Gathering Info on Prospective Employees: What Some New Laws Mean

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When it comes to gathering information and conducting searches on prospective employees, changes in state laws make what you ask for and when you ask for it critical.

Criminal Histories
The city of Philadelphia recently passed legislation prohibiting employers from including criminal record history questions on employment applications and from making personnel decisions based on records of an arrest that did not result in a conviction.

Philadelphia joins the states of Massachusetts and Hawaii in crafting similar legislation, and states including New Jersey, Nebraska and Rhode Island, as well as other city governments, have similar laws pending.

The laws vary according to which employers can or when employers can inquire about criminal histories. The laws also vary according what information can be released and how that information figures into the hiring decision.

Background Checks
On April 12, Maryland’s governor approved the Job Applicant Fairness Act,the latest state law to regulate the use of credit history-related information by employers for employment purposes. The act takes take effect on October 1, 2011 and applies to all employers with some exceptions.

Some employers can and should conduct credit checks, but you need to verify state and local laws to determine if you are excluded from the law’s restrictions. Legislation (including the Fair Credit Reporting Act) potentially limits the access to a person’s credit history, plus, there are procedures to follow for requesting and evaluating credit history reports for hiring decisions. 

Action Steps for Employers

  1. Consult an attorney or HR specialist to review your employment application and to determine if you are subject to laws regarding criminal histories. See if you need to remove any questions regarding criminal histories and convictions.
  2. You can inquire about convictions (FINRA has listed this as a potential disqualifying event, but you need to check with your compliance department or broker-dealer), but you need to know when and how to ask about prior convictions. Check local and state laws on the use of and access to criminal records.
  3. Be careful you are not making decisions on arrests and accusations that did not lead to convictions.
  4. Careful consideration and review should be given to determine if an employer is covered by the law to conduct a credit check and if the performance of or type of job requires credit checks.

Mary Dunlap, CFP®
Mary Dunlap Consulting
Pottstown, Pa.

This article is for informative purposes only and is not to be construed as legal advice. You need to consult your experts, such as an attorney, to be aware of federal, local and state regulations.

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