Screening = Long-Term Aid to Temporary Hiring
By Jim Calahan
"I'd rather not fill a position than send someone who is wrong for it," states Joe Cummings of Royal Staffing, in Westlake Village, CA, "because that person represents you in the client's office." Joe is a fourteen-year veteran of the staffing industry and one of sixteen full-time employees in two offices the 33 year-old firm maintains. Joe is the screening "guru" for the firm which handles the whole gamut of employee placement from clerical employees to executive search and various points in-between, including financial and IT specialists.
"We began screening around 1993," Joe recalls, "when one of our larger clients began requesting criminal and DMV [Department of Motor Vehicle] searches on their placements." Screening continues to be primarily client-driven at the company to this day. "The quals for placing someone in an executive assistant position, for example, can vary quite a bit. Some firms request that background checks be done and some don't," notes Mr. Cummings. Another example is credit checks. "Some clients value them and others do not."
"Hiring" a screening firm to provide Royal with additional types of background checks was fairly simple. Royal has been using InfoLink Screening Services, located in Chatsworth, CA, since 1993. "Barry Nadell, the President of InfoLink, was acquainted with Mrs. Wolff, our Founder and President, through PIHRA [Professionals in Human Resources Assn.]," Joe Cummings recalls. "When he first came out to our offices it was very relaxed; there was no sales pitch. Barry answered our legal concerns very clearly. We updated our forms with InfoLink's suggested language and we have sometimes called Barry to get 'Do's and Don'ts about certain screening procedures. For example, we had some misgivings about collecting credit information on individuals, but Barry indicated it was perfectly all right to do so as long as our clients were consistent in requiring credit checks for where they could affect our client financially. We always want to make sure our procedures are legally correct in order to protect ourselves and our clients from needless lawsuits."
Although concern for correct legal procedure may have initiated the relationship between Royal and InfoLink, other factors have maintained the relationship over time. "InfoLink offers a complete program of background screening including drug-testing. Their rates are competitive and the quality of their research is very good," states Joe Cummings. "Turnaround time is crucial for us. To maximize billings, we need to have our temps out working. Also, while waiting on screening results you risk a temporary being picked up on someone else's assignment. InfoLink has been able to accommodate us on the occasional rush cycle."
Other contributions by InfoLink have included maintaining separate billing records for the two Royal Staffing offices as well as the development of web-based services. Screening requisitions can now be initiated and retrieved online through InfoLink's secure Web site as well as by fax, the method traditionally used by Royal Staffing.
After implementing the initial screening program with InfoLink, Royal staffers soon saw some surprising results. "One thing that always surprises me is how some of the applicants react or don't react to the screening procedure. I am very direct with them when screening is involved in their placement. I say, 'We are going to do a background check on you that includes a drug test, criminal history and credit check. Will you pass such a check?' They may say 'yes', but sometimes the results come back showing a lien, judgment, or conviction and I want to say, 'Did you forget about this?' I think for some of them, if not working now, they are willing to take their chances. However, for me it becomes a credibility issue after that."
While screening has become a part of the staffing business, it hasn't changed essential skills, but has enhanced them. "I am very experienced at interviewing," states Joe Cummings, "and very straightforward with my applicants. I tell them, 'I can ruin my reputation all on my own without assistance. I can help you get work, but you have to help me by being honest."
"I think a good interviewer is very skilled at detecting deception," he continues, "but screening still adds a lot. First, some people are just very expert at deception and they can slip by. Second, you have to make sure that you are asking the right questions; sometimes you can sense something is wrong without being able to exactly put your finger on it. Another major factor is the economy right now. With employment so high, most of the good ones are already working, so you may have to do ten or fifteen interviews to get two or three prospects."
The advancement of screening affects staffing in other ways, too. "When we take on a new employer," Joe notes, "it is not unusual for them to ask about our screening capabilities. Employers certainly realize that a person dressed up for an interview is not always what they seem to be. Also, I will suggest to them that when temporary staff is taken on with a potential of permanent hire, they should do any desired screening up front. This avoids issues arising once the person is already on the job."
Joe's experience with screening over the last eight years encourages him to offer several words of advice. "I think you have to be very careful to check an applicant's references and ensure they can do what they say they can do. It's very easy for someone to get a piece of company letterhead and write themselves a letter of recommendation with a forged signature. Some have even forged diplomas! I say, if you ever have an uncertain feeling about an applicant, or the references don't seem to add up, you cannot hesitate to do a screening on them."
"The other thing is to know the law," he adds. "We have never been sued by an applicant and I think this derives from the fact that we have been in legal compliance through InfoLink from the very beginning and we have maintained that compliance to the present day. If the applicant sees that you are fully knowledgeable of the law, then they are unlikely to attempt legal action. If they say 'That's discrimination!' I can immediately explain the situation to them and they'll recognize that it isn't."
Friday, February 27, 2004
Thursday, February 26, 2004
FTC Flexes Muscles on "Consumer Rights" Affecting All Employers
by Barry J. Nadell
Companies who background screen job applicants or employees (obtaining public records, references, etc. on job applicants or current employees) must be aware of the amended Fair Credit Reporting Act! Penalties on those who do not comply include actual damages, punitive damages, costs, and attorneys fees. In addition, civil and criminal penalties may apply. (15 U.S.C. 1681n, 1681o, 1681s).
The Consumer Credit Reporting Reform Act of 1996, (CCRRA) became effective on September 30, 1997. The CCRRA affects all employers by amending the Fair Credit Reporting Act (FCRA), 15 U.S.C. 600-624, which governs the use of consumer reports for employment purposes. Do not be fooled and think that this new law only deals with credit issues. The law makes serious changes in the procedures every employer must use to screen applicants or investigate current employees.
Definitions of key terms. 603:
• A consumer report is a report of any information provided by a consumer reporting agency bearing on a consumers credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for employment purposes.
Any background report from a consumer reporting agency offering public record information or where the information is obtained through personal interviews provides insight into the consumers character or personal characteristics. Unless an employer is not obtaining information from a consumer reporting agency, there are very few exceptions to what the CCRRA considers a consumer report. The following would be considered consumer reports: criminal history report, credit history, motor vehicle report, social security identification, education, license verification, military record verification, or workers compensation history.
Credit reports fall under the definition of consumer reports. When credit reports are sought for employment purposes, the user of the report must adhere to additional requirements outlined in the CCRRA and in state law.
• The term "investigative consumer report" means a consumer report or portion thereof in which information on a consumer's character, general reputation, personal characteristics, or mode of living is obtained through personal interviews with neighbors, friends or associates.
Investigative consumer reports are a form of a consumer report. The difference is the information in the report is obtained through talking to people. When an investigative consumer report is used, the user of the report must conform to additional requirements not required if requesting a consumer report.
