applicant credit report

Can an Employer Refuse to Hire Based on an Applicant’s Credit Report?

Recent economic downturns have resulted in many Americans falling short on income and missing one or more payments to creditors. Unfortunately, late or missed payments on a credit report can negatively impact purchasing power and income-earning opportunities.  Sanctioned by the Fair Credit Reporting Act, the use of credit reports to gauge potential and current employees’ trustworthiness is a growing practice. However, this trend works to the detriment of otherwise qualified and trustworthy workers who experienced hardships due to an uncertain economy. Therefore, it is unfair for an employer to refuse to hire an applicant based on their credit report.  

I Have Bad Credit, Live in Washington, and Need a Job

In most cases, employers try to comply with state and federal laws when seeking to fill open positions.  However, understanding your rights and the rights of employers in Washington is essential when you are looking for a new job.  While Washington employers are generally prohibited from conducting background credit checks on new-hires and established employees, some situations may warrant running a credit report. If you are applying for positions that require a credit check, review your credit report and challenge any errors early in your job search to avoid last-minute hiring complications.

When Can a Washington Employer Check My Credit Report?

Washington is one of ten states that limit the use of background checks by employers.  

Under RCW 19.182.020, Washington employers are generally prohibited from accessing credit reports of employees or employment applicants for hiring and promotion purposes. However, exceptions apply where information contained in a credit report may significantly relate to the employee’s duties, such as in financial asset management and public safety. In these instances, strict compliance with federal FCRA regulations is still required, beginning with obtaining an applicant or employee’s legal written consent before conducting a credit check. 

The Federal Fair Credit Reporting Act (FCRA)

The FCRA governs employers’ use of credit information when considering a prospective or current employee for hire or promotion. Under FCRA guidelines, employers must:

  1. request written permission from the employee or applicant authorizing the credit background check, 
  2. send a pre-adverse action notice based on information contained in the report, and
  3. allow the prospective or current employee an opportunity to contest errors contained in the report.

The FCRA does not restrict employers from denying employment or promotions based on credit report information, even if the report contains errors. If you are denied employment or promotion by an employer based on your credit report, the employer must provide:

  1. a copy of your credit report,
  2. a “Summary of Your Rights Under the Credit Reporting Act,” and 
  3. a final Adverse Action Notice. 

When seeking work or anticipating a promotion, it is wise to pull your credit report in advance and carefully review it for inaccuracies. You have the right to challenge any errors and should do so as soon as possible. 

How Can A Washington Employment Law Attorney Help You?

If you have been unfairly subjected to a credit history check or were wrongfully denied employment or promotion based on an unwarranted credit check, you may have legal recourse.  An experienced Washington employment law attorney can provide a comprehensive case analysis and explain your legal rights. If your rights were violated, you might have grounds for a legal claim. Contact our office today to speak with a qualified employment law attorney.