Credit checks: Ohio proposal would protect workers, job applicants

If a bill currently before the Ohio Senate gets passed this year, employers will no longer be able to do what Kathy Lott-Gramkow had done to her by an employer about 11 years ago.

"When Hills changed to Ames, I was a manager there and they ran credit checks on us. It's not a new thing. Going into a new company, I understood why they did it," she said. "I had good credit, but I kind of felt like, 'Oh no, if it's not good enough, will I lose my job?' But I could do the job and was doing the job."

At the time, Lott-Gramkow, now the director of employment and training at Washington-Morgan Community Action, felt like the credit check was an invasion of her privacy.

Others apparently agree.

Sixteen states, including Ohio, have proposed outlawing most credit checks for prospective employees. Some lawmakers say the practice traps people in debt because their past financial problems prevent them from finding work.

Ohio Senate Bill 91 was introduced in April 2009 to ban credit checks on most job applications. It would make an employer who uses a person's credit rating or score or consumer credit history as a factor in whether to hire or retain that person subject to a civil penalty.

Under federal law, prospective employers must get written permission from applicants to run a credit check on them. But consumer advocates say most job applicants do not feel they are in a position to say no.

A recent survey by the Society for Human Resources Management found that 60 percent of employers said they run credit checks on at least some job applicants. In 2006, a somewhat similar survey found 42 percent of companies did the same thing.

Lott-Gramkow said of the many people coming into Community Action looking for help finding jobs, none have said they were turned down based on a credit check.

Mike Huggins, 36, of 865 McGill Road, Vincent, said he's never had a credit check performed on him for a job, but he'd likely bristle at the suggestion if it was required by a potential employer.

"I think it's an invasion of your privacy," said McGill, a supervisor at an area retailer. "They don't really need to know that.

"I guess it would probably depend on the position you were applying for. As a cashier, if you had bad credit you might be tempted to take some money," he said. "If it's just an average floor position, I don't see why it's anyone's business."

Charlotte Keim, executive director of the Marietta Area Chamber of Commerce, said she's not aware of any local businesses that perform credit checks, aside from those in the financial services industry such as banks or financial planners.

"I have mixed feelings about it," she said. "I can see in some industries, particularly any that has a fiduciary responsibility, you would want to know that (the prospective employee) could handle their own money before they handle somebody else's. But I also understand people want their privacy."

Randall Perry, stockholder at Perry & Associates CPA's A.C., of 428 Second St., Marietta, said new hires in the accounting side of the business aren't subject to credit checks, but someone working on the security end of the business would be.

"As a general rule, the firm here does not (perform credit checks)," he said. "In the security business, which would be River City Financial Services, the brokerage would require credit checks for licensing."

Perry said the checks are required by a federal regulatory agency.

Even though more companies are using credit checks, only 13 percent perform them on all potential hires, according to the Society for Human Resources Management's most recent survey. Mike Aitken, the group's director of government affairs, said a blanket ban could remove a tool employers can use to help them make good hiring decisions.

Aitken pointed to a 2008 survey by the Association of Certified Fraud Examiners that found the two most common red flags for employees who commit workplace fraud are living beyond their means and having difficulty meeting financial obligations. The same survey estimated American companies lost $994 billion to workplace fraud in 2008.

Aitken said someone who cannot pay his or her bills on time may not be more likely to steal, but might not have the maturity or sense of responsibility to handle a job like processing payroll checks.

Jennifer Offenberger, director of marketing and public relations for the Memorial Health System, said Washington County's largest employer doesn't use credit checks when looking at job applicants.

"We believe that criminal background checks are a much better evaluation of a person's fit for our organization," she said. "Credit checks don't give you the proper information to determine fit."

The Associated Press contributed.