It is important to our team to educate our clients and ensure they have all the necessary information available to them. Recently, we have been asked about a credit check in Canada, and whether this is something that occurs during the job hiring process. Today, let’s dive a bit deeper into the subject.  

While not all companies will conduct a credit check, employers are able to check one’s credit with your permission, subject to restrictions imposed by applicable privacy laws

According to a 2018 report sponsored by the National Association of Background Screeners (NAPBS), 16% of companies pull credit or financial checks on all their job applicants and almost one-third of employers do an employment credit check on some candidates.   

What most people are concerned about, and should be aware of, is the information that is available for employers. Loans Canada outlines the following details most employers can see:  

  • Payment history: missed and on time payments  
  • Credit history: accounts you have opened and when, the amount you owe, credit limit overages and debts  
  • Credit inquiries: who has requested your report within the last three years  
  • Public records: bankruptcy or court decisions related to your credit  

Credit checks are most used if hired in a position where you will oversee money. Depending on the specific employment circumstances, employers may check your credit history to determine if you are trustworthy, reliable, financially responsible, and organized. According to Loans Canada, “If you work in the financial sector, be prepared to have a credit check performed on you. The financial sector includes industries such as banking, insurance, finance, and accounting. Essentially, any job that involves money will involve consideration of an employee’s financial capabilities, which is why an employer may do a credit check.”   

In January of 2018, Public Services and Procurement Canada (PSPC) implemented mandatory credit checks, or financial inquiries, as part of its personnel security processes.   

While an employer may not hire you because of your credit history, it is important to remember that not all employers will do a check. As mentioned earlier, they are common in finance positions and in certain government settings. Also, your credit cannot be checked without your authorization. Therefore, ensure you understand what is entailed before doing so. If you happen to have issues with your credit history, and work within one of the sectors where credit checks are reasonably necessary, you may consider being open and honest with your potential employer during the interview process.  

You can also request a copy of your credit report, which will show a list of those who have requested your credit report in the last year. This will include current, or prospective, employers who have requested it within the last two years. 

As referenced earlier, an employer’s ability to perform a pre-employment credit check is limited by applicable privacy legislation. 

We spoke with Ron Smith – Founder of Smith Labour & Employment Law, who shared his expertise with us. Smith explains that in Alberta, an employer may perform a credit check on a prospective employee if the purpose of collecting the credit information is reasonably connected to the duties of the position applied for or a larger business purpose. Information obtained through a credit search is personal information as defined under the Alberta Personal Information Protection Act (“PIPA”).  Collection of this personal information is prohibited by PIPA unless an employer can establish that such information is reasonably necessary to measure the applicant’s ability to do the job.   

Smith further explains that this means that for most jobs, a pre-employment credit check will be offside PIPA. Before collecting personal credit information an employer should determine the employment purpose for collecting the information and ask if the credit information will help achieve the purpose. If the answers to these questions are “yes” the employer should then examine if the employment purpose can be achieved by less intrusive means.  

Lastly, Smith states that the privacy legislation for each Province and Territory in Canada varies and for employers under the federal jurisdiction that The Personal Information Protection and Electronic Documents Act (“PIPEDA”) governs. Employers must assess their ability to perform pre-employment credit checks having regard to the specific requirements of the governing legislation. 

We greatly appreciate Smith’s advice on this topic, and for taking the time to further educate us.  

If you have questions or need assistance in navigating the job hunt process, contact our team today. We are here to help!