Employers seeking an investigative consumer report must clearly and accurately disclose to the consumer that an investigative consumer report including information as to his character, general reputation, personal characteristics and mode of living, whichever are applicable, may be made. 606(a)(1). The disclosure must also indicate that the information may be obtained through personal interviews with neighbors, friends, or associates of the consumer reported on, or with others with whom he/she is acquainted or who may have knowledge concerning any such items of information. 603(3). The disclosure must be provided in writing not later than three days after the date on which the report was first requested. 606(a)(1)(A). The disclosure must also include a statement informing the consumer of their right to request additional disclosures of the nature and scope of the investigation. 606(a)(1)(B). The language required for an investigative consumer report need not be on the disclosure for a consumer report or consumer credit report. Finally, the employer must include the summary of consumer rights. 609(c).
• A consumer reporting agency is an organization which, for monetary fees, engages in whole or in part in providing information on consumers for the purpose of furnishing consumer reports to third parties.
Consumer reporting agencies are defined very broadly. They include any company who obtains information on a consumer and charges a fee to the user of the report for the information. They also include companies who charge fees for services rendered, and in order to provide the service, obtain background information on a consumer that may or may not be given directly to the employer. Included in the CCRRAs definition of a consumer reporting agency is a public records provider, licensed private investigator, detective agency, on-line database company, or the like. In addition, a government agency like a state Department of Motor Vehicles, who sells public information is a consumer reporting agency.
• Employment purposes are when reports are used for the purpose of evaluating a consumer for employment, promotion, reassignment or retention as an employee.
• Adverse action is a denial of employment or any other decision for employment purposes that adversely affects any current or prospective employee.
• The term "consumer" means an individual. Therefore, a background check of an organization does not fall into the purview of the FCRA.
Certification: Before requesting a report an employer must sign and have on file a written certification form with the consumer reporting agency they use. The certification form requires the employer (user of the report) to certify as to the permissible purpose intended and that they will comply with proper disclosure and adverse action requirements. Finally, the employer must certify that the information from the consumer report will not be used in violation of any applicable Federal or state equal employment opportunity law or regulation. 604(b).
Notification: Prior to an employer requesting any consumer report or an investigative consumer report the employer must make a disclosure to the consumer. This notification is required in all instances except for an investigative consumer report (talking to people) where the consumer did not initiate the cause for the report. 604(b)(2)(B).
The notification must be a clear and conspicuous written disclosure that consists solely of the disclosure, and must be provided prior to requesting any consumer report. The disclosure must include the name, address, and toll-free telephone number of the consumer reporting agency. 615(a)(2)(A). A separate disclosure designed for credit reports must be used if the employer seeks a credit report. Federal law specifically states the disclosure must indicate that a consumer report may be obtained for employment purposes. 604(b)(1), 606(a)(1).
Prior to the CCRRA, the only requirement imposed upon the employer was to notify the consumer. Where an employer wishes to obtain public records or obtain an investigative report, they must now obtain authorization from the employee to do the background check.
The requirement for the consumer to authorize the disclosure with their signature places a substantial burden on employers. What is an employers responsibility and authority should a consumer refuse to authorize the background check? In this regard, a background screening can be analogous to drug screening. There is ample authority that if an applicant refuses to authorize a drug screen, the employer can terminate the employment application process and the employer is under no obligation to hire the consumer. Therefore, any applicant who refuses to authorize the background check immediately disqualifies himself or herself from the employment process. Likewise, if an employee refuses to authorize a background screen required by the employer prior to a potential promotion or reassignment, the employee automatically removes his or her candidacy.
Unfortunately, the employers rights are not clear when the employer is in the process of an investigation and, due to the nature of the investigation, requires an employee background search. Where employees have signed only an employment application and refuse to sign a disclosure form authorizing a background check, employers may not be able to take any adverse action against the non-complying employee. If the employee however, previously agreed in writing to provide any support requested by the employer in an investigation and had agreed to all remedies available to the employer including termination if the employee refuses to help in the background investigation, the employer may be able to terminate the employee.
Where an investigative consumer report is to be prepared on a current employee, and to be used for employment purposes for which a consumer has not specifically applied, section 606(a)(2) provides that the notice otherwise required by section 606(a)(1) need not be sent. This is the only exception to disclosure of the background check. For example, if an employer hires an outside agency to perform an investigation, and such investigation is on a current employee who has not applied for a promotion or reassignment, and the agency only obtains information through personal interviews with co-workers, disclosure is not required.
Information within the report: Information must be up to date. Records are considered up to date if they are the current public record status of the item at the time the report is reported. 613(2). Information from public records (i.e. arrest, conviction, judgment, etc.) shall not be furnished unless the consumer reporting agency verifies the accuracy of the information during the 30 day period (which ended on the date on which the report is furnished) that the source of the information is the best possible. 606(d)(4)(A). Information obtained from a CD-ROM or on-line service generally provides only hearing dates and may not indicate if the consumer was convicted, or whether the conviction was expunged or dismissed. Therefore, provisions in the CCRRA which require the reporting of timely information indicate that employers must be very careful and only use agencies which provide direct research at the Superior or Municipal Court (hand searches). Anything less than a hand search will not qualify due to timeliness and/or accuracy.
The most accurate and up to date criminal information available resides in the physical records of each counties’ Superior and Municipal Courts. On-Line access to these records by Consumer Reporting Agencies is not available. Some states allow on-line access to records through their state repository; however, records are generally not up to date and some are up to a year old.
In order to offer records on-line some companies transcribe court microfiche records. Companies using these services experience very high error rates. In addition, microfiche records only offer hearing or filing dates. These dates provide arrest information and the consumer may never have been convicted. If sought pre-offer, knowledge of this data is unlawful. Where a consumer had been convicted, microfiche data does not reveal if the case has been expunged or dismissed. Finally, due to the time it takes to input this information into a computer, it is not timely and up to date, a new requirement under provisions of the CCRRA.
Time Limit on Reporting Information: Information provided in reports is generally limited to seven years (ten years for bankruptcies). This limit is based upon the type of report and may have an exception for state laws in existence prior to September 30, 1996, if there is no conflict with California’s Investigative Consumer Reporting Agencies Act (ICRAA). Suits, judgments, and paid liens are reportable for seven years for both the CCRRA and in California. The ICRAA allows unsatisfied judgments to be reported for ten years while the CCRRA has no time limit as the section only addresses paid liens. 605(a)(3), 1786.16. The CCRRA limits the reporting of records of arrest, indictment, or conviction of a crime to only seven years from the date of the disposition, release, or parole. Under the ICRAA, there was an exception to this time period based on an income of $30,000. 1786.16(b)(2). This exception for California employers will no longer be applicable.
In order to compute the reporting time period for a crime, the reporting agency must analyze whether the conviction of the crime includes a sentence of confinement. If the consumer was convicted of a crime, but the sentence does not include confinement, the reporting period of seven years is controlled by the date of the disposition.
