Can an employer ask about an applicant’s criminal history or financial condition?

Questions about criminal history or financial history can put employer’s in hot water because minorities are often disparately affected by these screening questions. Thus, an employer who screens applicants based on their criminal record or financial condition can run afoul of Title VII.

When it comes to criminal history, there is an important distinction between arrest records and conviction records. A person who is arrested is presumed innocent, but a person who is convicted is not. Because of this distinction, employer requests for an applicant’s arrest record or conviction records are treated differently in the hiring process.

Generally, requests for an applicant’s arrest record may be unlawful unless the employer inquires for a legitimate business purpose, uses the record only as basis for further inquiry, and doesn’t base the hiring decision only on the arrest record. For example, automatically excluding any applicant has been arrested is a violation of Title VII because minority groups are more frequently arrested and such an automatic disqualification would disproportionately affect minorities. Even requesting such information can be unlawful because it would discourage applicants with arrest records.

On the other hand, an employer may ask about an applicant’s conviction record if there is a connection between the job requirements and criminal history. For example, an employer could request an applicant’s conviction record for a job as a security guard. Further, some employers are required by law to request an applicant’s conviction record. These include nursing homes, personal care facilities, adult day care facilities, and school districts. However, like with arrest records, employers cannot automatically exclude every applicant with a conviction.

Similarly, questions about financial condition used to screen applicants can disproportionately affect minorities, and thus violate Title VII. For example, an employer cannot ask whether an applicant has had his wages garnished because more minorities have been subject to garnishment proceeding that have non-minorities. Similarly, an employer cannot discriminate against a person who has filed for bankruptcy or is in the process of doing so.

While an employer may violate Title VII by basing hiring decisions on credit references, an employer may also fail to meet the requirements of the Fair Credit Reporting Act (FCRA). The FCRA limits how employers can obtain and use credit reports and investigative consumer reports in their hiring process.

A credit report is a summary of a person’s credit history, and before an employer can request one it must provide the applicant with a clear and conspicuous disclosure that a credit report may be obtained for employment purposes, and it must get the applicant’s written permission for the report. An employer can use the credit report to refuse to hire an applicant, but it must give the applicant notice of its refusal to hire, the contact information of the consumer reporting agency, notice of the applicant’s right to a free copy of the credit report, and notice of the applicant’s right to dispute the accuracy of the report with the reporting agency.

An investigative consumer report is a description of a person’s credit-worthiness and reputation and is based on interviews with people who know that person. To get an investigative consumer report, an employer has to notify an applicant, within three days of requesting the report, that the applicant will be the subject of an investigative report, and must inform the applicant of his right to obtain all of the information listed in the report. If the applicant makes a written request, the employer must disclose the information in the report within five days from receiving the applicant’s request.