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Firm Can Base Hiring Decision on Credit History of Applicant

November 26, 2001

Question: I have a problem that is ruining my chances of attaining suitable employment in the accounting field. I filed a personal bankruptcy that was discharged about 2 1/2 years ago.

The interviews go very well and it appears that I will get the position until I fill out the employment application. Most employers require a credit history check, and when they see that I have had a bankruptcy, I am disqualified.

I recently had a potential employer tell me I did not get the position because of my credit history.

Is it legal for a company not to hire a person because of his credit history? Should I bring this up in the interview before the potential employer does the credit history check?

--D.S., Corona

Answer: It is legal for an employer to research an applicant's credit history and make a hiring decision based on that credit record, especially if the position involves access to money or other financial information.

It probably would be a good idea to bring up your problem in the interview, so you have an opportunity to explain it rather than have your employer learn of your problem through a credit check

--Michael A. Hood

Employment law attorney

Paul, Hastings, Janofsky & Walker

Florida Firm Must Follow California Law

Q: I work for a major insurance company that requires employees to use their vacation or lose it.

Although this is illegal in California, we have been told this state's law does not apply because the company's corporate office is in Florida.

Is that true?

--M.W., West Los Angeles

A: If you work in California, even if your employer's corporate office is in Florida, California law must be followed.

California does not permit employers to adopt a "use-it-or-lose-it" vacation policy. If you have accrued your vacation, your employer cannot take it away, even if you don't use it.

However, an employer can refuse to allow you to build up additional vacation in the future until you use a specified amount of accrued vacation.

--Don D. Sessions

Employee rights attorney

Mission Viejo

Vacation/Sick Leave Reserve Policy Is Legal

Q: I work for an Orange County firm that lumps staff vacation and sick time into paid time off.

Recently, two of my co-workers have been denied time off by the office manager because they would not have had three to five days in reserve after being off.

This policy is not in the office policy manual, nor has it been applied uniformly.

Is it legal for my employer to require time in reserve?

--M.E., Laguna Beach

A: There is no law prohibiting an employer with such a policy from requiring employees to retain a specified amount of paid time off in reserve, although one wonders about the purpose of such a requirement.

There also is no law requiring that an employment policy be applied uniformly, but companies should do so. It is good for employee morale and reduces the risk of discrimination claims.

--Deborah C. Saxe

Management attorney

Heller Ehrman White & McAuliffe

Fixing Mix-Ups With Stock Purchase Plan

Q: Last year, our company initiated a stock purchase plan in which an employee who contributes to the plan during the year can purchase the company's stock at the end of the year at a discount. Employees who do not wish to purchase stock can let the company know before the deadline and get their contributed amounts returned.

I requested my money back and filled out the company's form before the deadline. Because of mix-ups in accounting and payroll, the company went ahead and used my contributions to buy stock.

Company officials admit their error but refuse to do anything to remedy the situation.

How can I get my money back?

--A.L., Los Angeles

A: I recommend you take a pragmatic approach to solving this problem.

If the current price of the stock is more than what you paid for it, for example, you can sell it and make a profit.

If the current price is the same as what you paid for it, you probably can still sell it and make a profit because most stock purchase plans give employees a discount of at least 15% of the value of the stock.

However, if the stock has gone down so much that the net proceeds (after sales commissions have been taken out) are less than what you paid, you should inform the company that you are going to sell the stock, demanding that the company reimburse you for any shortfall.

--Kirk F. Maldonado

Employee benefits attorney

Brobeck, Phleger & Harrison

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If you have a question about an on-the-job situation, please mail it to Shop Talk, Los Angeles Times, P.O. Box 2008, Costa Mesa, CA 92626; dictate it to (714) 966-7873, or e-mail it to shoptalk@latimes.com. Include your initials and hometown. The Shop Talk column is designed to answer questions of general interest. It should not be construed as legal advice. Recent Shop Talk columns are available at -www.latimes.com/shoptalk.

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