For example, a report provided on September 1, 1997, may not include a crime where the date of the disposition was before August 31, 1990. However, if the consumer was imprisoned, the date of release or placement on parole controls the reportable time frame and the crime may be reported until seven years after parole or confinement is terminated. 605(a)(5). For example, if the consumer was released from confinement on January 15, 1993, and the disposition for the crime was on June 15, 1988, the crime could be reported as the release date is within the normal reportable period of seven years. Information indicating a date, which may be found later from another source like newspaper or interview, does not serve to extend the reporting period. Only the date of disposition, release or parole determines a reporting period. Employers should review their employment application, paying close attention to language that limits the time period an applicant should report a conviction for a crime.
Federal law exempts the time limit on credit reports if the employee earns or is expected to earn $75,000 per year. However, at least one credit reporting agency has advised our firm that they will not produce an extended credit report based on the exceptions in the CCRRA. The information will only extend back seven years (ten for bankruptcies).
Credit Reports: Employers, when seeking a credit report for employment, must obtain a report that has been designed only for employment as the permissible purpose. This type of report is different than one obtained for the purpose of borrowing money. Credit reports which are designed specifically for employment purposes provide everything a normal credit report provides including bankruptcy, liens, judgments, past dues, collection accounts, etc. However, these reports omit date of birth, account numbers, and do not place an inquiry that a lender may see if the applicant applies for credit.
The California Consumer Credit Reporting Agencies Act requires employers who seek a credit report to place a box on the disclosure form that the consumer can check if he or she wants a copy of the credit report. If the box is checked, the consumer must receive a copy of the report at no charge along with their rights concurrently with the employer who requested the credit report. 1785.20.5.
Employers should exercise caution when requesting credit reports on consumers. The August 1997, BNAs Policy and Practice Series, published by the Bureau of National Affairs, Inc., indicates employers should be able to establish a business necessity for using credit checks to avoid the risk of being sued for a Title VII violation, and he or she should inform applicants if hiring is contingent on the results of the checks. PM:201:3416, pg. 20. An employer should only seek credit information if the job description would place the consumer in a position which can potentially affect the company financially (i.e. employees handling cash, in the accounting department, or handling company credit cards or credit card transactions).
Adverse Action Requirements: Taking adverse action is now a two step process. Prior to actually taking adverse action, an employer must provide a copy of the report and a copy of the consumers rights as indicated by the FTC to the consumer. The CCRRA does not place a time period between the time of providing a copy of the report, including the consumers rights notice and the time the employer may advise the consumer of the adverse action taken. Notwithstanding, the employer must perform these functions in the specified order. Official commentary indicates that the employer must wait reasonable time prior to actually denying employment or taking other adverse action.
Once the employer has properly provided a copy of the report and the consumers rights, the actual adverse action must be disclosed with specific language. 615(a). This disclosure must provide (1) oral, written, or electronic notice of the adverse action to the consumer, (2) the name, address, and telephone number of the consumer reporting agency (including a toll-free telephone number established by the agency if the agency compiles and maintains files on consumers on a nationwide basis) that furnished the report to the person, (3) a statement that the consumer reporting agency did not make the decision to take the adverse action and is unable to provide the consumer the specific reasons why the adverse action was taken, (4) a statement of the right of the consumer to obtain a free copy of a consumer report on the consumer from the consumer reporting agency, (5) notice of the sixty day period for obtaining such a copy, and (6) notice of the consumers right to dispute the accuracy or completeness of any information in a consumer report furnished by the consumer reporting agency.
The person who procures or causes to be prepared an investigative consumer report, must upon the written request made by the consumer within a reasonable period of time after the initial disclosure, make a complete disclosure of the nature and scope of the investigation that is requested. 606(b). This disclosure must be in a written statement that is mailed, or otherwise delivered, to the consumer no later than five days after the date on which the request was received from the consumer, or the report was first requested, whichever is later in time. 606(b).
Summary: Job applicants and employees are quick to seek legal remedies should their consumers rights be violated. Failure, ignorance or noncompliance on the part of an employer or the consumer reporting agency to comply with the provisions of the Consumer Credit Reporting Reform Act of 1996 will be costly. Employers must seek and use a competent and detail oriented consumer reporting agency that understands this new law and complies with all of the acts provisions.
This enclosed article is not intended to provide legal advice regarding the Consumer Credit Reporting Reform Act of 1996, the Fair Credit Reporting Act, or state laws. This article represents the authors interpretation of the changes mandated by the CCRRA. Prior to making any changes in your screening of job applicants or current employees, please consult your legal counsel for verification and more detailed information regarding the CCRRA’s impact on your company.
by Barry J. Nadell
Companies who background screen job applicants or employees (obtaining public records, references, etc. on job applicants or current employees) must be aware of the amended Fair Credit Reporting Act! Penalties on those who do not comply include actual damages, punitive damages, costs, and attorneys fees. In addition, civil and criminal penalties may apply. (15 U.S.C. 1681n, 1681o, 1681s).
The Consumer Credit Reporting Reform Act of 1996, (CCRRA) became effective on September 30, 1997. The CCRRA affects all employers by amending the Fair Credit Reporting Act (FCRA), 15 U.S.C. 600-624, which governs the use of consumer reports for employment purposes. Do not be fooled and think that this new law only deals with credit issues. The law makes serious changes in the procedures every employer must use to screen applicants or investigate current employees.
Definitions of key terms. 603:
• A consumer report is a report of any information provided by a consumer reporting agency bearing on a consumers credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for employment purposes.
Any background report from a consumer reporting agency offering public record information or where the information is obtained through personal interviews provides insight into the consumers character or personal characteristics. Unless an employer is not obtaining information from a consumer reporting agency, there are very few exceptions to what the CCRRA considers a consumer report. The following would be considered consumer reports: criminal history report, credit history, motor vehicle report, social security identification, education, license verification, military record verification, or workers compensation history.
Credit reports fall under the definition of consumer reports. When credit reports are sought for employment purposes, the user of the report must adhere to additional requirements outlined in the CCRRA and in state law.
• The term "investigative consumer report" means a consumer report or portion thereof in which information on a consumer's character, general reputation, personal characteristics, or mode of living is obtained through personal interviews with neighbors, friends or associates.
Investigative consumer reports are a form of a consumer report. The difference is the information in the report is obtained through talking to people. When an investigative consumer report is used, the user of the report must conform to additional requirements not required if requesting a consumer report.
Employers seeking an investigative consumer report must clearly and accurately disclose to the consumer that an investigative consumer report including information as to his character, general reputation, personal characteristics and mode of living, whichever are applicable, may be made. 606(a)(1). The disclosure must also indicate that the information may be obtained through personal interviews with neighbors, friends, or associates of the consumer reported on, or with others with whom he/she is acquainted or who may have knowledge concerning any such items of information. 603(3). The disclosure must be provided in writing not later than three days after the date on which the report was first requested. 606(a)(1)(A). The disclosure must also include a statement informing the consumer of their right to request additional disclosures of the nature and scope of the investigation. 606(a)(1)(B). The language required for an investigative consumer report need not be on the disclosure for a consumer report or consumer credit report. Finally, the employer must include the summary of consumer rights. 609(c).
