Hiring Decisions Based on Credit Reports
If you’ve applied for a job, the employer may have pulled your credit report as a part of the application process. Although this is a common hiring procedure many WA state employers and employees are unaware of state laws regulating and prohibiting this practice.
Washing law only permits a potential employer to pull a credit report if it is 1) required by law or 2) substantially related to the job. RCW 19.182.020. If your credit is substantially related to the job, the employer or person pulling the report, must also state in writing the reasons for use of the report. If the employer fails to follow these laws it leaves itself vulnerable to claims under the consumer protection act.
The next logical question that follows is, “What jobs are substantially related to a credit score?” This depends. As with most of the law, there is no clear answer, but I would argue that a substantial part of the position must involve maintaining company finances. For example, obviously a credit score is not substantially related to an applicant’s ability to perform the duties of a machinist. However, a credit score would likely be substantially related to the applicant’s ability to perform the duties of an accountant, i.e. paying bills, balancing a check register, etc. Therefore, obtaining a credit report in the latter situation would be warranted. Because the majority of jobs do not involve the management of company finances, I would estimate that most Washington companies obtaining credit reports as part of the hiring process are violating state law.
Prior to the economic crisis, I don’t think this topic would have generated much attention, and not even a blog post. However, times change and I anticipate that more states will follow Washington’s lead and adopt legislation regulating the use of credit reports during the hiring process.