Credit checks, holiday pay and FMLA

Q: Since we have been doing background and reference checks, the quality of our hiring has improved and our turnover rate has dropped. My boss wants to add credit checks to our process, but I’m not sure that’s a good idea. Is that likely to help, and are there any precautions to be aware of?
A: There are certainly precautions. In today’s litigious society and workforce, you need a good business reason to do anything. There are no acceptable data establishing that someone’s credit rating has a direct correlation to their work performance. Unless the job you are filling is directly related to a credit rating, you should not pursue it. For example, if you are recruiting for a vice president of finance, then the credit rating may be pertinent.

If the person you are hiring will be officially representing your company in a public relations capacity or as a financial consultant to you or your clients, the credit rating might be pertinent. If the individual’s reputation, financial standing or credit rating is a significant factor in the performance of the job, then the rating may be pertinent.

But, if you intend to do credit checks, recognize that by doing so you are assuming the role and legal responsibility of a bank lending money or merchant selling products.

You are required to obtain the individual’s consent and provide him or her with a copy of your findings. If you reject the application based on the credit check, you must then allow him or her an opportunity to respond and appeal the results.

You are also required to at least reconsider your decision after the process is complete. There have been several Equal Employment Opportunity Commission (EEOC) charges as a result of candidates being rejected based on the results of their credit checks.

Credit rating, in spite of what the banks say, is not a clear sign of character. If it’s not job related, don’t do it.

Bill Cook, Human
Resource Associates,
PLANET HR Consultant

Q: One of our employees had to service a customer on the holiday. Does he get paid overtime and, if so, at what rate?
A: No, he doesn’t get paid overtime on the basis of it being a holiday.

The laws requiring holidays only apply to government employees. As a private employer, you are not required to provide holidays at all.

If you do provide paid holidays and an employee works on that day, you are only required to pay the employee’s normal pay.

However, if he works more than 40 hours in your workweek, the Federal Labor Standards Act (FLSA) requires you to pay overtime at one-and-a-half time.

In that holidays are the most undesirable days of the year for most employees to work, the national norm is to pay the employee for the holiday and to also pay for the hours worked; that is, double time.

Bill Cook, Human
Resource Associates,
PLANET HR Consultant

Q: I have an employee on FMLA leave (Family and Medical Leave Act). The holiday occurred during her leave. Should she get paid, not paid, or does it even count as FMLA leave time?
A: The holiday has no impact and does not change the FMLA count of days on leave. The entire week is counted as FMLA leave.

However, there are some exceptions. If the place of business is closed for at least one week and employees are not required to report that week, then the week does not count toward the FMLA leave.
 
The idea is that the employee is not missing work and there is no work being scheduled, so no leave is being granted or used.

In addition, if the employee is using the FMLA leave in increments of less than one week, then the holiday does not count toward the FMLA leave unless the employee was scheduled to work on that holiday. (Note: The federal requirement to provide FMLA only applies to companies with 50 or more employees.)

Bill Cook, Human
Resource Associates,
PLANET HR Consultant