• A consumer reporting agency is an organization which, for monetary fees, engages in whole or in part in providing information on consumers for the purpose of furnishing consumer reports to third parties.
Consumer reporting agencies are defined very broadly. They include any company who obtains information on a consumer and charges a fee to the user of the report for the information. They also include companies who charge fees for services rendered, and in order to provide the service, obtain background information on a consumer that may or may not be given directly to the employer. Included in the CCRRAs definition of a consumer reporting agency is a public records provider, licensed private investigator, detective agency, on-line database company, or the like. In addition, a government agency like a state Department of Motor Vehicles, who sells public information is a consumer reporting agency.
• Employment purposes are when reports are used for the purpose of evaluating a consumer for employment, promotion, reassignment or retention as an employee.
• Adverse action is a denial of employment or any other decision for employment purposes that adversely affects any current or prospective employee.
• The term "consumer" means an individual. Therefore, a background check of an organization does not fall into the purview of the FCRA.
Certification: Before requesting a report an employer must sign and have on file a written certification form with the consumer reporting agency they use. The certification form requires the employer (user of the report) to certify as to the permissible purpose intended and that they will comply with proper disclosure and adverse action requirements. Finally, the employer must certify that the information from the consumer report will not be used in violation of any applicable Federal or state equal employment opportunity law or regulation. 604(b).
Notification: Prior to an employer requesting any consumer report or an investigative consumer report the employer must make a disclosure to the consumer. This notification is required in all instances except for an investigative consumer report (talking to people) where the consumer did not initiate the cause for the report. 604(b)(2)(B).
The notification must be a clear and conspicuous written disclosure that consists solely of the disclosure, and must be provided prior to requesting any consumer report. The disclosure must include the name, address, and toll-free telephone number of the consumer reporting agency. 615(a)(2)(A). A separate disclosure designed for credit reports must be used if the employer seeks a credit report. Federal law specifically states the disclosure must indicate that a consumer report may be obtained for employment purposes. 604(b)(1), 606(a)(1).
Prior to the CCRRA, the only requirement imposed upon the employer was to notify the consumer. Where an employer wishes to obtain public records or obtain an investigative report, they must now obtain authorization from the employee to do the background check.
The requirement for the consumer to authorize the disclosure with their signature places a substantial burden on employers. What is an employers responsibility and authority should a consumer refuse to authorize the background check? In this regard, a background screening can be analogous to drug screening. There is ample authority that if an applicant refuses to authorize a drug screen, the employer can terminate the employment application process and the employer is under no obligation to hire the consumer. Therefore, any applicant who refuses to authorize the background check immediately disqualifies himself or herself from the employment process. Likewise, if an employee refuses to authorize a background screen required by the employer prior to a potential promotion or reassignment, the employee automatically removes his or her candidacy.
Unfortunately, the employers rights are not clear when the employer is in the process of an investigation and, due to the nature of the investigation, requires an employee background search. Where employees have signed only an employment application and refuse to sign a disclosure form authorizing a background check, employers may not be able to take any adverse action against the non-complying employee. If the employee however, previously agreed in writing to provide any support requested by the employer in an investigation and had agreed to all remedies available to the employer including termination if the employee refuses to help in the background investigation, the employer may be able to terminate the employee.
Where an investigative consumer report is to be prepared on a current employee, and to be used for employment purposes for which a consumer has not specifically applied, section 606(a)(2) provides that the notice otherwise required by section 606(a)(1) need not be sent. This is the only exception to disclosure of the background check. For example, if an employer hires an outside agency to perform an investigation, and such investigation is on a current employee who has not applied for a promotion or reassignment, and the agency only obtains information through personal interviews with co-workers, disclosure is not required.
Information within the report: Information must be up to date. Records are considered up to date if they are the current public record status of the item at the time the report is reported. 613(2). Information from public records (i.e. arrest, conviction, judgment, etc.) shall not be furnished unless the consumer reporting agency verifies the accuracy of the information during the 30 day period (which ended on the date on which the report is furnished) that the source of the information is the best possible. 606(d)(4)(A). Information obtained from a CD-ROM or on-line service generally provides only hearing dates and may not indicate if the consumer was convicted, or whether the conviction was expunged or dismissed. Therefore, provisions in the CCRRA which require the reporting of timely information indicate that employers must be very careful and only use agencies which provide direct research at the Superior or Municipal Court (hand searches). Anything less than a hand search will not qualify due to timeliness and/or accuracy.
The most accurate and up to date criminal information available resides in the physical records of each counties’ Superior and Municipal Courts. On-Line access to these records by Consumer Reporting Agencies is not available. Some states allow on-line access to records through their state repository; however, records are generally not up to date and some are up to a year old.
In order to offer records on-line some companies transcribe court microfiche records. Companies using these services experience very high error rates. In addition, microfiche records only offer hearing or filing dates. These dates provide arrest information and the consumer may never have been convicted. If sought pre-offer, knowledge of this data is unlawful. Where a consumer had been convicted, microfiche data does not reveal if the case has been expunged or dismissed. Finally, due to the time it takes to input this information into a computer, it is not timely and up to date, a new requirement under provisions of the CCRRA.
Time Limit on Reporting Information: Information provided in reports is generally limited to seven years (ten years for bankruptcies). This limit is based upon the type of report and may have an exception for state laws in existence prior to September 30, 1996, if there is no conflict with California’s Investigative Consumer Reporting Agencies Act (ICRAA). Suits, judgments, and paid liens are reportable for seven years for both the CCRRA and in California. The ICRAA allows unsatisfied judgments to be reported for ten years while the CCRRA has no time limit as the section only addresses paid liens. 605(a)(3), 1786.16. The CCRRA limits the reporting of records of arrest, indictment, or conviction of a crime to only seven years from the date of the disposition, release, or parole. Under the ICRAA, there was an exception to this time period based on an income of $30,000. 1786.16(b)(2). This exception for California employers will no longer be applicable.
In order to compute the reporting time period for a crime, the reporting agency must analyze whether the conviction of the crime includes a sentence of confinement. If the consumer was convicted of a crime, but the sentence does not include confinement, the reporting period of seven years is controlled by the date of the disposition.
For example, a report provided on September 1, 1997, may not include a crime where the date of the disposition was before August 31, 1990. However, if the consumer was imprisoned, the date of release or placement on parole controls the reportable time frame and the crime may be reported until seven years after parole or confinement is terminated. 605(a)(5). For example, if the consumer was released from confinement on January 15, 1993, and the disposition for the crime was on June 15, 1988, the crime could be reported as the release date is within the normal reportable period of seven years. Information indicating a date, which may be found later from another source like newspaper or interview, does not serve to extend the reporting period. Only the date of disposition, release or parole determines a reporting period. Employers should review their employment application, paying close attention to language that limits the time period an applicant should report a conviction for a crime.
Federal law exempts the time limit on credit reports if the employee earns or is expected to earn $75,000 per year. However, at least one credit reporting agency has advised our firm that they will not produce an extended credit report based on the exceptions in the CCRRA. The information will only extend back seven years (ten for bankruptcies).
