Guest blog: what’s wrong with pre-employment credit checks?

In these days of higher unemployment and tougher competition for jobs, a disturbing trend is beginning to emerge in which potential employers ask candidates to submit to various checks as part of the interview process – drug tests, police checks, credit checks. Yes, credit checks.

One might ask what someone's personal finance has to do with their ability to do a job and why a credit check is necessary. The rationale goes that if someone fails a credit check it means they are more likely to have been in financial trouble, which may make them more likely to steal money from the company, thus credit checking potential employees is safeguarding the company from potential loss.

To put it another way, credit checking is a method for screening out people who may have motivation to be dishonest. Not people who have been dishonest, mind you.


Agree or don't get the job

This is not illegal. In New Zealand, it's not even regulated yet. I believe it's a practice that's been inherited from the US, and I can't help but notice that the information used to advise employers that this is a good idea often seems to come from those who get paid to do the checks. For most positions which have little direct financial risk to the company, and for most people who are basically honest, this practice is pointless.

But worse, it's an invasion of privacy, and it's one that puts jobseekers between a rock and a hard place. Either they submit to the credit check, or they get automatically screened out because a refusal indicates to employers that either they have something to hide, or they are a troublemaker – neither of which are desirable traits in an employee. So people give consent to credit checks as part of the interview process.



The ratchet effect

I am very concerned about the increasing screening of jobseekers based on their willingness to consent to various checks, and even more concerned about the lack of moves from the government to protect workers from these coerced breaches of privacy.

In an abusive personal relationship, the one with the power pushes the boundaries of the other, gradually overstepping them in ways that seem logical, making sure it's never far enough so the victim can justify refusing to allow it, giving rationalisations for why they should allow it, making sure there are larger negative consequences for refusing than there are for allowing their boundaries to be breached. This is how abusers 'groom' their victim until the victim will allow whatever treatment the abuser chooses to dish out because they can no longer judge what behaviour is OK to accept, and cannot stand up for themselves when it's not OK.

In my opinion, this is what's happening with this credit check business. There's a relatively plausible rationale for it. It's an invasion of privacy, but it's one the victim has to give consent to. Never mind that the 'consent or no job' factor makes it into a coercive situation – you give consent therefore it's legal for potential employers to poke around in your financial history. Or drug test you. Or check your police record.

People are becoming ok with this growing list of checks done on them so that they can go shuffle paper in an office. They are losing track of where their boundaries are. And in an economy of growing unemployment where competition for jobs is getting tougher, the human rights abuses people are willing to consent to so they can work are expanding.

How far will we allow this to go before we stand up and go "Oi! This isn't right!"? Because frankly, the government isn't going to.

A related case note from the Privacy Commissioner.