Should an employer run credit reports on potential new employees?

Does a person’s credit situation really reflect their ability to do a job?

U.S. Sen. Elizabeth Warren, a Massachusetts Democrat, introduced legislation on Tuesday that would prohibit employers from requiring job applicants to disclose their credit history.

In a conference call with reporters, Warren argued that a person’s poor credit history is often the result of medical bills, job loss or divorce and does not reflect his ability to perform a job.

A credit reports includes information on the bank accounts and credit card accounts opened by a person and whether those accounts are paid up. It indicates liens, bankruptcy filings and court judgments. A 2012 report by the Society for Human Resource Management found that around half (47 percent) of companies conduct credit checks on some or all prospective employees.

Over the years I have hired many employees – some great and some not. Having the skills necessary to do the job is important, but equally important is having the peace of mind to be able to concentrate on the job. Someone with a bad personal situation can directly affect their ability to do their job. Does this “bad personal situation” include their financial condition? Personally, I think not because that problem can be addressed. Employers should be cautious when using a credit report to determine a person’s ability to do a job. They will miss out on some wonderful employees.

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