Credit Reports: Employers, when seeking a credit report for employment, must obtain a report that has been designed only for employment as the permissible purpose. This type of report is different than one obtained for the purpose of borrowing money. Credit reports which are designed specifically for employment purposes provide everything a normal credit report provides including bankruptcy, liens, judgments, past dues, collection accounts, etc. However, these reports omit date of birth, account numbers, and do not place an inquiry that a lender may see if the applicant applies for credit.
The California Consumer Credit Reporting Agencies Act requires employers who seek a credit report to place a box on the disclosure form that the consumer can check if he or she wants a copy of the credit report. If the box is checked, the consumer must receive a copy of the report at no charge along with their rights concurrently with the employer who requested the credit report. 1785.20.5.
Employers should exercise caution when requesting credit reports on consumers. The August 1997, BNAs Policy and Practice Series, published by the Bureau of National Affairs, Inc., indicates employers should be able to establish a business necessity for using credit checks to avoid the risk of being sued for a Title VII violation, and he or she should inform applicants if hiring is contingent on the results of the checks. PM:201:3416, pg. 20. An employer should only seek credit information if the job description would place the consumer in a position which can potentially affect the company financially (i.e. employees handling cash, in the accounting department, or handling company credit cards or credit card transactions).
Adverse Action Requirements: Taking adverse action is now a two step process. Prior to actually taking adverse action, an employer must provide a copy of the report and a copy of the consumers rights as indicated by the FTC to the consumer. The CCRRA does not place a time period between the time of providing a copy of the report, including the consumers rights notice and the time the employer may advise the consumer of the adverse action taken. Notwithstanding, the employer must perform these functions in the specified order. Official commentary indicates that the employer must wait reasonable time prior to actually denying employment or taking other adverse action.
Once the employer has properly provided a copy of the report and the consumers rights, the actual adverse action must be disclosed with specific language. 615(a). This disclosure must provide (1) oral, written, or electronic notice of the adverse action to the consumer, (2) the name, address, and telephone number of the consumer reporting agency (including a toll-free telephone number established by the agency if the agency compiles and maintains files on consumers on a nationwide basis) that furnished the report to the person, (3) a statement that the consumer reporting agency did not make the decision to take the adverse action and is unable to provide the consumer the specific reasons why the adverse action was taken, (4) a statement of the right of the consumer to obtain a free copy of a consumer report on the consumer from the consumer reporting agency, (5) notice of the sixty day period for obtaining such a copy, and (6) notice of the consumers right to dispute the accuracy or completeness of any information in a consumer report furnished by the consumer reporting agency.
The person who procures or causes to be prepared an investigative consumer report, must upon the written request made by the consumer within a reasonable period of time after the initial disclosure, make a complete disclosure of the nature and scope of the investigation that is requested. 606(b). This disclosure must be in a written statement that is mailed, or otherwise delivered, to the consumer no later than five days after the date on which the request was received from the consumer, or the report was first requested, whichever is later in time. 606(b).
Summary: Job applicants and employees are quick to seek legal remedies should their consumers rights be violated. Failure, ignorance or noncompliance on the part of an employer or the consumer reporting agency to comply with the provisions of the Consumer Credit Reporting Reform Act of 1996 will be costly. Employers must seek and use a competent and detail oriented consumer reporting agency that understands this new law and complies with all of the acts provisions.
This enclosed article is not intended to provide legal advice regarding the Consumer Credit Reporting Reform Act of 1996, the Fair Credit Reporting Act, or state laws. This article represents the authors interpretation of the changes mandated by the CCRRA. Prior to making any changes in your screening of job applicants or current employees, please consult your legal counsel for verification and more detailed information regarding the CCRRA’s impact on your company.
Wednesday, February 25, 2004
Background Screening Articles
How to Avoid the Employee From Hell - Legally!
by Barry J. Nadell
The "employee from hell" is easy to identify after the fact. An Oakland civil jury awarded over $11 million to a woman’s husband after she was murdered by a man who came to clean their carpets. Under the legal doctrine of negligent hiring Americas Best Carpet Care was ordered to pay over $9 million of the award despite their defense that the perpetrator was an independent contractor and not an employee. This is a hellish scenario for any human resources professional!
As President and co-founder of InfoLink Screening Services, Inc., I have a front row seat on the trends shaping Americas hiring practices. On the one hand, I see the Internet progress we have made; increasing the speed and convenience of screening services, while lowering the cost. On the other hand, I see workplace trends that are making hiring more difficult and the need for screening more acute than ever. “To screen or not to screen?” is a crucial question affecting several areas of your business.
HIRING:
The current extremely low unemployment rate makes finding qualified employees more difficult than usual and may tempt employers to speed hiring decisions with shortcuts. When someone perceived as the right applicant comes along, you may want to act quickly before someone else hires them, or you may want to avoid alienating the prospect with the disclosures and possible delays of a thorough screening process.
As an employer myself I believe its a top priority to ascertain an applicants honesty in presenting himself, or herself. The major purpose of screening is to verify that the information submitted by the applicant is indeed a fair and correct history. Sometimes the person who seems too good to be true is exactly that! A survey published by the Society of Human Resource Management in 1998 gave the following results for resumes and job applications where falsification had been detected:
• Length of employment 53%
• Past salaries 51%
• Criminal records 45%
• Former job titles 44%
• Former employers 35%
• Driving records 33%
• Degrees 30%
• Credit 24%
• Schools attended 24%
• Social security number 14%
It still amazes me when InfoLink, as an employer, finds the perfect person for a position only to discover through our own screening process that the person was not all they seemed to be. How could someone applying for a position at a screening company attempt to materially misrepresent himself or herself, or fail to disclose vital information requested on the application? Yet, it continues to happen. One such applicant was found to have a current arrest warrant outstanding for a drug violation! Another had a serious misdemeanor conviction which had not been disclosed.
If these sorts of incidents can happen to us in the screening industry, then I am confident they can happen to you as well. Remember that you are not only assessing the possible contributions of an applicant, but their potential employee costs in terms of low morale, lateness, absenteeism, accidents, insurance claims and turnover as well as possible theft, violence or lawsuits.
SECURITY:
In the past, sensitive positions in security or law enforcement, finance and health care were most often professionally screened. However, current social trends such as drug abuse and workplace violence have shown a need for broader screening processes. Department of Labor statistics show, surprisingly, that 73% of all current drug users age 18 or older are employed, with over 80% employed full-time. Businesses without a drug-screening program are naturally more likely to hire such individuals and to suffer the hidden costs associated with them. A U. S. Postal Service study indicated that employees who tested positive on their pre-employment drug test were 77% more likely to be discharged within the first three years of employment and were absent from work 66% more often than those that tested negative.
