TransUnion Employment Credit Report
HireSafe’s employment credit report by TransUnion™ can identify if an applicant has any accounts in collections, open loans, inquiries made by third parties, and much more.
The TransUnion Employment Credit Report includes:
- Current Address with other previous addresses
- Social Security Number
- Phone Number (if applicable)
- Current Employer (if applicable)
- Up to Three Previous Employers (if applicable)
- Aliases (if applicable)
The employment credit report summary also includes but not limited to:
- Collection Accounts
- Current or Previous Delinquent Accounts
- Types of Credit
- Account Charge Offs
- Alerts of any Confirmed or Suspected Fraud Activity.
Since this credit report check is designed for employment purposes, it does not place an inquiry on the applicant's report. We recommend this service for all positions that involve access to cash, expensive equipment, or financial record keeping. This service provides the employer insight into an applicant's level of fiduciary responsibility and to assess potential risk in case of employment. Before releasing credit history reports to a new client, an onsite credit bureau authorization is required (applicable fee).
- Used in all industries for positions with fiduciary responsibility
- Some industries (like Financial Services) may wish to run this search on all employees
- To identify applicants who may not show responsibility and may potentially be pre-dispositioned to mismanage company funds
Credit Report Limitations
Pre-Employment Credit Reports have traditionally been utilized during the employment background check process; this is done to evaluate the candidate's financial responsibility. Discretion and common sense have always ruled at HireSafe, where the only recommended utilization of credit reports was for positions with a clear business need. The financial turmoil of 2008 has left many otherwise responsible people in a challenging situation.
To remedy their overuse, ten states (as of 07/01/2013) have now enacted legislation that limits the use of Credit Reports within employment background checks. However, in the states of CA, CO, CT, HI, IL, MD, NV, OR, VT, and WA, the use of credit reports for employment suitability has not been banned outright. These new state laws balance the role of credit reports as one component of the hiring background check evaluation.
Generally, the law states that employers may not use or require an applicant to consent to the release of consumer credit information for employment purposes. However, the exception is when the credit report is "Substantially Related" to the employee's current or potential job responsibilities. This information would apply to banks, financial institutions, and circumstances where a credit report is required by law.
"Substantially Related" is generally defined as a position which:
1. Constitutes executive/management personnel or officers or employees who constitute professional staff to such personnel and the position involves at least one of the following:
- Setting direction/control of business/division;
- A fiduciary responsibility to employer;
- Access to customers', employees' or employer's personal or financial information
other than information customarily provided in a retail transaction;
- The authority to issue payments, collects debts, or enters into contracts;
- Routinely handles large sums of cash in, or
(2) Involves certain contracts with federal government (e.g., defense, intelligence)
Although not required to do so, a best-practice would be for an employer to provide an applicant or employee the opportunity to explain any unusual or mitigating circumstances related to their background credit report results. Life events such as divorce, loss of a job, or medical bills can be overwhelming and beyond an individual’s control. While necessary, a credit report does not represent the total of an individual’s capabilities.
The proper use of a background credit report is not to automatically deny employment based upon a blemish in an applicants’ past. Instead, it is a tool for an employer to make an informed hiring decision. In addition, to ensure that potential new employees can demonstrate the strength of their character despite earlier indiscretions. More importantly, the new state credit report regulations have been in complete synchronization with the HireSafe method of conducting compliant background checks since 1997.
If the person requesting your credit report does not have one of the “permissible purposes,” then your credit report is off-limits, period. If your neighbor, ex-girlfriend, co-worker, relative, or stranger pulls your credit report, you can be reasonably certain that they probably violated the FCRA.
Where it gets tricky is when a potential creditor, employer, landlord, or another person that you have some colorable relationship with overreaches and grabs your report without having a permissible purpose.
Here are some common scenarios when an individual or other entity pulls your report without an impermissible purpose:
- An employer pulls your credit report without asking your permission.
- Someone looking to sue you for a non-credit account or an involuntary debt -- as car towing and impound fees or breach of a real estate purchase agreement -- your credit report to find out if you have assets it can collect against.
- Your creditor pulls your credit report after you discharged that debt in bankruptcy.
