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Bad Credit Report & Employee Dismissal

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Question: 
The bank I am presently employed at pulled a credit report on me before they hired me. Unfortunately, since my date of hire, I have had financial difficulties, and my credit is ruined. My supervisor just informed me they are going to start to do annual credit reports on employees. Is it possible for them to terminate me? I started here February 26, 2003 and received "Employee of the Month" in August. I know they are very happy with my performance here, so the only thing I'm worried about is my ruined credit. Any information you can give me regarding this matter would be greatly appreciated.
Answer: 

Under the federal Fair Credit Reporting Act, an employer may obtain a consumer credit report on an applicant, but only with the consent of the applicant. The question does not state whether you gave consent. If you did, the bank was allowed to obtain the report; if you did not, it was not. The whole issue may be moot, however, because the bank did hire you.

The bank can use the credit report in making its decision whether or not to hire an applicant. However, if the bank relies on the credit report to decide not to offer a position to the applicant, then it must so inform him or her. (The credit reporting agency may also have the same obligation.) The credit reporting agency has a duty to take care that its reports are accurate. You have a right to a copy of the report and to correct any misinformation.

Under federal law, I do not believe that an employer is allowed to obtain annual credit reports on employees, except in two situations: one, if the employee is being considered for another position (e.g., a promotion) or two, for purposes of making a loan to the employee. I would have to have more information and do some research, but I do not believe an employer may simply obtain credit reports on employees, except for a reason permitted by the statute.

The questioner asks whether it is possible for the bank to terminate him on the basis of his credit report. Again, a definitive answer would require more facts and perhaps some research, but I do not believe the bank could terminate the employee on the basis of his credit report. I say so for three reasons: one, having already hired him, despite knowledge of the credit history, I think the bank would be hard-pressed to fire him now; two, dismissing the employee on the basis of a credit report may well be "wrongful discharge in violation of public policy." Third, before taking an adverse action against an employee (and dismissal is certainly an adverseaction) under the Fair Credit Reporting Act, the employer must notify the employee and give him an opportunity to correct any mistakes, etc.

Finally, this answer does not take into account state fair credit reporting statutes. Under the law of the state in which the employee lives, he may have additional protections.

First published on BankersOnline.com 12/1/03

First published on 12/01/2003

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