applicant's credit report would most likely result in a decision not to make a job offer. Here's the problem: Using a bankruptcy as a decision not to hire (or to fire or to refuse a promotion) is illegal under federal law.
A majority (65%) allow applicants to explain credit-check results before the final hiring decision is made. But 22% allow applicants to explain only after a decision is made, and 13% don't allow any explanation. Even if employers are convinced that credit checks prevent crime, why wouldn't they want to know if an applicant was the victim of identity theft or ran up debt for a life-saving operation for their child?

If companies aren't willing to use a little common sense on their own, maybe some needs to be imposed on them.
No evidence supports use

There's no hard evidence that links bad credit and bad morals.

"At this point we don't have any research to show any statistical correlation between what's in somebody's credit report and their job performance or their likelihood to commit fraud," Eric Rosenberg, the state government liaison for TransUnion credit bureau, conceded in testimony to Oregon legislators.

Rosenberg was actually arguing against a state bill that would limit employers' ability to use credit checks. TransUnion and other credit bureaus that provide the reports say they're an important tool for evaluating applicants.

The arguments didn't sway the Oregon Legislature, which recently passed a law prohibiting credit checks for hiring, firing, promoting or determining compensation for most workers. Exceptions were made for financial institutions, public-safety offices and other employment if credit history is important to a job and a background check is disclosed to the applicant or employee.

Washington state and Hawaii already have curbed widespread use of credit checks in making hiring decisions. Other states are considering similar laws, and U.S. Rep. Steve Cohen, D-Tenn., has sponsored a bill that would ban employment-related credit checks nationwide except when the job:

Required a national-security or Federal Deposit Insurance Corp. clearance.
Was with a state or local government agency that otherwise required the use of a consumer report.
Was in a supervisory, managerial, professional or executive position at a financial institution.

It appears that Congress won't act on Cohen's measure, though.
Some second thoughts

At least the federal Defense Finance and Accounting Service in Cleveland, which considered terminating dozens employees at least in part over bad credit, is now taking a second look at its decision. After the workers' situation was publicized and U.S. Rep Dennis Kucinich, D-Ohio, intervened, the agency agreed to review its actions and delay firing 39 people who had been expected to lose their jobs.

Defense Finance and Accounting Service spokesman Tom LaRock said the agency was just following guidelines set down by the Department of Defense in 2005. The workers' jobs were reclassified from "noncritical, nonsensitive" to "noncriticial, sensitive" because of workers' access to private, identifying information, such as Social Security and bank account numbers.

"Because of what we do -- paying people, paying all DOD bills -- because of that fiduciary responsibility, all DFAS positions were reclassified," LaRock said.

The guidelines require that workers be investigated not only for their credit but for other criteria including, according to a Defense Department fact sheet that LaRock supplied, "allegiance to the United States, foreign influence, foreign preference, sexual behavior, personal conduct, financial considerations, alcohol consumption, drug involvement, psychological conditions, criminal conduct, handling protected information, outside activities, and use of Information Technology (IT) systems."

Financial considerations alone rarely lead to firings, LaRock said. Typically, there is some other problem, such as "personal conduct" or false statements to investigators, he said.

[Unrepresented]

I don't see anything about being fired over bad credit in the article, only it being an obstacle to being hired. I agree that it's a self perpetuating issue that should be dealt with as should data mining in general.

[fourstringdrums]

I've only heard of it being a prerequisite to getting hired. Getting fired for it doesn't make sense...though not getting hired doesn't make sense. If you're having financial trouble that has wrecked your credit, common sense who dictate that you need the job to hopefully help remedy it. There are too many variables as to why someone has poor credit and if someone doesn't hire because of it then they are just guessing and passing judgement.

[LiquidMidnight]

The short response is that yes, you can be fired for bad credit. Employment at will takes precedence here. The exception would be if you had an individual contract with your employer, whom you could attempt to sue for breach of contract, or if you are unionized, in which case, your union could challenge the termination decision via your collective barganing agreement's grievance-arbitration procedure.