- A tax collector, unless you have a payment agreement already in place or the information was subpoenaed. It is unclear if a tax collector can pull your credit report once it has obtained a tax lien, however.
- Someone requests your report to use it as evidence against you in a divorce, criminal, personal injury, or other non-credit lawsuit or proceeding.
- A landlord is attempting to collect past-due rent unless the landlord has obtained a judgment against you.
- A credit card company pulls your report, but you were only an authorized user -- not an obligor -- that account.
Restricted Use of Credit Reports by State (subject to change)
California Assembly Bill 22 (AB 22) amends Section 1785.20.5 of the Civil Code and adds Chapter 3.6 (commencing with Section 1024.5) to Part 2 of Division 2 of the Labor Code, relating to employment. AB 22 prohibits employers or prospective employers – with the exception of certain financial institutions – from obtaining a consumer credit reports for employment purposes unless the position of the person for whom the report is sought is one of the following:
- A managerial position;
- A position in the state Department of Justice;
- A sworn peace officer or other law enforcement position;
- A position for which the information contained in the report is required by law to be disclosed or obtained;
- A position that involves regular access to specified personal information for any purpose other than the routine solicitation and processing of credit card applications in a retail establishment;
- A position in which the person is or would be a named signatory on the employer’s bank or credit card account, or authorized to transfer money or enter into financial contracts on the employer’s behalf;
- A position that involves access to confidential or proprietary information; or
- A position that involves regular access to $10,000 or more of cash.
In addition, AB 22 also requires the written notice informing the person for whom a consumer credit report is sought for employment purposes to also inform that person of the specific reason for obtaining the report.
The “Employment Opportunity Act” (SB13-018) specifies the purposes for which consumer credit information such as consumer credit reports and credit scores can be used by employers or potential employers in making employment-related decisions.
Specifically, the “Employment Opportunity Act”:
- Prohibits an employer’s use of consumer credit information for employment purposes if the information is unrelated to the job;
- Requires an employer to disclose to an employee or applicant for employment (jointly referred to as “employee”) when the employer uses the employee’s consumer credit information to take adverse action against him or her and the particular credit information upon which the employer relied;
- Authorizes an employee aggrieved by a violation of the above provisions to bring suit for an injunction, damages, or both; and
- Requires the department of labor and employment to enforce the laws related to employer use of consumer credit information.
The “Employment Opportunity Act” defines employment purposes broadly to include “evaluating a person for employment, hiring, promotion, demotion, reassignment, adjustment in compensation level, or retention as an employee.” Two types of employers are permitted to use consumer credit information for employment purposes under the law: “banks or financial institutions” and employers “required by law” to conduct credit checks. The remaining employers may only review credit reports for “executive or management personnel” and positions that involve “contracts with defense, intelligence, national security, or space agencies of the federal government.”
Connecticut Senate Bill No. 361 (S.B. 361) prohibits certain employers from using credit reports in making hiring and employment decisions regarding existing employees or job applicants. The law took effect October 1, 2011 and applies to all employers in Connecticut with at least one employee.
Exceptions to S.B. 361 are employers that are financial institutions as defined under law, credit reports required to be obtained by employers by law, and credit reports “substantially related to the employee’s current or potential job.” These “substantially related” reports are allowable if the position:
- Is a managerial position that involves setting the direction or control of a business, division, unit or an agency of a business;
- Involves access to personal or financial information of customers, employees or the employer, other than information customarily provided in a retail transaction;
- Involves a fiduciary responsibility to the employer, as defined under the law;
- Provides an expense account or corporate debit or credit card;
- Provides access to certain confidential or proprietary business information, as defined under the law; or
- Involves access to the employer’s nonfinancial assets valued at $2,005 or more, including, but not limited to, museum and library collections and to prescription drugs and other pharmaceuticals
House Bill 31 SD1 CD1 was passed by the Hawaiian legislature – over the Governor’s veto – and put limits on the use of employment credit history or credit reports unless it “directly related to a bona fide occupations qualification” or falls under another exception. Effective July 1, 2009, the law amended the Hawaiian Fair Employment Practices Act by making it an unlawful discriminatory practice for any employer to refuse to hire or employ, continue employment or to bar or discharge from employment, or otherwise to discriminate against any individual in compensation or in the terms, conditions, or privileges of employment of any individual because of the individual’s credit history or credit report, unless the information in the individual’s credit history or credit report directly relates to a bona fide occupational qualification.
