New Oregon Law Bans Use of Credit Check for Employment Related Purposes

By Doreen Koronios

During its February 2010 special session, the Oregon Legislature adopted Senate Bill 1045, prohibiting employers from using credit histories in making employment-related decisions.  The law goes into effect on July 1, 2010 and makes it “an unlawful employment practice for an employer to obtain or use for employment purposes information contained in the credit history of an applicant for employment or an employee, or to refuse to hire, discharge, demote, suspend, retaliate or otherwise discriminate against an applicant or an employee with regard to promotion, compensation or the terms, conditions or privileges of employment based on information in the credit history.”

In my last blog, I discussed the issue of credit checks for employment purposes and how applicants should know their credit information and their rights under the various laws.  It is also important for companies to know the different laws, especially in multi state businesses.  Oregon joins Washington and Hawaii as the three states which have banned the use of credit history for employment purposes.  Other states are busy trying to get the same legislation passed. Employers who violate the law will be subject to either an administrative claim filed with the Oregon Bureau of Labor and Industries or a private lawsuit, and can be held liable for lost wages and attorney fees, among other remedies.

Under the federal Fair Credit Reporting Act, an employer can make employment-related decisions based on credit history but, prior to running a credit check, must notify prospective employees in writing and receive their consent. Additionally, if the employer decides not to hire because of the credit report, the employer must disclose this information to the applicant and provide information on the credit bureaus used. In contrast, the Oregon law creates an outright ban on the use of credit history in employment-related decisions.  However, there are four exceptions to the prohibition:

  1. Bank and credit union employers
  2. Employers that are required by state and federal law to use credit histories for employment purposes
  3. Public safety officer employers
  4. Employers that can demonstrate that credit information is “substantially job-related” and that provide written disclosure of the reasons for the use of the credit check

In light of the above, it is important that business managers and owners know the law for the states in which they hire employees and should consult legal counsel to determine if they fit into one of the statutes exceptions.

Of importance is the fact that the new Oregon law only prohibits the use of credit history, so other background checks – such as criminal background checks – are not affected.

You can find a copy of the Bill at

How fair is using a credit check as a qualifier for employment?

By Doreen Koronios

It’s hard enough to find work these days without having pre-hire roadblocks, such as credit checks, thrown in front of you. Many companies use credit checks as part of their standard pre-employment background check. The Society for Human Resource Management reports that 60% of companies use credit checks as part of the screening process for certain positions.  In fact, some companies use a credit check as a pre-qualifier, meaning the credit check is done first and if the credit is adverse the company may choose not to move forward with the applicant.  There has always been controversy around using credit checks to qualify an applicant for employment. However, with unemployment so high and the economic recession affecting millions of people, the subject is being hotly debated. Lawmakers are seeking to ban the practice.  Two states have already done so: Hawaii and Washington state.  In many other states, laws have been introduced to curb the practice. In fact, US Rep Steve Cohen (D. Tennessee) is sponsoring a federal bill to completely ban the use of credit checks for employment purposes.

So, is it really fair to use a person’s credit as a qualifier for employment? After all, there are many issues that could cause bad credit that are out of one’s control – economy, unemployment, divorce, illness, etc.  Just because someone has hit a rough patch that affected his credit doesn’t mean he won’t be a good employee. Right?  Before we get hot under the collar, let’s discuss why it is important for companies to perform credit checks for certain positions and what the applicant can do to minimize the issue of adverse credit.

From a company’s perspective, pre employment screening is necessary to hire the right person for the position, and to avoid lawsuits and costly hiring mistakes. Screening applicants aids in keeping the workplace safe for all employees. We have seen in the news many times how companies can be held liable for the actions of their employees, especially if they have not been properly background checked. Credit checks are used to prevent hiring at-risk or untrustworthy applicants into positions where they could do harm to the company.

An employer may request a credit check to verify previous employment. Some employers use credit reports to gauge the applicant’s level of responsibility. Many banks and financial institutions want to make sure the people they are hiring are financially stable and less likely to embezzle money.

For these reasons, it is easy to see why background checks, in general, and credit checks, in particular, are prudent parts of the hiring process for any company.

For the applicant, forewarned is forearmed!  As a general practice, and especially when you are seeking employment, it is important to make sure to check your credit report. The law allows you one free credit check per year. Many times, credit reports contain errors which can be easily fixed with a letter to the credit agencies.

