Do you know whom you are hiring?
Contributed by Edward Niam, president and CEO of Corporate Solutions, inc. ([email protected]) , Hudson, Ohio, a national supplier of pre-employment background screening services. Contributed articles do not necessarily reflect the viewpoint of the ÆGIS e-journal. NB: We were torn between putting this article in the due diligence section and here. Because of the physical risk involved in failing to exercise due diligence, we felt that this was the appropriate spot.
With the workplace filled with violence, drugs and theft, it is more critical than ever that in-depth background checks be required for prospective employees.
The doorbell rang and Elizabeth Harrison went to answer it. Looking through the peephole, she noticed a familiar face. It was that of neither a friend nor an acquaintance, but of a man who was in her house just days before. Opening the door, she allowed someone in who would change her life forever.
Harrison let into her home a Tallahassee Furniture delivery man who, a few days earlier, helped deliver her furniture and pick up a piece that needed repairs. Using a pretext, the delivery man, alone this time, entered her home and proceeded to attack her with a knife, permanently damaging one arm and inflicting emotional scars that may never heal.
Harrison sued Tallahassee Furniture and was awarded nearly $2 million in compensatory damages and $600,000 in punitive damages. During the trial, evidence showed the delivery man never filled out an application, nor was he subjected to a pre-employment background investigation. A simple criminal record search, costing as little as $20, would have revealed the perpetrator’s long documented history of violent crime.
The jury’s verdict in favor of Harrison found Tallahassee Furniture negligent for not checking the delivery man’s background. After all, was she wrong in letting him into her home? Should she have known the person delivering her furniture was a convicted criminal with a history of psychiatric problems?
It is taken for granted that representatives of a cable company, public utility, pizza shop, or furniture store have clean backgrounds, and are not dangerous felons. People have come to expect — and demand — that the service reps with whom they come in contact every day be screened by employers to avoid concerns about rape, robbery, and attack in their own homes.
This implied trust is often misplaced: Individuals with problem backgrounds work in every industry in this country. The workplace has its share of violence, drugs, and theft.
Pre-employment background checks include resume and employment application verification as well as data research from other sources. (In some states, falsification of a job application is a criminal offense.) Most information comes from public records, except for credit reports, which require a signed release. Employers are on firm legal ground as long as the inquiries comply with applicable laws (Fair Credit Reporting Act, Americans with Disabilities Act, Equal Employment Opportunity Act, Title 7 of the Civil Rights Act of 1964, and the Age Discrimination in Employment Act).
Ultimately, hiring better workers with pre-employment background checks ensures a number of benefits: lower hiring costs; reduced turnover; protection of assets and the firm’s name; a shielding of employees, customers, and the public from theft, violence, drugs, and harassment; and insulation from negligent hiring and retention lawsuits.
Credit History
Years ago, employers only looked at an applicant’s financial history if he or she was going to handle money. This is no longer true.
The Fair Credit Reporting Act lists several reasons for which a credit report may be obtained, including pre-employment and employee retention, promotion and re-assignment. Every employer has the right to review the credit history of any applicant, although it requires a signed release.
The credit report has become an integral part of any comprehensive pre- employment background check. It verifies the name, address, and Social Security number of the applicant, and may provide prior addresses that can be used for more extensive criminal searches as well as cross-referencing employment information. It includes public records such as judgements, liens, collections, and bankruptcies.
Credit reports provide a detailed history of accounts, payments and liabilities showing total debt, and a monthly breakdown of financial obligations. Heavy debt may be a catalyst for theft, drugs, prostitution, and violence. If applicants can not manage their own affairs, how well can you expect them handle your business?
It may also be prudent to re-run an employees credit report for promotions, retention or re-assignment. But a signed release must be on file.
The absence of a credit report can be indicative of a questionable background. When a credit history can not be found for someone in the workforce 10 or more years, there is one of two explanations: The person paid cash for everything or assumed a false identity. Which explanation is more plausible?
Criminal History
A national parking lot company put an employee on the job before completing a background check. The applicant, it turned out, had three convictions for aggravated assault. Would you want to fire this employee? Get the facts before you hire.
A criminal record search should be conducted for every applicant considered for hire. Finding the information, however, can be a long and convoluted trail. Which courts should an employer search and how thorough will the information be?
