Can Arizona Employers Use Credit Checks When Making Hiring Decisions?

Are employers allowed to use a credit report when making a hiring decision in Arizona?hiring

The short answer is, as of January 2015, yes. However, as is the case with many aspects of pre-employment background checks in Arizona, the full answer is a bit more complicated.

As it currently stands, neither Arizona law nor federal law prevents a company from considering an employee’s credit history when conducting a background check in conjunction with potential employment. The Fair Credit Reporting Act, which governs “consumer reports” including credit reports and pre-employment background checks, places the following restrictions (and many more) upon employers:

  • The employer must have the applicant’s consent before obtaining a credit score.
  • If the credit report is a factor in a negative hiring decision, the employer must then disclose that such information was used against the applicant.
  • The applicant is then afforded several avenues of redress that can be viewed here.

In addition to these restrictions posed by federal law, several states have also passed laws governing the use of credit reports in the hiring process. As it stands now, 10 states have either banned or limited the use of credit reports for hiring. However, Arizona is not currently one of these states (in fact, proposed legislation to further limit credit check in the Arizona hiring process recently failed).

In light of these above mentioned restrictions – and, it should be known, that was the crudest of overviews and should not be substituted for legal advice – there are a few common sense principles to keep in mind when using a credit check for hiring purposes in Arizona.

  • Is the applicant qualified in all other respects for the job? If not, don’t request a credit check. If another “red flag” would prevent you from hiring an applicant, it is not logical to expose yourself to potential liability by requesting a credit check.
  • Consider the relative value of knowing an applicant’s credit score – Do they handle large sums of money or have access to confidential financial information? If not, their credit is likely irrelevant and tangential (at best to their employment).

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