As previously noted, jobs with access to customers homes are particularly susceptible to abuse by unethical or criminal employees and can create huge legal liabilities. However, screening can help with lesser problems as well. One InfoLink subscriber reports occasional instances when its employees have been accused of theft, sometimes as a distraction by the real thief. In addressing such claims, the employer finds it worthwhile to disclose that its employees have undergone extensive background screening a much more thorough check than is given to the typical domestic worker!
LEGAL:
An overlooked, but a most important reason for screening is lawsuits. Corporations are increasingly held legally responsible for the types of individuals they hire, especially if those individuals engage in criminal activity.
Examples of a dire nature are, unfortunately, not difficult to find. PDQuick recently made headlines in Los Angeles when one of its home delivery drivers; two weeks on the job, allegedly committed sexual assault on a San Gabriel woman as well as attacking two other women. PDQuick had failed to check the criminal history of the employee who, unknown to them, was on parole for a violent conviction.
In another recent instance, a home health care provider in Massachusetts named Trusted Health Resources unknowingly hired someone with a criminal record as a home attendant. That individual subsequently murdered a young paraplegic man placed under his care as well as the patients grandmother, apparently to cover up a theft. When the employee was later tried and convicted of the crime, the victims family sued the company on the basis of negligent hiring and obtained damages of $26.5 million dollars. Not surprisingly, Trusted Health is no longer in business.
In addition to these high-profile cases, there is also danger from lawsuits incurred due to noncompliance with Federal and state laws governing background check procedures. Non-compliance with these laws is fairly common. Even among companies that have previously used a background screening service, about 75% of the employers I see have language (or are missing language) in their documents that violates either Federal or state law. When choosing a background screening company to hire, I often recommend analyzing the documentation provided by that company for legal compliance. If the documentation violates state or FCRA law, its a serious problem. How can one trust a company’s reporting procedures when their documentation and procedures do not even conform to the applicable laws of their industry?
SCREENING PITFALLS:
While the above examples show the need for increased scrutiny, the difficulty in detecting unflattering backgrounds has also increased:
• When employers conduct reference checks, they are increasingly met with a limited or nonexistent response as legal concerns make former employers reluctant to provide anything more than a confirmation of name, job title and dates of employment.
• Workers with imperfect backgrounds often gravitate towards working as temps, either out of necessity, or as a means of masking their histories. Employers hiring a temporary worker through an agency may not feel the need to conduct the normal background check, but the company is nevertheless considered a co-employer for liability purposes and is liable along with the agency.
THE SOLUTION:
The way to avoid hiring the employee from hell for most companies is a background check by a professional screening company which complies with the applicable legal procedures. These checks typically include criminal history search, motor vehicle report information and a social security number trace. The importance of criminal checks is self-evident, but the others may not be so clear. A motor vehicle report discloses convictions for DUI (Driving Under the Influence), drug possession and failures to appear. In addition, current arrest warrants may be found. Social Security checks help identify false numbers and identities used by an applicant to evade screening of their own personal history.
Other frequently performed checks include:
• References
• Verification of education, licenses, or military service records.
• Credit checks or searches for liens and judgments which help indicate character
• Worker compensation filings which can identify past employers not revealed on an application
Turnaround times for these checks range from the immediate (with online access to credit and other up-to-date databases) to generally two or three working days, depending on the type and extent of search desired. Fees are surprisingly low and can range from $3, up to $50-80 depending on several factors: the package of searches required for a particular position, the number of references contacted and the number of counties searched for criminal activity. It is important for a business to have a screening program appropriate to the type of personnel that they are hiring and to design searches based upon job requirements. As an example, you should not perform a credit check on someone who couldn’t affect you financially, but should always require one for someone in accounting, or who handles money.
If an employer relies on any third party such as a private investigator, public record provider or professional screening service (all considered consumer reporting agencies under Federal law) for references or a more involved background screening, there are a number of additional requirements that must be met. These include legal disclosure and adverse action procedures that must be followed as required by both the Fair Credit Reporting Act and applicable state laws. Because of the complexity of both Federal and state laws, a professional service should be engaged to provide the appropriate documents and expertise to set up such a program. An effective one shields the company from needless lawsuits and promotes morale by screening out the employee from hell.
by Barry J. Nadell
The "employee from hell" is easy to identify after the fact. An Oakland civil jury awarded over $11 million to a woman’s husband after she was murdered by a man who came to clean their carpets. Under the legal doctrine of negligent hiring Americas Best Carpet Care was ordered to pay over $9 million of the award despite their defense that the perpetrator was an independent contractor and not an employee. This is a hellish scenario for any human resources professional!
As President and co-founder of InfoLink Screening Services, Inc., I have a front row seat on the trends shaping Americas hiring practices. On the one hand, I see the Internet progress we have made; increasing the speed and convenience of screening services, while lowering the cost. On the other hand, I see workplace trends that are making hiring more difficult and the need for screening more acute than ever. “To screen or not to screen?” is a crucial question affecting several areas of your business.
HIRING:
The current extremely low unemployment rate makes finding qualified employees more difficult than usual and may tempt employers to speed hiring decisions with shortcuts. When someone perceived as the right applicant comes along, you may want to act quickly before someone else hires them, or you may want to avoid alienating the prospect with the disclosures and possible delays of a thorough screening process.
As an employer myself I believe its a top priority to ascertain an applicants honesty in presenting himself, or herself. The major purpose of screening is to verify that the information submitted by the applicant is indeed a fair and correct history. Sometimes the person who seems too good to be true is exactly that! A survey published by the Society of Human Resource Management in 1998 gave the following results for resumes and job applications where falsification had been detected:
• Length of employment 53%
• Past salaries 51%
• Criminal records 45%
• Former job titles 44%
• Former employers 35%
• Driving records 33%
• Degrees 30%
• Credit 24%
• Schools attended 24%
• Social security number 14%
It still amazes me when InfoLink, as an employer, finds the perfect person for a position only to discover through our own screening process that the person was not all they seemed to be. How could someone applying for a position at a screening company attempt to materially misrepresent himself or herself, or fail to disclose vital information requested on the application? Yet, it continues to happen. One such applicant was found to have a current arrest warrant outstanding for a drug violation! Another had a serious misdemeanor conviction which had not been disclosed.
If these sorts of incidents can happen to us in the screening industry, then I am confident they can happen to you as well. Remember that you are not only assessing the possible contributions of an applicant, but their potential employee costs in terms of low morale, lateness, absenteeism, accidents, insurance claims and turnover as well as possible theft, violence or lawsuits.
SECURITY:
In the past, sensitive positions in security or law enforcement, finance and health care were most often professionally screened. However, current social trends such as drug abuse and workplace violence have shown a need for broader screening processes. Department of Labor statistics show, surprisingly, that 73% of all current drug users age 18 or older are employed, with over 80% employed full-time. Businesses without a drug-screening program are naturally more likely to hire such individuals and to suffer the hidden costs associated with them. A U. S. Postal Service study indicated that employees who tested positive on their pre-employment drug test were 77% more likely to be discharged within the first three years of employment and were absent from work 66% more often than those that tested negative.
