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Job-applicant background checks declining

There's some good news for job seekers who have been faced with financial issues, or have had brushes with the law.

Fewer employers are snooping into your criminal or credit background today.

Criminal background checks have become increasingly popular partly because technology has made it easier to dig up dirt and partly because hiring managers want any tools to help them weed through the many applicants, given the tight labor market.

But such reviews had a tendency to disproportionately hurt African-Americans and Latinos, according to many labor advocates. Not to mention the fact that lots of other job seekers from all groups who've faced unemployment, or underemployment, have faced money woes and may have had their credit histories impacted as a result.

Steps by the federal government and states to crack down on the practice have gotten everyone looking more closely at the process.

In April, the Equal Employment Opportunity Commission approved new rules for employers who use criminal background checks, calling for careful consideration of how and when such reviews can be used in pre-employment screenings and in the workplace because of their potential to be biased against certain groups, such as racial minorities.

A handful of states have moved to ban or curb credit history checks on jobs applicants, including Illinois that passed a law in 2010 prohibiting the use of such reviews. “A job seeker’s ability to earn a decent living should not depend on how well they are weathering the greatest economic recession since the 1930s," Gov. Pat Quinn said in signing the bill into law. 

Employers are now scaling back their use as a job-screening tool.


"Some of the decline in the use of credit checks may be related to measures put in place by state governments and municipalities, as well as increased attention to the issue," said Mike Aitken, vice president of government affairs at the Society of Human Resource Management.
The organization just released its figures on such background checks and found:

More than one-half (53 percent) of respondents to a SHRM survey said they don’t use credit background checks in hiring. That’s an increase from 2010, when 40 percent of organizations reported not using credit checks, and from 2004, when 39 percent did not.

"Employers – through their HR professionals – are continually evaluating practices and programs. And this is no different," Aitken said. 

The SHRM survey also found that: 

  • Most employers focused on credit histories of two to seven years. Only 6 percent of organizations said that all years of credit history were equally important, a decrease from 17 percent in 2010.
  • Of the 34 percent of employers that conducted credit checks on selected job candidates, 87 percent did so for positions with financial responsibilities and 42 percent used them for senior executive positions. 
  • More organizations saying that complying with state law requirements was among the primary reasons criminal checks were done, up 8 percentage points from 2010 to 28 percent.
  • Fifty-eight percent of organizations allowed job candidates to explain the results of their criminal checks before the decision to hire was made.

"We think employers are looking more closely at these practices," he continued. "They want to ensure that any screening or evaluation tool used during the hiring process is related to the duties of specific positions and consistent with federal law prohibiting job discrimination."

Amen to that.

(A version of this story first appeared on CareerDiva.net.)

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