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The ABCs of Background Checking

You want to weed out the bad apples, but not break the law. You want to announce what you’re doing, but not scare off applicants from applying. Here’s a roundup of what HR needs to know about background screening.

November 2, 2001
Related Topics: Staffing and the Law
For some employers, background checking has been a step taken grudgingly. They order only the bare minimum background check, mainly to protect themselves against claims of negligent hiring. But, like so many things in the world of work, September 11 has opened many employers' eyes.

Now, a very thorough background check has become the order of the day, says Eric Boden, president and CEO of Irvine-based HireRight.

"Employers are looking at this a little bit differently now," Boden says. "Before, it was perfunctory, without much thought to quality. Now a number of our customers are asking what can they do to improve quality of the processes on their end, and what other services we have to give them more comfort."

Background checking can't give employers everything they want ("There's no known database for terrorists," Boden says). But there are databases and sources for many, many other kinds of information: nurses' aide registries, sex-offender registries and workers' compensation histories. And, of course, there are the usual -- and critical -- background checks, done to screen for criminal, employment, and educational history.

Creating a safe, profitable workplace
One expert recommends that HR think about background checking this way: it's not the last thing you do after selecting a candidate. It should be your first consideration, and the centerpiece of how you organize your hiring, says Les Rosen, an attorney and president of Employment Screening Resources, based on Novato, California.

"Safe hiring takes place well before background report," he says. "It starts before the first ad goes out." Rosen calls this a PTA process: You need a program for safe-hiring, training in it, and auditing of it. The auditing ensures that everyone is following the program, he says. (Two tools that Rosen and ESR created, a safe-hiring audit and a safe-hiring checklist, accompany this article.)

Rosen recommends that companies put their safe-hiring commitment front and center: Widely announce that you do background checking. Put it on your Web site. Put it in your classified ads, he says.

The firms that do that have a lower rate of "hits" -- that is, background screenings that come back with something negative in them. Rosen says that's because the announcement of screening has prompted some applicants to opt out so they wouldn't be scrutinized. Boden says such applicants turn instead to companies that they know don't do background checking. That's "adverse selection," and you don't want your company to be in that group, he says.

The second advantage of letting people know that a company background screens is that "you encourage applicants to be open about their past indiscretions," Rosen says. It opens up some frank and important discussions that let employers make better hiring decisions. It might not matter to you that the applicant had a DUI conviction 15 years ago, but at least your candidate has leveled with you about it.

What background checks cost
A comprehensive check, including criminal, employment, education, plus a few other specific checks, typically ranges between $100 and $200, says John Long, president and CEO of HireCheck, based in St. Petersburg, Florida. A basic criminal check could be as little as $25. "It's a small price to pay for peace of mind," says Boden.

If your company is very small, and even $150 sounds like a lot, visit Employment Resource Screening's Web site, and read "How to Avoid Hiring a Criminal for under $20."

The cost of not checking
Perhaps, despite September 11, your company still feels that background checking is unnecessary. Perhaps you're in a small community, and your referrals from current employees, so you feel that you know who you're hiring. But that attitude is not going to help your company if it's sued for negligent hiring.

"Because of increasing incidents of workplace violence, more and more governing bodies and courts in the United States have created laws or made rulings regarding employers' responsibility to make sure they know who they are hiring before they put clients and employees at risk," says Long. "By conducting a reasonable background check, employers should have the information needed to make better hiring decisions. By not conducting a check, the employer may be subject to lawsuits and crippling penalties and court awards if an unchecked employee commits a crime against a client or fellow employee."

The average jury award for negligent hiring against a company was $870,390 in 2000, according to Barry J. Nadell, president of Chatsworth, California-based InfoLink Screening Services. Contrast that with the $25 your company would spend on a basic criminal background check.

What to check
The major background checking vendors offer a variety of reports that address the needs of employers in different industries, Long says. Although specific industries have some specialized search reports, the most common background reports include:

  • county criminal (felony only, felony and misdemeanor, misdemeanor only)
  • prior employment verification
  • education verification
  • licensing verification
  • motor vehicle record
  • credit
  • Social Security number
  • reference checks

Employers who are only concerned about avoiding liability will do a minimal search that would be considered "a reasonable" effort by the court system -- protecting the employer if a negligent hiring suit arises, Long says. Since "reasonable" has not been defined by law, an employer doing a minimal search is probably protected from negligent hiring claims, Long says.

Typically, this minimal search would include a criminal search in the applicant's county of residence, along with the counties where he worked and went to school, background checking firms say. Employers also can choose a statewide criminal background check in the state of the employer, but not all states have reliable statewide criminal-record repositories. That means the most reliable criminal checks are done county by county (and there are more than 3,000 jurisdictions in the United States, with more than 10,000 courthouses). There is a national criminal-record database, but it's for law-enforcement use and isn't open to background checkers and employers (with the exception of checks for outstanding arrest warrants).

To decide what checks apply to which applicants, employers should look at the jobs people do, and match the check to those classifications. "The reports ordered are dependent on the position, though all positions should be subject to a criminal records check," Long says. "For instance, there is usually no need to conduct a credit check or an education verification on a forklift operator position who has no contact with corporate assets and possibly limited educational requirements."

Employers also have flexibility in the extent of the search by choosing how far back they want to research, Long says. For criminal records checks, employers can obtain arrest information back seven years and conviction information back as far as the source can provide. (Note that some states, like California, generally do not permit employers to even ask applicants about arrest backgrounds, let alone consider arrests in the hiring decision. Make sure your background-checking company understands your state's law.)

For applicants who would earn more than $75,000 in annual salary, an employer is allowed to obtain all information back as far as the source can provide, Long says. Typically, a diligent background check would encompass a minimum of five years on non-criminal searches and the maximum allowable time for criminal records, Long says. Here's the critical thing to remember about these criminal checks, Rosen says: "The EEOC says you can't automatically disqualify someone because of a past criminal record. You can take it into consideration, but you have to have a sound business reason" for not hiring someone with a conviction.

Although most background checks are conducted pre-employment, there are instances when periodic checks are in order, Long says. Driving records should be checked periodically for all employees on the road on company time. "Credit reports should be pulled periodically for employees handling company assets to monitor their personal financial condition: sudden improvements may indicate a newfound source of income -- perhaps your company coffers," Long says.

What HR should do as a partner with a background checking company
Here are a few hints for doing your part of the job right.

  • Understand the basics of the federal laws that govern background checks. The primary one is the Fair Credit Reporting Act.

  • Make sure you get two forms of ID. You should already be doing this to complete the INS's I-9 form. Someone might be able to create a fake driver's license, but perhaps not that and a passport, or a birth certificate. Without a real identity to check, the background screening company can't do its job properly.

  • Require applicants to fill out a job application. "Without one, you have no way to collect the information you need," Rosen says. "You can't gather information such as, 'Why did you leave your last job? And 'Do you have a criminal record?'"

  • Compare the application to the résumé. "Usually people who aren't truthful forget their stories and make a mistake," that makes the two documents inconsistent, Boden says.

  • Finally, when the background report comes back, read it. "It may seem very basic, but we have cases where the report isn't read," Boden says.

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