As previously noted, jobs with access to customers homes are particularly susceptible to abuse by unethical or criminal employees and can create huge legal liabilities. However, screening can help with lesser problems as well. One InfoLink subscriber reports occasional instances when its employees have been accused of theft, sometimes as a distraction by the real thief. In addressing such claims, the employer finds it worthwhile to disclose that its employees have undergone extensive background screening a much more thorough check than is given to the typical domestic worker!
LEGAL:
An overlooked, but a most important reason for screening is lawsuits. Corporations are increasingly held legally responsible for the types of individuals they hire, especially if those individuals engage in criminal activity.
Examples of a dire nature are, unfortunately, not difficult to find. PDQuick recently made headlines in Los Angeles when one of its home delivery drivers; two weeks on the job, allegedly committed sexual assault on a San Gabriel woman as well as attacking two other women. PDQuick had failed to check the criminal history of the employee who, unknown to them, was on parole for a violent conviction.
In another recent instance, a home health care provider in Massachusetts named Trusted Health Resources unknowingly hired someone with a criminal record as a home attendant. That individual subsequently murdered a young paraplegic man placed under his care as well as the patients grandmother, apparently to cover up a theft. When the employee was later tried and convicted of the crime, the victims family sued the company on the basis of negligent hiring and obtained damages of $26.5 million dollars. Not surprisingly, Trusted Health is no longer in business.
In addition to these high-profile cases, there is also danger from lawsuits incurred due to noncompliance with Federal and state laws governing background check procedures. Non-compliance with these laws is fairly common. Even among companies that have previously used a background screening service, about 75% of the employers I see have language (or are missing language) in their documents that violates either Federal or state law. When choosing a background screening company to hire, I often recommend analyzing the documentation provided by that company for legal compliance. If the documentation violates state or FCRA law, its a serious problem. How can one trust a company’s reporting procedures when their documentation and procedures do not even conform to the applicable laws of their industry?
SCREENING PITFALLS:
While the above examples show the need for increased scrutiny, the difficulty in detecting unflattering backgrounds has also increased:
• When employers conduct reference checks, they are increasingly met with a limited or nonexistent response as legal concerns make former employers reluctant to provide anything more than a confirmation of name, job title and dates of employment.
• Workers with imperfect backgrounds often gravitate towards working as temps, either out of necessity, or as a means of masking their histories. Employers hiring a temporary worker through an agency may not feel the need to conduct the normal background check, but the company is nevertheless considered a co-employer for liability purposes and is liable along with the agency.
THE SOLUTION:
The way to avoid hiring the employee from hell for most companies is a background check by a professional screening company which complies with the applicable legal procedures. These checks typically include criminal history search, motor vehicle report information and a social security number trace. The importance of criminal checks is self-evident, but the others may not be so clear. A motor vehicle report discloses convictions for DUI (Driving Under the Influence), drug possession and failures to appear. In addition, current arrest warrants may be found. Social Security checks help identify false numbers and identities used by an applicant to evade screening of their own personal history.
Other frequently performed checks include:
• References
• Verification of education, licenses, or military service records.
• Credit checks or searches for liens and judgments which help indicate character
• Worker compensation filings which can identify past employers not revealed on an application
Turnaround times for these checks range from the immediate (with online access to credit and other up-to-date databases) to generally two or three working days, depending on the type and extent of search desired. Fees are surprisingly low and can range from $3, up to $50-80 depending on several factors: the package of searches required for a particular position, the number of references contacted and the number of counties searched for criminal activity. It is important for a business to have a screening program appropriate to the type of personnel that they are hiring and to design searches based upon job requirements. As an example, you should not perform a credit check on someone who couldn’t affect you financially, but should always require one for someone in accounting, or who handles money.
If an employer relies on any third party such as a private investigator, public record provider or professional screening service (all considered consumer reporting agencies under Federal law) for references or a more involved background screening, there are a number of additional requirements that must be met. These include legal disclosure and adverse action procedures that must be followed as required by both the Fair Credit Reporting Act and applicable state laws. Because of the complexity of both Federal and state laws, a professional service should be engaged to provide the appropriate documents and expertise to set up such a program. An effective one shields the company from needless lawsuits and promotes morale by screening out the employee from hell.
Monday, February 02, 2004
Background Screening Articles
High unemployment spurs need for background checks
Fairfield County Business Journal, February 2004
By Jen Malcom
In today's world of rampant theft, violence, false workers' compensation claims and poor performance at the workplace, employers must protect themselves, their employees, their clients, customers and the public from potential employees who can cause them harm, said Barry Nadell, president of InfoLink Screening Services Inc., a national provider of background screening.
"The states have laws regarding negligent hiring and consequently if someone hires a criminal because they haven't screened their background and they hurt someone, the company is liable," said Nadell.
"Fraud by applicants is at a ridiculously high rate these days and is far more prevalent when the unemployment rate is high," said David Lewis, president of Operations Inc.com, in Stamford and vice president of the Southern Connecticut Chapter of SHRM (the Society for Human Resource Management).
"People when unemployed for long periods of time are more desperate and more willing to compromise some of their values, and less likely to be honest on their resumes."
There is a trend to conduct more employment checks when the economy is down. "If an employer is hiring in a down economy, they have a more difficult time determining who is truly representing themselves accurately," said Lewis. Mary Beth Rippert, managing director of Strategic Staffing L.L.C. of Shelton, said before hiring a prospective employee she checks their references and confirms dates of employment as well as asking them to rate the employee from one to 10 on various categories such as communication skills and strengths and weaknesses. She usually talks to at least three people including a coworker and boss. She conducts drug or criminal screening if requested by the client.
"I feel employment checks are necessary. If applicants say they have experience programming and they just sat next to one or if they say they were a team leader and they were just an acting one for the day, I'll find out," said Rippert. "If they lie they are disqualified."
More employers checking
A recent survey completed by the SHRM found that the number of employers reporting they conduct criminal background checks has increased by 29 percent since 1996. Eighty percent of HR professionals now say they conduct such checks and 35 percent conduct credit checks to screen potential employees. Eighty-two percent of HR professionals report their organizations investigate the background of potential employees, which is up from 66 percent in 1996.
InfoLink Screening Services Inc. "found that of those employees checked who authorized a background check in writing: eight percent had criminal convictions, three and a half percent tested positive for drugs, 37 percent have DMV issues, 23 percent have something negative on their credit report, and 17 percent had discrepancies on their reference checks," said Nadell.
As a present employer looking to evaluate and verify information that is presented in a resume or application to insure it is accurate and complete, it is also vital to look for information that wouldn't be on a resume such as prior criminal history, said Lewis. It's essential to be take a proactive approach to prevent future problems.
"Just calling a past employer today won't give you the answers you are looking for to see if the person has the character, experience and abilities to be a good worker," said Nadell. "Companies need to access all the possible information available to make good hires."
Reference checks are limited by companies not giving out information for fear of being sued, said Lewis. Background checks go deeper, they don't give performance information but they give dates of employment and educational background. It is becoming more and more common that checks come back with data that conflicts with information that comes from resumes or applications.
