Employers are often tasked with creating systems to reduce employee theft or fraud. Such systems can include many things including credit checks on potential employees. Recently, Mark’s Work Wearhouse in Alberta was stunned to learn that such credit checks weren’t permissible in the circumstances — even when a number of other measures had failed. As such, it agreed to stop conducting prehiring credit checks.
Facts
Faced with in-store theft or fraud, Canadian national retail chain Mark’s Work Wearhouse instituted a series of measures to deter employees. When other measures weren’t successful, it started collecting credit check information on its applicants.
When one applicant wasn’t hired as a sales associate, he made a complaint to the Alberta information and privacy commissioner that Mark’s Work Wearhouse was collecting personal information from applicants that wasn’t reasonable given the job requirements. In response, a delegate was assigned to conduct an investigation.
Investigation
In a previous investigation of a similar issue, another delegate in Alberta determined that a pre-employment credit check for a clerical position wasn’t reasonable. In that case, the employee wasn’t going to be directly handling cash.
Because an organization can usually successfully defend itself against this kind of complaint on the basis that harm exists and that it’s trying to ameliorate the harm in the least privacy-intrusive way possible, one would have thought Mark’s Work Wearhouse was on solid ground. There was harm – the in-store theft problem. The employee would have been handling cash. And Mark’s Work Wearhouse was able to show that it had taken less privacy-intrusive steps:
- since 1996-97, employees were prohibited from processing their own sales and from keeping large amounts of cash in the cash terminals;
- in 2003-04, all employees were required to acknowledge that they had received a security and crime prevention booklet and required to agree to abide by it;
- in 2005, it implemented a business conduct hotline and website for anonymously reporting issues including in-store thefts; and
- closed-circuit TV cameras were installed in the majority of corporate stores.
Despite the sales associates’ cash-handling duties, the in-store theft problem, and the less privacy-intrusive steps already taken, the delegate determined that:
- the collection of the credit check information was not reasonably related to assessing how applicants would handle financial responsibility and tasks associated with their duties as sales associates;
- a credit report may be influenced by outside circumstances unrelated to the ability to work as a sales associate;
- sales associates did not appear to have discretionary power over allocation of cash. All money handled by a sales associate was thoroughly documented and closely supervised by management; and
- there were less intrusive means by which to assess an applicant’s abilities, such as making inquiries with references about skills and past performance in a work-related environment.
The delegate wasn’t convinced that personal credit information reasonably evaluates employees’ likelihood to commit theft or fraud. In the three years since pre-employment assessment included the collection of personal credit information, there had been no significant decrease in the number of in-store theft or fraud cases. Needless to say, this wasn’t a helpful fact for Mark’s Work Wearhouse.
The delegate’s investigation concluded that Mark’s Work Wearhouse failed to establish any reasonable connection between collecting the personal credit information and its stated purposes for collecting the information. Therefore, the requirements of the Alberta Personal Information Protection Act hadn’t been met.
To resolve the violation, Mark’s Work Wearhouse agreed to stop collecting personal credit information from sales associate applicants as part of the hiring process.
