Is it unethical—or illegal—for a hiring organization to

Is it unethical—or illegal—for a hiring organization to check an applicant’s credit history? The Equal Employment Opportunity Commission (EEOC) seems to think so. It is suing Kaplan Higher Education Corporation for its use of credit checks, alleging that relying on poor credit histories to reject applicants has adverse impact on minority applicants, with no legitimate purpose justifying its use. Justine Lisser, an EEOC spokesperson, said, ‘Credit histories were not compiled to show responsibility. They were compiled to show whether or not someone was paying the bills, which is not always the same thing.

In its defense, Kaplan maintained that it typically conducted credit checks: The checks are job-related and necessary for our organization to ensure that staffing handling financial matters, including financial aid, are properly screened.” However, research indicates that credit scores are not correlated with workplace deviance.

A 2011 survey of employers revealed that 21 percent conducted credit checks on all applicants. That was up from 15 percent the year before. Two-thirds conduct credit checks on some applicants, up from 61 percent in 2010.

Joey Price, with BL Seamon, thought she had found the perfect candidate for a conference planner position. The candidate was fresh out of college but had experience planning conferences and a good academic record. But when Price found out she had multiple car repossessions, extremely high credit card bills, and collection agencies after her, she rejected the candidate. ‘A credit report doesn’t lie,’ Price said.

Some employers choose to disclose their reasoning to applicants rejected for poor credit. Says one hiring manager, if a credit check comes back poor, the potential employee has a week to dispute and correct the errors.” What are the advantages and disadvantages of such a policy?