I'm entirely skeptical of credit checks having any sort of criterion validity for positions in which the candidate does not act in a fiduciary role. Unfortunately, the brown lumps my cat leaves in her litter box have more content, construct, and criterion validity than many of the selection protocols used in the world. Do employers still do lunch interviews where they make inferences on whether or not you salted your food before tasting it? The fact of the matter is there are a ton of hiring managers in this world with no background in HR or I/O psychology, making off the cuff selection decisions based upon totally subjective biases that have nothing to do with a candidate's ability to perform the position. God help us.

[fdeck]

Credit checks are a way of making it harder for minorities.

[LiquidMidnight]

Originally Posted by fdeck

Credit checks are a way of making it harder for minorities.

In that case, it would be disparate impact, which would be fairly difficult to prove in a discrimination case.

[cassanova]

Originally Posted by Unrepresented

I don't see anything about being fired over bad credit in the article, only it being an obstacle to being hired. .

The only place I saw it was under the articles title.

"Could you be fired for bad credit?

In some cases, the answer might be yes. Or you might simply not be offered a job and never know why. If you find that troubling, here's what you can do."

I just used the title of the article as the title of the thread.

[cassanova]

Originally Posted by LiquidMidnight

In that case, it would be disparate impact, which would be fairly difficult to prove in a discrimination case.

It's hard to prove you were denied employment based on a poor credit report too.

Overall, I think it makes it harder for the poor/working class as a whole to obtain a decent job, not just minorities. I basically feel that it's just another way for those whom have wealth to oppress those that do not.

[fdeck]

Originally Posted by LiquidMidnight

In that case, it would be disparate impact, which would be fairly difficult to prove in a discrimination case.

That's why it's used.

[Tat2dHeart]

In right-to-work states, they can fire you for pretty much anything, including bad credit.

[knumbskull]

the whole concept is flawed, in my opinion.

a friend of mine who has worked steadily throughout his adult life and scrupulously avoided getting in any debt whatsoever, was refused a mortgage because he had "no credit history". he didn't exist, as far as they were concerned, since he had never borrowed, never got a credit card, always kept his bank account in the black. in the end he had to sign up for a credit card, which he snapped in half the moment it arrived, just to be able to move into his home.

bad credit - sure, if you have bad credit, you NEED a job! how else are you going to pay it off?

[LilloEsquilo]

The question here is answered by yes they can. They can fire you at any time, for any reason or no reason at all. You signed (if you live in "right to be fired" state) an agreement that states such. The flip side of that is you can quit at any time, but you could anyway, being that we aren't slaves in a legal sense. And my philosophy used to be to ALWAYS bend over backwards to give notice and work with them when moving on but now I treat them as they treat me - if I get treated decent I'll do all I can, if you treat me like dirt, I give you no notice other than "see ya I quit". That's the way it goes but it's another story.

Now if you are talking about does it make sense, well frankly employers aren't concerned with that, and they don't have to be, they have 500 desperate people applying for any position who would put up with literally anything including being gang raped and horsewhipped daily for a job. So their feelings are who cares if it's your fault or not, just weed em out and move on, plenty more where that piece of meat came from. Hate to be so blunt but it's just the truth.

And things won't be getting better anytime soon either so I don't expect this to change or congress to act as they couldn't care less about this sort of thing anyway. They'd probably prefer those people starved off to reduce the surplus population. Again brutal honesty here but it's the truth.

[LiquidMidnight]

Originally Posted by Cassanova

It's hard to prove you were denied employment based on a poor credit report too

There are a number of shifting burdens in a discrimination case, and the majority of the onus falls on the plaintiff. Here's a pretty good explantation of how a disparate impact case operates: Disparate Impact legal definition of Disparate Impact. Disparate Impact synonyms by the Free Online Law Dictionary.

Originally Posted by Tat2dHeart

In right-to-work states, they can fire you for pretty much anything, including bad credit.

