H. Checking References

The majority of states limit an employer's ability to make preemployment inquiries regarding criminal arrests and convictions beyond a certain number of years and restrict the use of such information. Some employers have been held legally liable to applicants for defamation, intentional infliction of emotional distress, and violations of the implied covenant of good faith and fair dealing when references are not investigated properly or are leaked to nonessential third parties. In one case, someone terminated from an insurance company several years ago discovered that his former boss, in responding to reference checks, had called him "untrustworthy, disruptive, paranoid, hostile, irrational, a classic sociopath." He sued, and a jury decided those characterizations were out of line, a mistake that cost the company $1.9 million.

Laws have been enacted to protect women in this area. For example, as a result of the 1990 Americans with Disabilities Act (ADA), the review and investigation of a person's medical history has been virtually eliminated. According to the Bankruptcy Code, no private employer may deny employment to someone who filed for bankruptcy or who is married to someone who has been or is bankrupt. Also, the EEOC has stated that refusal to hire candidates with poor credit (often minorities and women) is illegal since such groups are more likely to be unable to pay their bills and such a policy effectively excludes a class of applicant from the job market.

In the majority of states and under the federal Consumer Credit Protection Act, it is illegal for a company to fire a person being sued for the nonpayment of a debt or when the company is instructed to cooperate in the collection of a portion of the person's wages through garnishment proceedings for any one indebtedness. Enforcement of this federal law is tough and violations are punishable by a fine of up to $1,000 and imprisonment for up to one year. Discharge for garnishment for more than one indebtedness is not prohibited. However, such a policy may be restricted by Title VII of the Civil Rights Act of 1964 when it has a disproportionate effect on minority and female workers.

Tip:Under the federal Fair Debt Credit Reporting Act, employers are generally forbidden to use credit reports for hiring or employment decisions unless the job is security-sensitive or the financial integrity of the applicant is essential to successful job performance. If such a report is made, ask for a copy to be sure it is accurate, together with the name and address of the credit agency supplying it. This way you may immediately be able to explain important errors that sometimes need to be corrected on credit reports.