Inform the hiring manager about any credit issues once you know the company will be moving forward with a credit check.  This gives you an opportunity to explain your circumstances in a proactive manner.  After all, many people have financial issues at some point in their lives.

It is important to know that a background check can not be legally conducted on you without your written permission. Under the FCRA, employees must sign a disclosure form granting authorization to perform a background check. The FCRA is not just restricted to credit reports but includes all consumer reports. Laws vary from state to state in how and what information can be used during the pre-employment screening process. So know your rights.

If you are denied employment due to adverse credit, the employer is required to provide you with the name and contact information of the credit agency. You can then contact the agency and dispute any inaccuracies that are found on your report and have them removed.

The reality is that very few people are denied employment due to a credit check. However, many companies do use them in the pre-hire process so it is important for applicants to know their credit and know their rights. In the meantime, we will continue to monitor the situation in different states as legislation is finding tough opposition from state business leaders and chambers of commerce on the subject of using credit checks in the hiring process.


By Doreen Koronios

The tragedy of the Ohio State University shooting is that it might not have happened had a full background check, including a reference check, been conducted by a reputable third party consumer reporting agency.  Nathaniel Brown lied on his employment application (studies have shown that 80% of applications contain some type of falsification) when asked if he had ever been convicted of a felony or misdemeanor.  However, Ohio prison records show that he was in prison for five years, from July 1979 to March 1984, for receiving stolen property in Stark County. Although OSU conducted a background check, it appears that the company they used may have conducted database checks only, which by themselves would not qualify as a thorough background check.

The corrections record itself might not have been found due to a discrepancy with the subject’s date of birth.  However, Mr. Brown clearly listed a reference on his employment application for a job he said he worked in while he was in prison.  A full background check would have included a call to the listed Supervisor who would have notified the screening company that Mr. Brown was not employed during the dates he listed on his application. This source may have provided the background check company with independent knowledge as to the true date of birth of Mr. Brown. It is important to note that this former supervisor had been interviewed by the Press and acknowledged that although Mr. Brown had worked for him it was not during the period indicated on his application.  The supervisor also confirmed that he was not contacted by anyone up to that point regarding Mr. Brown’s employment history with his firm. Mr. Brown would then have had some explaining to do about where he was during the dates listed, which might have uncovered the fact that he had a criminal record.

Although “national” criminal records database checks are marketed as quick, efficient, and less costly, you definitely get what you pay for.  When searching for a background screening company, a red flag should go up as soon as you see the words “free” and “instant results”.

While criminal records databases are useful in identifying potential criminal records they should not be relied upon as accurate or complete. Here are several reasons why so called “national” criminal records databases don’t work:

1. There is no such thing as a national criminal records check – There is no central repository for federal, state, and local criminal records. The FBI has the only nationwide criminal database, known as NCIC (National Crime Information Center), which cannot be accessed by anyone other than a criminal justice agency. According to Concerned CRAs, criminal record databases are put together by private companies who purchase information from a “patchwork” of sources, including county courts, state criminal records repositories, sex offender registries, and prison systems. U.S. Senator Herb Kohl said, “The current system of state-based background checks is haphazard, inconsistent, and full of gaping holes”.

2. They are not FCRA compliant – The Fair Credit Reporting Act (FCRA) is the federal law that details how consumer credit information can be collected, disseminated and used.  Most important is the fact that the information reported must be up to date.

3. The information is not up to date – Not all states have automated systems for collecting data and most do not make their records available in bulk electronic format.  Therefore, the content, accuracy, and timeliness of the data are called into question.

4. They are prone to errors – report criminal records that have been expunged which causes the denial of employment to many – At least 40 states allow the right to seal or expunge records for some minor prior criminal convictions. However, the private electronic databases of criminal records are not up to date and sometimes show these expunged records. This leads to many of these applicants losing job opportunities because their background checks contain inaccurate information about their criminal convictions.  

5. They expose your company to the risk of costly litigation -Employers who fail to do the proper due diligence often find themselves embroiled in litigation. The average award for a negligent hiring lawsuit is $1 million.  The highest award in the U.S. for a negligent hiring case was $26.5 million. A company’s best defense against negligent hiring lawsuits is a thorough pre-employment screening by an experienced company that knows how and where to search for criminal records.

6. They expose your company to a potential public relations nightmare – Your company’s reputation has an enormous impact on the growth and success of the business.  Negligent hiring can expose a company to bad publicity, damage the company’s reputation, and affect future growth and earnings. 