You mean employment at will. Right to work is a legal doctrine, granted to states via the NLRA, to pass legislation that outlaws union security clauses in collective bargaining agreements, which means that employees do not have to join a certified union for employment. However, they will still be a member of the bargaining unit and the union is still has a stuatory obligation under the NLRA to represent that employee. The exception are federal enclaves housed in right to work states, which still can enforce security clauses.

As always, none of this is legal advice.

[LiquidMidnight]

Originally Posted by knumbskull

the whole concept is flawed, in my opinion.

a friend of mine who has worked steadily throughout his adult life and scrupulously avoided getting in any debt whatsoever, was refused a mortgage because he had "no credit history". he didn't exist, as far as they were concerned, since he had never borrowed, never got a credit card, always kept his bank account in the black. in the end he had to sign up for a credit card, which he snapped in half the moment it arrived, just to be able to move into his home.

bad credit - sure, if you have bad credit, you NEED a job! how else are you going to pay it off?

+1

I'm 29, and the only thing I've gone in debt for in my life has been my education...and I'm in relatively little debt for that, considering I've went to a technical school, got a Bachelor's, got a Master's, and am currently working on a doctorate. I've always paid cash for vehicles, and the only credit card I've used has been for work purposes, which I always paid off the moment I got the bill for it.

I know that I'm basically going to have to get a credit card and use it for small purchases, which I'll immediately pay off, just to build credit for when it comes time for a mortgage. I don't mean to be all holier-than-thou, but it blows my mind on a constant basis about how much of the world's economic systems are based on debt and money that largely exists in the abstract. It's a scary thought if the house of cards comes tumbling down. My family always lived modestly and within its means, so the idea of plopping down plastic for stuff without much thought to it is sort of a weird concept to me.

[Tat2dHeart]

Originally Posted by LiquidMidnight

You mean employment at will. Right to work is a legal doctrine, granted to states via the NLRA, to pass legislation that outlaws union security clauses in collective bargaining agreements, which means that employees do not have to join a certified union for employment. However, they will still be a member of the bargaining unit and the union is still has a stuatory obligation under the NLRA to represent that employee. The exception are federal enclaves housed in right to work states, which still can enforce security clauses.

I'm not a legal expert either, I just know that here in Florida, my employer's paperwork says that Florida is a "right to work" state. After googling the employment law, it's actually both a work at will and a right to work state. Thanks for tossing out that extra info - I learned something new today.

[LiquidMidnight]

Originally Posted by Tat2dHeart

Thanks for tossing out that extra info - I learned something new today.

Now you know, and of course:

[Jay Ralston]

What also makes me angry is credit checks for insurance. I have never had a ticket or an accident yet because my son had open heart surgery 2 years ago and my wife had breast cancer last year, we have had a few medical bills go to collection simply because we didn't have the money to pay all of them. So even though I have never had a claim, my insurance is now higher because of 2 major family events that were beyond our control but had nothing to do with my driving record or home owners record.

[LilloEsquilo]

Yep it's of course just another way to fleece you. Has anyone noticed that the insurance companies just happened to "notice" that people with poor credit filed more claims just as the economy was tanking, which of course means more poor credit? Gee what a terrific coincidence that was.

Then they have the gall to tell you that they are just doing it to help you out because more of their customers pay less than before. BS!!! If that was true they would have things alone.

Like you I have no tickets, accidents or claims in well over 20 years. I also happen to have top notch credit. Yet in spite of this, these evil bastards CONTINUALLY look for reasons to jack my rates up, often trying to do it twice over the same 6 month period. If these criminals don't have a reason, they will find a reason. Read Aesop's fables one of the morals of his story was the tyrant always justifies his tyranny. That pretty well sums it up for how insurance companies are.

And if you are an insurance exec who wants to try to shoot down these facts, I really couldn't care less about hearing more of your lies, save em for someone dumb enough to believe em please and spare me. Thanks.