Legislative Update: No More Credit Checks in Hawaii?
Legislators in the state of Hawaii have drafted a bill that would prohibit employers from using credit reports when conducting employment background checks, similar to the proposed legislation in Connecticut (House Bill #5521).
The stated purpose of Hawaii House Bill 31 is "to protect individuals from discriminatory employment practices by making it unlawful for an employer to refuse to hire or employ, or to bar or discharge from employment, or otherwise discriminate against any individual because of an individual's credit history or credit report."
A similar measure was proposed and nearly passed into legislation in California last year, until Governor Arnold Schwarzenegger vetoed it. The argument against this legislation is the same argument that can be made for the Connecticut bill. In rejecting the bill Gov. Schwarzenegger said, "This bill would significantly increase businesses' exposure to civil actions over the use of credit checks. Further, the bill would increase administrative costs to those employers who must legitimately use credit reports as a screening tool by requiring that the employer first abide by its onerous requirements. California employers and businesses have inherent needs to obtain information about applicants for employment. The bill would become a new employer obstacle to the use of available information needed to make hiring decisions."
If you are on the fence on this one, just remember the law of unintended consequences. Let's say that you are considering hiring a Chief Financial Officer and you no longer have the ability to conduct a credit report. The credit report might have revealed that this individual had several liens and judgments and that they owed more money than their salary could provide. In short, the credit report would have revealed a lack of personal responsibility on behalf of the candidate. Now that candidate has unfettered access to your organization's financial records, bank accounts, etc. What that person does in anyone's guess? Is it worth the chance? Now let's expand that out to a bank employee or IT person. Both have access to a significant amount of customer money and data. Still on the fence?
If you are an employer in the state of Hawaii and believe that this will have an adverse affect on your business, I encourage you to contact Jon Karamatsu and, or Robert Herkes.
Article by, Nick Fishman and courtesy of EmployeescreenIQ
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