Employment Screening Market Survey

By: Insperity Staff
February 6th, 2011

The 411 on Employment Screening
Employment screening, or what is commonly known as a background check, should be a high priority if you’re an employer. One regrettable hiring decision could cost you thousands of dollars. Moreover, our fluid regulatory environment is becoming increasingly complex and confusing, which can overwhelm anyone trying to run a business. Again, one employer misstep can result in costly consequences, ranging from lawsuits to federal- and state-levied fines and penalties. In short, this is the epitome of a “What you don’t know can certainly hurt you,” scenario.

There is one thing you can be sure of, however: Even though job applicants cannot erase prior misdeeds or questionable pasts in this digital age, few will volunteer information that could potentially hurt their chances of snagging an interview or a job offer.

Certainly the more you know about job applicants, the better hiring decisions you will make. As you seek to understand who you hire, you can unwittingly jump to certain conclusions or use solutions that may even be unlawful. For example, you might be tempted to use lie-detector tests if you suspect that an applicant or a current employee is hiding something. But in fact, federal law and some state laws prohibit employers from using lie detector tests, with certain exceptions. Moreover, numerous federal, state and local laws dictate what employers can and cannot say or do in terms of acquiring applicant- and employee-related background information.

Legal landmines are everywhere, and it’s a tough balancing act. While you can ill afford taking shortcuts, you also run the risk of violating privacy laws and regulations that protect applicants and workers. For instance, in addition to federal privacy regulations, some states forbid employers from asking applicants about previous arrests and convictions as well as juvenile and/or sealed records. Other states allow you to consider prior convictions only if the crimes are relevant to the job. Because laws vary from state to state, you should consult with legal counsel — or at minimum research your respective state laws — before digging into an applicant’s criminal history.

The Current Landscape
With Department of Labor statistics showing roughly 2 million U.S. workers assaulted in workplace violence incidents each year, employers should be especially concerned about hiring liabilities. After all, employers are responsible for the safety and welfare of their employees. And if an incident does occur, the company could face a costly negligent hiring lawsuit.

“Background checks are the best way to identify these types of individuals before they are employed,” says Jeff Jones, a director of operations for Insperity Employment Screening. “Contrarily, not doing anything increases the potential for a poor and potentially unsafe working environment.”

Much has been written about lawful and unlawful hiring practices. But the average business owner cannot be expected to be an employment law expert. When was the last time you discussed the Uniform Guidelines on Employee Selection Procedures with your executive management team?

These guidelines, adopted in 1978, essentially established the criteria that public and private employers must use when making hiring decisions. But it’s safe to say that few employers are well-versed in these guidelines.

Certainly employers must keep in mind that discrimination in hiring is a big no-no, particularly with the U.S. Equal Employment Opportunity Commission (EEOC). The EEOC makes it illegal to discriminate against a job applicant or employee because of his or her race, color, religion, sex (including pregnancy), national origin, age (40 or older), disability or genetic information. It is also illegal to discriminate against a person because the individual complained about discrimination, filed a charge of discrimination, or participated in an employment discrimination investigation or lawsuit.

Options
There are a number of different ways an employer can go about conducting background checks on prospective and existing workers. While much of the information that an employer might seek on an individual is public record, finding the time to search for it and knowing where to look can be an issue.

That’s why companies without large HR departments typically outsource this process to specialists. Quick criminal history reports are fairly inexpensive and easy to order — though not always comprehensive. More in-depth reports from professional screening firms, which examine the county court and police records where an individual has resided among other things, are more costly.

Sometimes employment screening is handled by the recruiting firm a company is working with. Other times, the employer is simply turning over the name and social security number of a new hire to a firm that specializes solely in background checks. Typically such firms will offer a range of options that might include checks on:

• Past employers. Researchers can check with previous companies that the individual claims to have worked with to verify facts such as employment timeframe and job title.

• Criminal history. A growing number of organizations want to ensure their prospective hire doesn’t have a dangerous criminal history. Firms will check the court and often police records in the areas where the candidate has resided. They can also conduct national and state-level checks.

• Credit history. Employees who have access to money or important information are increasingly being subjected to credit checks. A credit check typically involves collecting a report from one of the national credit reporting agencies. Such reports show an individual’s debt paying history and other details such as former addresses and employers. The Federal Fair Credit Reporting Act (FCRA) governs how a person’s credit history and other details can be shared and used.

• Driving record. Checking an individual’s driving record is most common when that prospective employee will be required to drive for work or use a company vehicle. The employment screening firm will look into that person’s driving record in each state he or she has lived in, looking for frequent or unusual violations and citations that could indicate an increased risk.

• Social media. A relatively new tool in employment screening is the social media platform. More and more firms are using sites such as Facebook and Twitter to find out more about a subject and look for any potential red flags.

• Drug testing. Employment screening companies will sometimes coordinate drug testing for client companies, particularly when the individual is working with machinery or will be around drugs.

Benefits
Once again, the information employers are seeking from background checks is freely available without the help of an outside firm. But for many small companies that do not have significant HR departments, the time and expertise that go into conducting a thorough background check is beyond their means.

For those who want the peace of mind that comes with a comprehensive examination of their employee’s past, outsourcing the background check is often the best option.

Outsourcing affords businesses:

• A chance to focus on regular day-to-day activities instead of getting bogged down in fact checking.

• Expertise in background researching. Firms have highly-qualified individuals who know how to thoroughly research an individual’s background and are well-versed in which questions to ask of previous employers and references.

• A buffer between the company and the candidate. While the information in the background check report will obviously be shared with a hiring manager, candidates won’t feel like they’re being investigated by their prospective new co-workers, or that their personal information will become common knowledge in the workplace.

• Legal protection. Employers who hire a third-party to conduct their background investigations get some legal immunity protecting them from lawsuits that allege misconduct, such as invasion of privacy or violating of the Fair Credit Reporting Act. But if the employer conducts the investigation solo, there’s no protection.

Avoiding the Pitfalls
Here is how a typical “bad-hire” fiasco might begin:  First, you notice that an applicant’s resume reflects all the qualifications and credentials of the candidate you are seeking — an almost perfect match.  Next, you find yourself sold on the applicant during the first five minutes of the interview. Then, because your instincts are usually spot-on, you decide to act on what your gut is telling you: Hire this person now before someone else does.

Wouldn’t it be nice if those first few minutes of an impressionable interview alone provided quality information to make a hiring decision? After all, pre-employment screening is time consuming, and you might not feel the need to conduct any additional background checks in order to make your decision. However, taking such shortcuts is not only risky, it can also cause you to miss out on valuable opportunities to identify other highly qualified and desirable candidates.

Some employers realize too late that their first impressions can be misleading and unreliable, especially when those “good vibes” are not supported by facts and information. Consider this highly publicized, high-profile example:  In 2006, a RadioShack Corp. CEO and president had to resign after admitting that he falsified his resume and misrepresented an academic record. And it’s not an isolated incident. According to Business Week, 16 percent of executive resumes contain false academic claims or important omissions related to educational experience.

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