Components of a good check
A good background check includes "an onsite search of the courts in all counties where the individual resides, a social security check and a motor vehicle report (even if they don't drive for you)," said Nadell.
Employers must have a "permissible purpose to perform a background check or the subject may sue," warned Nadell. "For employment, a written disclosure must be authorized in advance. Before taking adverse action, the subject must be given a copy of the report with their rights as prescribed by the Federal Trade Commission (FTC) and an opportunity to dispute the information in the report."
Many times the applicants sign a release on the back of their employment application. "It's always a good idea to have an additional form signed saying this is what we're going to be checking with a space for social security number and name and signature," said Lewis. "Once the release is put in front of someone especially someone aware that the information they provided wasn't accurate they often request their application back to check their information."
Another screening tool, credit reports, should only be used when the person can affect the company financially but are a good indicator of character, said Nadell. "If someone has financial responsibility and can't handle their own finances, there may be a problem. Also, hiring someone in big debt for a low wage could be an indicator of a problem waiting to happen."
Ridgefield Bank, for example conducts a credit check, background check, and drug test for all new employees. "If we're hiring for a teller and they have bad credit that gives you a red flag, said Susie Costello, Ridgefield Bank, human resource systems. There are both federal and state laws that employers must follow while screening their employees. The Federal Fair Credit Reporting law and laws such as the Americans with Disabilities Act are the prevailing federal laws. In addition, many states have their own laws in this area including state fair credit laws, state labor codes, state civil laws and state civil rights laws, said Nadell.
In addition certain state laws also govern what you do with the information when you get the report back. In Connecticut, employers are required to keep at least two files per employee. One focuses on performance and other on qualifications. Benefits and personal info goes to another file to be held separately because no manager needs to know personal information about you in order to manage you, said Lewis.
It is most important to get a reputable service provider. The completeness of the report and ease that it gets back is key. Larger, well-established companies have great channels of info already established, said Lewis. The cost of background checks have "come way down over the years and one can obtain a good comprehensive background check for often less than $15 to $50 depending on the services requested," said Nadell.
Fairfield County Business Journal, February 2004
By Jen Malcom
In today's world of rampant theft, violence, false workers' compensation claims and poor performance at the workplace, employers must protect themselves, their employees, their clients, customers and the public from potential employees who can cause them harm, said Barry Nadell, president of InfoLink Screening Services Inc., a national provider of background screening.
"The states have laws regarding negligent hiring and consequently if someone hires a criminal because they haven't screened their background and they hurt someone, the company is liable," said Nadell.
"Fraud by applicants is at a ridiculously high rate these days and is far more prevalent when the unemployment rate is high," said David Lewis, president of Operations Inc.com, in Stamford and vice president of the Southern Connecticut Chapter of SHRM (the Society for Human Resource Management).
"People when unemployed for long periods of time are more desperate and more willing to compromise some of their values, and less likely to be honest on their resumes."
There is a trend to conduct more employment checks when the economy is down. "If an employer is hiring in a down economy, they have a more difficult time determining who is truly representing themselves accurately," said Lewis. Mary Beth Rippert, managing director of Strategic Staffing L.L.C. of Shelton, said before hiring a prospective employee she checks their references and confirms dates of employment as well as asking them to rate the employee from one to 10 on various categories such as communication skills and strengths and weaknesses. She usually talks to at least three people including a coworker and boss. She conducts drug or criminal screening if requested by the client.
"I feel employment checks are necessary. If applicants say they have experience programming and they just sat next to one or if they say they were a team leader and they were just an acting one for the day, I'll find out," said Rippert. "If they lie they are disqualified."
More employers checking
A recent survey completed by the SHRM found that the number of employers reporting they conduct criminal background checks has increased by 29 percent since 1996. Eighty percent of HR professionals now say they conduct such checks and 35 percent conduct credit checks to screen potential employees. Eighty-two percent of HR professionals report their organizations investigate the background of potential employees, which is up from 66 percent in 1996.
InfoLink Screening Services Inc. "found that of those employees checked who authorized a background check in writing: eight percent had criminal convictions, three and a half percent tested positive for drugs, 37 percent have DMV issues, 23 percent have something negative on their credit report, and 17 percent had discrepancies on their reference checks," said Nadell.
As a present employer looking to evaluate and verify information that is presented in a resume or application to insure it is accurate and complete, it is also vital to look for information that wouldn't be on a resume such as prior criminal history, said Lewis. It's essential to be take a proactive approach to prevent future problems.
"Just calling a past employer today won't give you the answers you are looking for to see if the person has the character, experience and abilities to be a good worker," said Nadell. "Companies need to access all the possible information available to make good hires."
Reference checks are limited by companies not giving out information for fear of being sued, said Lewis. Background checks go deeper, they don't give performance information but they give dates of employment and educational background. It is becoming more and more common that checks come back with data that conflicts with information that comes from resumes or applications.
Components of a good check
A good background check includes "an onsite search of the courts in all counties where the individual resides, a social security check and a motor vehicle report (even if they don't drive for you)," said Nadell.
Employers must have a "permissible purpose to perform a background check or the subject may sue," warned Nadell. "For employment, a written disclosure must be authorized in advance. Before taking adverse action, the subject must be given a copy of the report with their rights as prescribed by the Federal Trade Commission (FTC) and an opportunity to dispute the information in the report."
Many times the applicants sign a release on the back of their employment application. "It's always a good idea to have an additional form signed saying this is what we're going to be checking with a space for social security number and name and signature," said Lewis. "Once the release is put in front of someone especially someone aware that the information they provided wasn't accurate they often request their application back to check their information."
Another screening tool, credit reports, should only be used when the person can affect the company financially but are a good indicator of character, said Nadell. "If someone has financial responsibility and can't handle their own finances, there may be a problem. Also, hiring someone in big debt for a low wage could be an indicator of a problem waiting to happen."
Ridgefield Bank, for example conducts a credit check, background check, and drug test for all new employees. "If we're hiring for a teller and they have bad credit that gives you a red flag, said Susie Costello, Ridgefield Bank, human resource systems. There are both federal and state laws that employers must follow while screening their employees. The Federal Fair Credit Reporting law and laws such as the Americans with Disabilities Act are the prevailing federal laws. In addition, many states have their own laws in this area including state fair credit laws, state labor codes, state civil laws and state civil rights laws, said Nadell.
In addition certain state laws also govern what you do with the information when you get the report back. In Connecticut, employers are required to keep at least two files per employee. One focuses on performance and other on qualifications. Benefits and personal info goes to another file to be held separately because no manager needs to know personal information about you in order to manage you, said Lewis.
It is most important to get a reputable service provider. The completeness of the report and ease that it gets back is key. Larger, well-established companies have great channels of info already established, said Lewis. The cost of background checks have "come way down over the years and one can obtain a good comprehensive background check for often less than $15 to $50 depending on the services requested," said Nadell.
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