Employee Credit Check Laws & Guidelines

Posted on 03.07.2015

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An employer may perform a credit background check on an employee or potential employee if the employer intends to use the information for employment purposes such as for granting new employment positions, promotions for existing employees or for duty reassignment, or for or determining continued employment for existing employees.

Any credit background check run on potential employees should only be run subsequent to a conditional offer of employment that has been given to the prospective employee in print. The reason behind the suggestion to make a conditional offer in writing is that non-financial data regarding the job candidate may be uncovered during the credit background check process and some of this data may be safeguarded against discrimination by provincial or federal law and if a decision is made to not employ the person in question, the employer could become subject to legal liability.

Completing a credit background check exclusively when a determination has been made to promote or to make a decision about retaining an employee should be the only instance in which a risk is taken when running such a check due to grave liability issues. Prior to running a credit background check, the Consumer Reporting Act binds an employer to provide written notice to any job applicant or existing employee that the company anticipates running a credit check on them.

If asked by the subject of the credit background check, the employer must furnish the subject of the report with the name and address of the consumer reporting agency providing the report. However, with regard to Ontario businesses, an employer may perform a credit background check on anybody employed with their company or who has applied for employment with their company for any position without provision as the Ontario Human Rights Code does not prohibit refusal to hire a prospective employee as a result of an undesirable result when checking their credit history.

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