Here’s a case I hope you find interesting. It sure seems curious to me.
In 2006, Mark’s Work Wearhouse in Alberta started running background credit checks on employees looking for work at the clothing store. Not criminal record checks; not general reference checks; credit checks.
Last Friday, Christina discussed the difficulties that employers go through when they approach reference employers to do background checks on prospective employees. Employers might very well want to know about those difficulties, because it’s reasonable for them to look for information that is relevant to a potential employee’s performance in a particular job.
It’s more difficult to justify collecting credit information on candidates or employees, at least when the job in question is middle-of-the-road retail. Mark’s seems to have missed this little fact until it faced a complaint to Alberta’s Privacy Commissioner. Performing background checks on prospective employees’ credit runs counter to the province’s Personal Information Protection Act, which applies to private sector businesses in the province.
Of course, the retailer defended its practice, saying:
Credit history information can provide insight into an applicant’s tendency to meet financial obligations as well as his or her current financial pressures. The way in which individuals handle their own funds can often be a reflection of how they will handle the financial responsibilities and tasks associated with their employment duties.
[Sales Associates] at Mark’s are often in a position to handle cash while completing merchandise transactions and … may also have access to the store safe, security codes, petty cash and the store itself during off hours.
In other words, the company wanted to avoid hiring Sales Associates it thought would be more likely to steal. While this case isn’t a human rights decision, I think Mark’s should have seen a problem right there. Maybe they should have asked why similar companies aren’t doing this sort of loss-prevention.
The Privacy Commissioner disagreed with the company’s defence, finding no reasonable connection between an individual’s personal credit information and her or his ability to perform the duties of a Sales Associate. Mark’s simply failed to provide a reasonable connection between its collection of the credit information and its purposes for collecting the information.
Thus, the commissioner recommended that Mark’s Work Wearhouse stop conducting the pre-employment credit checks, which it did.
Organizations must remember that they may only collect personal information for reasonable purposes. What I found curious is that Mark’s—or their lawyers—didn’t recognize that the company’s credit-check practice was questionable at best. Maybe it’s not so obvious, but it seems pretty clear to me that credit information cannot form the basis of a hiring decision (except in very specific circumstances).
What do you think—should employers be allowed to conduct background checks on prospective employees’ credit? Does a person’s credit record say anything about her or his ability to perform a job securely? Or is the idea simply discrimination under a different guise?
Also, if you don’t want to get caught in a similar scenario, here are some other—legal—things you can do about employee theft.
First Reference Human Resources and Compliance Assistant Editor