NY firms can't background check employees

New York City Council has passed a bill banning employers from screening job candidates' credit files, which is expected to be signed into law later this year by the city's mayor.

NEW YORK - April 24, 2015.

If the bill becomes law, employers - even within the traditionally-excluded financial sector - will soon no longer be able to buy credit reports of job applicants or existing employees.

Opponents of employers using financial checks on workers have long-argued the practice unfairly discriminates against applicants with adverse credit histories, particularly low-income workers.

They argue job-seekers are being excluded during the hiring process because of reasons such as healthcare debt, student loans, divorce and identity theft, which can all be flagged by commercial credit checks.

It is estimated that nearly half of employers in the US routinely check the credit histories of job applicants during their hiring decision processes.

The 'Stop Credit Discrimination in Employment Act' has become one of the US's most potent measures against the credit screening of potential and existing employees.

The Act also restricts the use of credit checks for any businesses' promotion, demotion, or compensation decisions.

Proponents say there is no evidence to correlate people’s credit history and their likelihood to commit theft of fraud or theft.

“Citizens of New York should be able to compete for a job based on qualifications and skills, not three digits on their financial report,” Council Speaker Melissa Mark-Viverito said, after the bill was passed.

In almost all other jurisdictions with similar laws, the financial sector is exempt, and most locales allow the credit-checking of anyone in management or who possesses a company credit card.

A number of business groups within New York lobbied against the broadest application of the bill which covers almost all employers, arguing that certain sectors such as the financial industry must screen applicants' backgrounds because of the nature of their work.

But their argument was broadly discredited during negotiations, with the only exceptions made concerning people wishing to work within the police force, national security, anyone in law enforcement in the Department of Investigation and employees with access to trade secrets.
 
In the UK, research suggests employment application fraud accounted for more than half of all internal frauds recorded in 2013 and that in the same year, employment screening helped detect a 70% increase in false employment applications. Around 15 per cent of candidates back out of a job application when told a background check was required, they added.

And, speaking back in 2010, Worldbox Business Intelligence founder Adrian Ashurst said international company clients operating in China were finding senior people they'd hired did not have the experience or academic qualifications required to fulfill their positions after background checking their credentials.

The company’s bureaus in Beijing and Hong Kong check details in an applicant's CV on behalf of clients, filling information requests that can't be served by traditional online subscription services or search giants.

Presswire

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