The law also indicated that in terms of hiring in the first place, the employer can only inquire into the credit history or credit report on a prospective employee only after there has been a conditional job offer, and only if the information is directly related to a bona fide occupational qualification. The law makes exceptions for employers that are expressly permitted to inquire into credit history or a credit report by federal or state law, financial institutions that are insured by a federal agency or to managerial or supervisory employees. The law sets out a specific definition of what constitutes a “Managerial” or “Supervisory” employee.
The “Employee Credit Privacy Act” (Illinois House Bill 4658) prohibits employers in the state from discriminating based on the credit history of job seekers or employees. The law took effect January 1, 2011 and prohibits employers from inquiring about or using an employee’s or prospective employee’s credit history as a basis for employment, recruitment, discharge, or compensation. Employers who violate the new law can be subject to civil liability for damages or injunctive relief.
However, under the law, employers may access credit checks under limited circumstances, including positions that involve:
- Bonding or security per state or federal law;
- Unsupervised access to more than $2,500;
- Signatory power over businesses assets of more than $100;
- Management and control of the business; and
- Access to personal, financial or confidential information, trade secrets, or state or national security information.
The “Job Applicant Fairness Act” (Maryland House Bill 87) took effect October 1, 2011 and enacted new legislation placing restrictions on so-called credit checks by employers that use the credit report or credit history of job applicants or employees for employment decisions. Along with prohibiting an employer from using the credit report or credit history of an employee or job applicant for employment purposes, the Act specifically prohibits most employers from using credit checks to determine whether to:
- Deny employment to a job applicant;
- Discharge an employee;
- Decide compensation; or
- Evaluate other terms and conditions of employment.
While the Act applies to Maryland employers of any size, some employers are excluded from the Act’s prohibitions, including financial institutions and employers required under federal or state law to inquire into the credit history of job applicants or employees. In addition, the Act also allows exceptions for employers to request or use credit history information if the data is related to “a bona fide purpose that is substantially job–related,” an exception that generally applies to:
- Jobs such as managerial positions involving handling money or confidential duties;
- Employees with expense accounts or corporate credit cards; and
- Employees with access to confidential business information.
The Act also requires that employers wishing to request or use credit information of job applicants and employees for a bona fide purpose must disclose the intent to do so in writing to the job applicant or employee.
With Governor Brian Sandoval signing Senate Bill 127 (SB 127) into law, Nevada has now become the tenth state in the U.S. to prohibit employers from conditioning employment on a consumer credit report or other credit information with few exceptions. Nevada SB 127 goes into effect on October 1, 2013.
Senate Bill 127 amends Chapter 613 of the Nevada Revised Statutes (NRS) that covers “Employment Practices” to make it unlawful for any employer in the state to:
- Directly or indirectly, require, request, suggest or cause any employee or prospective employee to submit a consumer credit report or other credit information as a condition of employment;
- Use, accept, refer to or inquire concerning a consumer credit report or other credit information;
- Discharge, discipline, discriminate against in any manner or deny employment or promotion to, or threaten to take any such action against any employee or prospective employee: (a) who refuses, declines or fails to submit a consumer credit report or other credit information; or (b) on the basis of the results of a consumer credit report or other credit information; or
- Discharge, discipline, discriminate against in any manner or deny employment or promotion to, or threaten to take any such action against any employee or prospective employee who has pursuant to the new law: (a) filed any complaint or instituted or caused to be instituted any legal proceeding; (b) testified or may testify in any legal proceeding instituted; or (c) exercised his or her rights, or has exercised on behalf of another person the rights afforded to him or her.
