Three Hiring Practices That Should Be Illegal

Finding a job is hard enough these days, as evidenced by the stubbornly high unemployment rate in the U.S., which ticked up to 9% in April 2011, according to the Labor Department.

As if massive downsizing, intense competition for jobs and outsourcing weren't enough, American workers must also contend with misguided hiring practices that are prevalent in virtually every industry in the country.

Following are three unfair and inappropriate hiring practices that discriminate against millions of would-be employees, contribute to higher levels of chronic unemployment, and pose potential threats to job-hunters' financial security. All three of these misguided hiring practices should be illegal.

1. Discriminating Against the Unemployed

For well over a year, many employers nationwide have been posting job advertisements declaring that the "unemployed need not apply" and that job-seekers "must be currently employed." Other employers have indicated they'll only hire those who've been unemployed for fewer than six months.

Any requirement that job candidates already be employed unfairly locks out the country's 14 million unemployed individuals who may be looking for work.

Jobless rate for the past 13 months
Jobless rate for the past 13 months

This blatant form of discrimination also disproportionately impacts African-Americans, mothers who may be returning to the workforce and older workers -– all of whom have higher levels of joblessness. For example, the rate of unemployment for African-Americans now stands at 16%.

Fortunately, states and the federal government are starting to look at this disturbing trend of companies refusing to consider unemployed job applicants.

New Jersey just passed a law, which takes effect in June, which forbids employers from advertising job notices that indicate that the unemployed cannot apply. Violators face fines of $1,000 for the first offense and $5,000 for repeat offenses.

Also, the Equal Employment Opportunity Commission (EEOC) earlier this year conducted a forum on discrimination against unemployed job seekers. The EEOC hearing came in the wake of members of Congress urging the commission to investigate the issue.

With any luck, lawmakers will create federal legislation banning discrimination against unemployed Americans, which is exactly what's been introduced in the Fair Employment Act of 2011 now winding its way through a Congressional committee.

2. Employment-Based Credit Checks

I understand that employers want, and have a right to, conduct employment-based screening for potential new hires. But why do credit checks, where an employer reviews someone's credit reports from Equifax, Experian or TransUnion, have to be part of the process?

Isn't it enough to assess a candidate's job skills and work history, check out a person's references, verify his or her educational background, and conduct a thorough interview to determine their qualifications? It should be. Perhaps that's why several states in the U.S. now ban job applicant credit checks and more are eyeing the issue.

I've yet to see any study – empirical or otherwise – that proves that people with great credit are better employees than those with average or even bad credit, or that people with shaky credit can't be good employees.

And even if researchers did come up with such statistical proof, it hardly seems reasonable or business-savvy for companies to weed out desirable, skilled job applicants simply because they happen to have negative marks on their credit reports.

Still, according to the Society for Human Resource Management, 60% of all employers perform employment-related credit checks, either for some or all of their employees.

As many out-of-work Americans hard hit by the recession will attest, credit checks only make the process of finding work far more difficult.

If your credit is less than perfect, here's some advice to improve your credit rating and maximize your credit score.

3. Asking for People's Social Security Number Prematurely

Obviously, when someone is hired for a job, that person's employer will need his or her Social Security number to process their paperwork. This helps companies and individuals accurately report taxes, and comply with IRS rules and other federal regulations.

But employers should be prohibited from asking for people's Social Security numbers until after an individual has been hired. Otherwise, job candidates are put at unacceptably high levels of risk for identity theft.

Identity theft, which affects nearly 10 million people annually in the U.S., is one of the fastest-growing white-collar crimes in America. And one of the most common places where it occurs is in the workplace.

I'm always amazed at the number of people and places that ask individuals for sensitive information or personal financial data. Prospective employers, unfortunately, fall into this category, too.

Consider the job-hunter who has applied for dozens of jobs. He or she has filled out scores of electronic or paper applications. If a job candidate has to give out her Social Security number to many dozens of companies – or even just a handful – this important information is floating around far too many places, increasing the person's chances of having her sensitive data compromised.

To diminish this risk, a job candidate should only be required to provide her Social Security number once she has a firm job offer in hand – and has accepted that offer. (Whether you're job hunting or not, read up on some tips to avoid having your identity stolen.)

I shudder to think of the Catch-22 facing the person who's already been victimized by identity theft and is looking for work. Strike 1.

That individual may now have bad credit – due solely to the havoc wreaked by a identity thief – which limits his or her job options. Strike 2.

Consequently, this jobless person may be unfairly screened out from applying for or receiving any number of jobs, making him or her more likely to continue being jobless for a prolonged period of time. Strike 3.

What a mess.

If federal authorities made these three misguided hiring practices illegal, it would help curb workplace discrimination, lower the unemployment rate and provide greater financial security for struggling job-hunters.