As discussed in part I, an increasing number of employers are conducting some form of pre-employment screening on job applicants. Employers are researching not only a candidate’s educational qualifications and prior job history, but also a candidate’s criminal history, credit history and online presence. At the same time, the Equal Employment Opportunity Commission (EEOC) and various states have begun scrutinizing the legality of some of these practices.

Part I of this article covered issues to consider when conducting criminal background checks. Part II discusses three other pre-employment inquiries that have received increased attention from the EEOC:

  • Credit checks
  • Investigations into an applicant’s online presence
  • Inquiries into an applicant’s current employment status

Credit checks

Along with criminal background checks, more employers are conducting credit checks as part of their usual pre-employment screening, with little thought given to the necessity of the credit check. Recently enacted laws, however, may limit an employer’s ability to conduct credit checks for all employees, absent a clear necessity.

As of August 2011, six states have laws prohibiting or limiting the use of credit data for employment purposes: Connecticut, Hawaii, Illinois, Maryland, Oregon and Washington, with varying exceptions based on the employer’s industry or the specific job. Seventeen other states are considering legislation that would limit or prohibit the use of credit histories in employment decisions: California, Colorado, Florida, Georgia, Indiana, Kentucky, Michigan, Missouri, Montana, Nebraska, New Jersey, New Mexico, New York, Ohio, Pennsylvania, Texas and Vermont. Most of these laws would prohibit employers from relying on credit histories to deny employment or make decisions regarding promotion and termination, although most provide exceptions if the information is substantially related to the job position or if otherwise required by law. Employers should continue to consult applicable laws in the jurisdictions in which they operate.

There is also a federal bill pending, the Equal Employment For All Act, which would restrict the use of credit reports by employers. If passed, the bill would amend the Fair Credit Reporting Act and restrict companies from performing credit checks for employment purposes with limited exceptions, including certain positions with financial organizations, government agencies or ones requiring national security clearance.

Finally, the EEOC is scrutinizing the use of credit checks in employment. In October 2010, the EEOC held a public meeting regarding their potential disparate impact , taking the position that credit checks should be job-related and consistent with business necessity. For example, a credit check may be okay for an applicant who is applying for a position with a bank where he or she will be handling large sums of cash. However, according to the EEOC, it is never okay to subject all job applicants to a credit check, regardless of position. It is anticipated that the EEOC will issue guidelines regarding employer use of credit checks for employment decisions.

As an example of its increased scrutiny of employee credit checks, the EEOC filed suit against Kaplan Higher Education Corporation in December 2010, arguing the company violated Title VII by rejecting job applicants based on their credit histories. The EEOC contends Kaplan’s policy had an unlawful discriminatory impact because of race and was not job-related or justified by business necessity. That lawsuit is still pending.

Social media and the electronic superhighway

An increasing number of employers are searching a job applicant’s online presence, examining Google, LinkedIn, personal blogs, Twitter feeds and other related sites. In fact, a 2010 survey commissioned by Microsoft and conducted by Cross-Tab in December 2009 of U.S. recruiters and H.R. professionals reveals some interesting facts:

  • 75 percent said their companies have formal policies in place that require hiring personnel to research applicants online
  • 70 percent said they rejected candidates based upon information discovered online
  • 89 percent said it was appropriate to consider professional online data when assessing a candidate and 84 percent said it is proper to consider a candidate’s personal data posted online
  • 78 percent said they used search engines to research job applicants
  • 63 percent said they used social networking sites to research job applicants
  • 48 percent said they used personal web sites to research job applicants
  • 46 percent said they used blogs to research job applicants

Employers who conduct online background checks are likely to discover not just an applicant’s educational and professional background, but also information pertaining to the applicant’s race, religion, age, sexual orientation, national origin, political affiliation, disability status or medical information regardless of whether the employer specifically sought out such information. Even if the employer chooses not to hire the applicant for legitimate reasons, the mere fact the employer performed the search and viewed the results may be enough to cast doubt on the employer’s reason for the non-hire.

Employers who choose to cruise the electronic superhighway for information pertaining to job applicants should consider implementing several safeguards, such as:

  • Adopting a policy or formulating guidelines regarding the breadth and scope of online searches. Employers may decide to limit the search to particular items or time periods
  • Limiting searches based on the job position (i.e., only conducting searches for particular positions)
  • Separating online researchers from those making hiring decisions

Discrimination against the unemployed

Yet another aspect of pre-employment inquiries receiving increased scrutiny involves inquiries into the current employment situation of job applicants. As of August 2011, the U.S. Bureau of Labor Statistics reports that 9.1 percent of Americans are currently unemployed and 42.9 percent of them have been unemployed for more than six months. Moreover, the unemployment rate for African Americans is 16.7 percent and for Hispanics, 11.3 percent.

Although no federal law prohibits employers from inquiring into an applicant’s employment status or discriminating against unemployed individuals, the EEOC has turned its attention to allegations of possible discrimination against unemployed job applicants. It has received reports of job advertisements precluding those currently unemployed from applying and of employers rejecting unemployed candidates. As a result, the EEOC held a public hearing on the issue in February 2011. Among the testimonies that were heard was the argument that denying jobs to those already unemployed can have a disparate impact on certain minority groups, including those with disabilities. Although unemployment itself is not a protected category under Title VII, the EEOC could thus decide to focus its enforcement power on the unequal impact of such hiring practices.

As a result of the publicity over this issue, Congress introduced legislation prohibiting discrimination against the unemployed. To date, the Fair Employment Opportunity Act of 2011 remains in committee.

In addition to possible changes at the federal level, some states are considering legislation banning discrimination against the unemployed. New Jersey became the first state to prohibit the practice of excluding unemployed individuals in job advertisements. Specifically, New Jersey’s new law prohibits employers from “knowingly or purposefully” publishing a job advertisement requiring an individual to be currently employed or stating that an employer will not consider applications by unemployed individuals. Employers who violate the law may be subject to monetary penalties of $1,000 for initial violations, $5,000 for second violations and $10,000 for each subsequent violation. Notably, the law does not preclude employers from publishing job advertisements requiring current or valid occupational licenses, certifications or other credentials or a minimum level of education, training or professional experience. Several other states, including New York, Michigan and Illinois, are considering similar legislation.

As a result of this increased scrutiny and New Jersey’s recent enactment, employers should review job advertisements and employment applications and ensure the advertisements and applications do not preclude unemployed individuals from applying for open positions. Finally, employers should review hiring procedures to ensure equal treatment of unemployed applicants during the hiring process.


Employers who conduct criminal background checks, credit checks, investigations into an applicant’s online presence and inquiries into an applicant’s current employment status during the pre-employment screening should be mindful of the numerous federal and state laws governing the process. They are advised to consult counsel before making employment decisions based on this information to ensure compliance with all applicable laws.