However, Senate Bill 127 does provide for exceptions where an employer may request or consider a consumer credit report or other credit information for employment purposes if:
- The employer is required or authorized, pursuant to state or federal law, to use a consumer credit report or other credit information for that purpose;
- The employer reasonably believes that the employee or prospective employee has engaged in specific activity which may constitute a violation of state or federal law; or
- The information contained in the consumer credit report or other credit information is “job related” or reasonably related to the position for which the employee or prospective employee is being evaluated for employment, promotion, reassignment or retention as an employee.
If an employer violates the new law, the Labor Commissioner may impose an administrative penalty against the employer of not more than $9,000 for each violation.
New York City recently amended the New York City Human Rights Law (NYCHRL) to prohibit, with limited exceptions, employers from using consumer credit history to make employment decisions. The amendment defines “consumer credit history” to include consumer credit reports, credit scores and information obtained directly from an individual regarding details about credit accounts, bankruptcies, judgments or liens. The NYCHRL provides for a private cause of action and the award of unlimited punitive damages, compensatory damages and attorneys fees to successful plaintiffs. The law goes into effect on September 3, 2015.
Oregon Senate Bill (SB) 1045, signed into law in February 2010 and declared to be effective immediately, prohibits the use of credit histories of job applicants in making employment-related decisions including hiring, discharge, promotion, and compensation.
However, SB 1045 provides exceptions for financial institutions, public safety offices, and other employment if credit history is job-related and use is disclosed to applicant or employee. The exceptions to the law include the following circumstances:
- Employers that are federally insured banks or credit unions;
- Employers that are required by state or federal law to use Individual credit history for employment purposes;
- The employment of a public safety officer, or
- Employers that can demonstrate that the information in a credit report is substantially job-related AND the employer’s reasons for the use of such information are disclosed to the employee or prospective employee in writing.
Effective July 1, 2012, Vermont Act No. 154 (S. 95) prohibits employers in the state, subject to various exceptions, from using or inquiring into credit reports or credit histories of job applicants and employees in the employment context and further prohibits discriminating against individuals based on their credit information. Vermont is the eighth and most recent state to restrict the use of credit reports by employers, joining California, Connecticut, Hawaii, Illinois, Maryland, Oregon, and Washington.
Enacted into law by Governor Peter Shumlin on May 17, 2012, Vermont Act No. 154 (S. 95) pertains to “credit history” that includes any credit information obtained from any third party, not only information contained in a credit report. The Act sets forth exemptions based on the type of employers at issue and the position or responsibilities of applicants or employees. Employers are exempt and may obtain and use credit information if they meet one or more of these conditions:
- The information is required by state or federal law or regulation.
- The position of employment involves access to confidential financial information.
- The employer is a financial institution or credit union as defined by state law.
- The position of employment is that of a law enforcement officer, emergency medical personnel, or a firefighter as defined by state law.
- The position of employment requires a financial fiduciary responsibility to the employer or a client of the employer, including the authority to issue payments, collect debts, transfer money, or enter into contracts.
- The employer can demonstrate that the information is a valid and reliable predictor of employee performance in the specific position of employment.
- The position of employment involves access to an employer’s payroll information.
However, even exempted employers that seek to obtain or act upon the credit information of an applicant or employee are prohibited by the Act from using credit report or credit history as the sole factor in making any employment decision. In addition, the Act requires employers to first obtain the written consent of the employee or applicant to the disclosure of the credit information and must also disclose in writing its reasons for accessing the report. If an employer intends to take an adverse employment action based on any contents of the credit report, the employer must notify the applicant or employee in writing of its reasons for doing so and also offer the subject an opportunity to contest the accuracy of the credit report or credit history.
Washington passed a law in 2007 amending the Revised Code of Washington (RCW) that stated employers could not obtain a credit report as part of a background check unless the information was substantially job related and the employer’s reasons for the use of such information were disclosed to the consumer in writing.
Under the amended Washington law, employers cannot obtain a credit report as part of a background check unless the information is:
- Substantially job related and the employer’s reasons for the use of such information are disclosed to the consumer in writing; or
- Required by law.
Employers in the state of Washington utilizing employment credit reports needed to change their forms, carefully review any job position where a credit report is requested, and communicate to job applicants the reason a credit report is substantially related to a particular job.