A bill is scheduled to reach Governor Arnold Schwarzenegger's desk which deals with narrowing the category of jobs for which employers could investigate the financial background of applicants in the state of California. Those would include positions in which employees would have access to large amounts of cash, valuables, or confidential financial information.  Even more positions such as managerial and law enforcement jobs fall under such a scenario. In these situations there may be some correlation between a history of poor financial choices and the ability to do certain jobs. However the reality is in today’s economy, the usefulness and practicality of this information is declining and at the same time employers’ use of it as a hiring tool seems to be increasing.

The federal government routinely requests credit checks for employees while hiring. But government workers aren’t the only ones whose credit histories are being scrutinized. Anyone who has had trouble paying bills could find an additional headache as employers use credit information to help decide whom to hire, fire, or promote.

Employers are increasingly using credit checks for screening candidates that apply for jobs. Credit checks, though not being a new tool for employers, but are currently posing hindrances for job seekers trying to find jobs in a recession. In today’s economy, when people are losing jobs and struggling financially, screening them on the basis of credit checks is taking the additional step of punishing them further by not giving them the job. If you are poor and have poor credit, you are taken out from a host of jobs. Unemployed workers are more likely to have suffered some downgrading of their credit score due to a loss of income; hence reliance on credit reports as a factor in hiring decisions might adversely impact those most in need of a job.

While companies feel that credit checks are a way to help verify that candidates are responsible and trustworthy, critics feel that this practice of screening people just on the basis of their credit score can lead to overlooking other factors in the candidate’s resume.  This can potentially leads to the loss of good candidates. Reports show that credit checks have not turned out to be a good predictor of workplace theft. A better predictor is scrutinizing criminal history involving charges of fraud or theft.  Also, credit reports at times can be inaccurate and correcting mistaken information is a tedious and time-consuming process that is not quickly reflected in reports.

The policy of credit checks is further criticized because it interferes with the privacy of the job seeker. Credit reports do not have predictive value in determining a worker’s ability to perform job duties, but a bad credit report might unfairly influence an employer’s attitude toward a job applicant. An employer should not have any right to obtain confidential information that is not pertinent to a prospective employee’s job. Studies have also found that there is little connection between credit history and job performance. Also the policy of credit checks is said to be disadvantageous to minorities, women, and immigrants.

This recession has rendered hundreds of people unemployed for months who are about to lose their cars, homes, and other possessions. Many cannot even fund their children’s education and are trying desperately to find a job. It is unfair to reject otherwise qualified applications based on their credit history  When unemployment in California is in double digits and employers are getting hundreds of applications for one job opening, people do not even get a chance to explain their poor credit report and instead get out rightly rejected. This bill  if signed might be a beacon of light for many distressed California job seekers while also protecting the privacy of California workers.