The moral of this story is that you truly get what you pay for. If you want to keep your company and employees out of harms way, the best way to do that is to hire a reputable third party consumer reporting agency (background screening company). The consequences of shortcutting a pre-employment background check could have long range affects including massive financial settlements, bad publicity, and, in the worst case, loss of life.

For information on how CARCO can help you with your pre-employment screening needs, please visit

Do you know about the Sue Weaver C.A.U.S.E.? If not, it’s time you learn!

By Doreen Koronios

Sometimes those of us in the risk mitigation business need to step back from the day-to-day grind to remember that the work we do affects the lives of millions of people every day. It is a serious business with serious consequences if not conducted properly.

Simply stated, bad hires – including permanent, temporary, contract, and vendor workers – cause serious problems!  We too often take for granted that our workplace is a safe environment and that workers who come to our homes are reputable and have been properly screened.  This, unfortunately, is not always the case.

One example is what happened to Sue Weaver.  On August 27, 2001, Sue Weaver was brutally raped and beaten to death by a twice convicted sex-offender hired to do service work in her home. Sue had contracted with a major department store to have the air ducts in her home cleaned.  The department store did not conduct criminal background checks on those workers they sent into their clients’ homes.

Sue’s life is over. Had a criminal background check been done, Sue might still be alive today. Created by Sue Weaver’s sister, Lucia Bone, the Sue Weaver C.A.U.S.E.’s mission is to promote Consumer Awareness of Unsafe Service Employment and to educate employers on the moral and legal obligations for criminal background checks and how they work.

CARCO has a profound respect for the mission of the Sue Weaver C.A.U.S.E., and is proud to announce that we are Sue Weaver C.A.U.S.E. Certified!  This Certification is an honor given to companies who demonstrate the integrity demanded by The C.A.U.S.E., and who also apply strict background standards when working with service providers seeking certification.

CARCO is also working with C.A.U.S.E. to design and deliver the technology platform that will make it easy for C.A.U.S.E. Certified companies to demonstrate their commitment and to maintain compliance with C.A.U.S.E. standards. When complete, this secure Web-based platform will allow any C.A.U.S.E. Certified background provider to easily upload individual certification information and pictures which will allow the companies and consumers who rely on C.A.U.S.E. Certification of workers to look up and independently verify claimed Certifications.

Partnering with the Sue Weaver C.A.U.S.E. is another commitment by CARCO to continually provide quality of service and state-of-the-art technology to enhance our clients’ screening programs.

For more information on CARCO’s C.A.U.S.E. Certified vendor screening program, please visit our website at  For more information on the Sue Weaver C.A.U.S.E., visit

A 2010 Hiring Trend Makes It More Important Than Ever to Accurately Screen Temporary Employees

By Doreen Koronios

The change in the economy over the last two years has increased the contracting of temporary workers, a trend that many believe is here to stay. The U.S. Department of Labor notes that employment of temporary workers is expected to grow 19% through 2018.

The positions in which companies use temporary employees have changed to include those of financial officers, health care workers, lawyers, IT professions, and even C-suite executives. Today, temporary workers have the same access to a company’s facility, files, and client records as permanent employees who have likely been background screened. Now more than ever, with this shift in the types of positions filled by temporary workers, screening all employees – temporary, contract, and permanent – is a vital element of the hiring process.

Case in point: In early 2009, Los Angeles county officials found themselves in a precarious, embarrassing situation. After discovering a convicted rapist had been working at one of its East Los Angeles health clinics for some time, the county was forced to suspend the contract for one of its largest providers of temporary employees, while also admitting to not knowing how many of the 2,000+ temporary workers employed at LA county hospitals and clinics had ever undergone criminal background checks.

The shift in the temporary workforce has put temporary employees in positions of power and influence like never before. They need to be treated in the same fashion as you would treat the permanent staffers they will work with every day. Therefore, the interaction between a company and its staffing agency should be a partnership.

Who is to blame when temporary employees are not screened? Some will blame the staffing companies but it ultimately is the responsibility of your company to ensure that any worker on your premises is properly screened. The staffing agency works for you and it is important to ensure that your temporary hires are subjected to the same high screening standards as your permanent staff. It is important for several reasons: to safeguard your company’s proprietary information, ensure a safe working environment, avoid costly lawsuits, and protect your company’s solid reputation.

For more information, visit and download CARCO’s white paper that explores the importance of screening temporary workers.