Federal crimes, such as bank robbery or credit card fraud, are not as common among job applicants as state offenses like rape, aggravated assault, theft, and drug-related crimes. The most thorough and up-to-date information tends to come from the county courthouse, where felony records are maintained. It is standard practice to conduct searches in the county where applicants live. If they have recently moved, prior residences should be checked.
Some state repositories allow records to be accessed for pre-employment screening, but they usually make it difficult, and the information often is incomplete and not current. There is no legal method of instantly searching all criminal courts nationwide.
The National Crime Information Center, maintained by the Federal Bureau of Investigation, keeps records of most felonies and some misdemeanors, but is for the sole use of law enforcement agencies. If an employer has a friend at a local police department who is checking applicants by computer, they are both breaking the law.
Criminal records generally are kept seven years, so an applicant is not discriminated against for a mistake made earlier in his or her life. Juvenile records are not accessible for pre-employment screening. Once a person turns 18, the record is expunged.
Driving Record
Some enlightened employers still believe a motor vehicle record (MVR) should be checked only on someone driving a company vehicle. But a driving record, or lack thereof, reveals a great deal about an applicant. It verifies the subject’s name, address, Social Security number and, possibly, physical description. If the address does not match the one on the application, it could be a warning sign.
A typical MVR covers a minimum of three years of traffic citations, accidents, driving under the influence (DUI) arrests and convictions, license suspensions, and revocations and cancellations. Driving habits may reveal drug or alcohol abuse and a person with a lax sense of responsibility. An applicant with two or three DUIs most likely has driven drunk many times before being caught.
Driving histories are obtained state by state, and most require a driver’s license number for access. It was not uncommon, years ago, for people with driving problems to have several valid licenses. But it now is illegal to have a valid license in more than one state. When a license does not match the state of residence, it may mean that the applicant “burned out” his or her license and went across the state line to get a clean one.
Another area of possible concern is the applicant with no driver’s license. There are people who do not drive, but nowadays it is rare, save, perhaps, in New York City, where many neither drive nor own cars. Some applicants use this ploy to conceal a bad driving record or suspended license.
In lieu of driver’s license number, ask to see a state I.D. card. What would you think if you saw the person you just hired driving to work when you were told he or she did not have a license?
Prior Employment
If you do not think checking an applicant’s prior employment is important, consider the worker who stole company stationery and typed his own letter of recommendation, falsifying the manager’s name. He claimed employment for three years. while hiding the fact that he was, in fact, terminated after three months.
Verifying an applicant’s current and past employment is essential. If employees are required to be licensed by the state, the status of that license must be verified. Licensing agencies maintain records of complaints, criminal charges, and revocation of licenses. Information such as job title, duties, and dates of service should be verified to establish that the applicant has the work experience needed for the position.
Eighty percent of resumes include lies about work history. Inaccuracies in dates of employment often conceal a lack of work experience. In worst cases, the applicant may be hiding a criminal history.
Many companies will not comment on performance ratings, fearing lawsuits. But firms should be more inclined than ever to release information about a former employee. The courts are allowing lawsuits against businesses withholding facts that might jeopardize others.
Education Verification
Any company giving preference to, or requiring, a college or other degree must verify at least the highest level of education obtained by an applicant. There are institutions that grant degrees, complete with transcripts, for a fee.
These diploma mills are in no way a recent phenomenon. They have existed since the late 1970s and currently operate in about 20 states. It is possible, for the right price, to get any type of degree without attending a single class. If education is important for the job, it is worth verifying.
Civil Litigation
A history of civil suits can help fill in details about an applicant’s background and character. Research of municipal, county, and federal district courts can reveal judgements for monetary damages, injunctions, liens, child support, alimony, and bankruptcies. Most of this information is included in a pre-employment credit report.
Personal Reference Check
Information about a subject’s strengths, integrity and responsibility is obtained through an interview with references provided by the applicant. Reference checks can help determine residency and ties to the community.
Not all references say something nice about the applicant. It is not unusual for a personal reference to hardly know and even dislike the subject. Many applicants will list references haphazardly, assuming they either will not be contacted or will respond with polite indifference.
Should employers wish to go deeper, the developed reference is the next step. Additional names are obtained from the references listed by the applicant. The benefit is that they would not have been coached by the applicant to provide positive information.
