Credit Checks Would be Illegal in Hiring

Bill Haight has, and always will, write from a business perspective – from running a business to thinking about relationships between vendors and customers. He also has flights of fancy – from airplane rides to taxi tour – the many ways he uses to better understand the fabric of his beloved Madison.

A bill now being debated in the Wisconsin Assembly would prohibit employers from using an applicant’s credit history in hiring decisions. (Assembly Bill 367).

Like most laws that come between employers and employees, this has lots of reasons to be scrapped.

Employers take huge risks in making any hire. Existing laws already open an employer to legal repercussions over discrimination, workplace harassment, wage and hour disputes and who knows what else a disgruntled employee might come up with. The safest course is to hire no one. If more help is really needed, hire very, very carefully. Consider only applicants with stellar work records.

That advice, unfortunately, works against young and inexperienced applicants. An employer who might otherwise be inclined to “give a break” to a less-than-blue-chip applicant has lots of reasons not to. This new credit-check prohibition would only reinforce that.

It’s legitimate for an employer to want to know how financially responsible a prospective employee is. To force them to close their eyes to credit records (or to pretend to) is a further government intrusion on what should be a free market decision between employer and employee. After all, the employee can take into account the financial responsibility of the employer when deciding whether to take the job.

Yes, I know, the employer is always presumed to have the strongest position and it’s always the employee who needs government protection, with all its bureaucratic expense and unintended consequences. But in reality, there are many small employers who really are not operating from a position of strength by any stretch. They don’t have the resources to stage a thorough and prolonged vetting of applicants and they can little withstand the consequences of a bad hire.

Hopefully employers will be reasonable and compassionate — but that should be up to them, not mandated by further government regulations.

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