Workers’ Compensation History
Fraudulent workers’ compensation claims are becoming a serious problem for companies nationwide. The records can be accessed electronically from 18 states. The remaining 32 either do not release the information, or make it difficult to obtain, with a turnaround time ranging from a few days to several weeks.
Workers’ compensation records are classified under the Americans with Disabilities Act, which became effective for companies with 15 or more employees in 1994. The law states that “an employee may not inquire about an individual’s workers’ compensation history at the pre-offer stage.” The Equal Employment Opportunity Commission says that medical examinations may be required after a job offer is made, and that employment may be conditional on the results regardless of disability.
One benefit of a workers’ compensation check is finding a claim at a company not listed on the application. It even could be in another region that should be searched for a criminal history. But the most important benefit of a worker’s compensation check is the discovery of frequent, possibly fraudulent, claims.
Social Security Number Verification
Social Security numbers (SSN) automatically are verified when a credit report is ordered. There are times, however, when a financial history is not wanted or needed. The SSN verification is the answer.
It provides verification of the applicant’s name and SSN as well as those of anyone who has used that number. Prospective employers may get up to 10 prior addresses for an individual. With the transient nature of today’s workforce, it has become an essential component of a thorough background check.
The Application
The entire process starts with the employment application. All prospective employees, regardless of the position, must fill out an application in their own handwriting. A thorough background check is not possible without a detailed and complete application.
Reading the application and looking for warning signs is a skill developed over time. Some red flags are previous addresses that do not match job history, gaps in employment, lack of detail, illegible writing, and an unsigned release.
Employers should not substitute a resume for a properly filled out application. A resume includes only information the applicant wants the employer to know and usually lacks detail. The application, on the other hand, asks specific questions in a standard format, requiring the subject to be honest.
Essential information that frequently is not elicited, but should be, include: additional names used in previous employment or while attending school; “May we contact your present employer?”; previous addresses for the past 10 years; and a signature for the comprehensive release.
In many companies, applicants are interviewed several times by many people. Although this practice has some benefits, it has one major flaw: Each interview is a first interview for the applicant, who is fresh each time and may always make a good first impression.
The human resource specialist should interview the applicant more than once. With a second and third interview, it is possible to break down barriers and see people as they really are.
Background Checks
A nurse’s aide was hired based on her application and interview. Several weeks later, a background check revealed three recent convictions for theft, drugs, and prostitution. Obviously, this is not the kind of person who should be caring for the sick or elderly. Would you want her watching over your parents or grandparents?
The cost of an entry-level employee who is not retained can run as high as $10,000 for the first three months. This includes salary, benefits, and training. By conducting thorough background checks, companies can hire a better quality staff and train people more likely to stay with the firm.
Ideally, background checks should be made on all applicants considered for hire, regardless of the position. Less information — credit , criminal histories and motor vehicle record — may be needed for entry-level jobs, whereas management positions might require employment and education verification as well.
Once it is decided what information is important, the same background check should be conducted for all applicants for that position. Consistency is the key to structuring and maintaining a quality pre-employment screening program. Remember, without factual information, any hiring decision is nothing more than guesswork.
In Holden v. Hotel Management Inc., a jury awarded $1 million in compensatory damages and $5 million in punitive damages to a man whose wife was murdered by a hotel employee. The hotel management company, against whom the claim was levied, failed to conduct pre-employment screening and reference checking that would have revealed the murderer’s violent history.
Negligent hiring and retention lawsuits are on the rise. The former arise when a company fails to conduct a thorough background check on an employee whose past might put others at risk. The latter refers to the same phenomenon, adding the element that the worker is not terminated immediately on discovery of a disqualifying history.
Traditionally, employer liability allows recovery for workers’ wrongful and criminal acts when they occur on the job. Companies may also be liable for offenses committed when an employee is not “on the clock.”
Every company, regardless of size, should run applicant background checks. Thirty percent of new business failures are caused by employee theft or embezzlement. Internal theft is 15 times more prevalent than external theft. More than 2 million personal thefts happen annually in the workplace. Seven percent of rapes, 8 percent of robberies, and 16 percent of assaults occur at work.
If companies still are not sure that pre-employment background checks are important, ask Elizabeth Harrison. She speaks from a perspective the rest of us hope never to experience.
