Subadhra Sriram's Blog

Background Checks for Contingent Workers Are Tricky

Would it be disconcerting to learn that the newest contingent worker who has been helping you with gathering some sensitive financial data has a recent DUI? Maybe what would be more disturbing is that the fact the staffing firms that supervised the screening knew. Well here’s the kicker.

First, in this case, the staffing firm may not be able to (legally) use the information, as the DUI may not be relevant to the contingent worker’s job responsibilities.  If the contingent were a truck driver, then the staffing firm would be legally obligated to inform the client that the contingent worker’s driving record may cause a dangerous situation for the company. 

The Equal Employment Opportunity Commission takes the position that background checks, including credit or criminal record checks, have a disparate impact on racial minorities, and are unlawful unless the background information is closely related to the job.  "Some states simply forbid using criminal record information in some cases, and in other cases forbid using the information unless there is a close, “substantial” relationship between the crime and the job," says Eric Rumbaugh, employment attorney with Michael Best & Friedrich LLP.

There are many such loopholes and pitfalls around background screening. It’s important to understand how to use this information — and its limitations.

Companies conducting background checks also have to comply with the Fair Credit Reporting Act (FCRA), the federal law that governs this area. The FCRA governs how the third parties that perform most background checks operate, and how companies that obtain consumer reports can use them. Under the FCRA,, candidates have an opportunity to learn about and refute any derogatory information.  The name Fair Credit Reporting Act is misleading.  Many businesses obtaining reference checks or criminal record reports on applicants think they are not obtaining “consumer reports.  However, almost all background checks obtained by employers from third parties are considered “consumer reports” under the FCRA, whether or not they contain credit information..

Plus, background checks can be costly to obtain.  They can range from a few dollars to find addresses to hundreds of dollars for more extensive investigation. Typical packages ordered range from about $30 for basic criminal searches to $100 for packages that include more extensive criminal searches (e.g., Federal Criminal and Terrorist Watch List) as well as employment verifications and motor vehicle records searches.

So suppliers and customers should use legal counsel to mitigate any risk around the use of background checks.  You don’t want to land in a potentially complicated legal wrangle just because you didn’t take the right precautions before screening your contingent workers.


Add New Comment

Post comment

NOTE: Links will not be clickable.
Security text:*

Recent Blog Posts

Should You Insource Your MSP?

You can hate or love it but you can’t ignore the MSP. Staffing suppliers have called managed service providers many a name but have ended up joining or acquiring one. The MSP is here to stay but the... Read More

Staffing Industry Growing, Touching Record-Breaking Highs

Here are some stratospheric numbers — and no we are not talking about Facebook’s impending IPO. In 2012, Staffing Industry Analysts’ Timothy Landhuis projects that IT staffing revenue could be as... Read More

Buyers of Contingent Labor Should Expect to Pay More

It’s no longer a buyer’s market.

As the economy improves, the buyer of contingent labor no longer has the upper hand. It was quite a different story during the recession. Buyers had the pick of the... Read More

IRS Fails Own Audit

Everyone knows how tough it is to be compliant with the maze of independent contractor law now in place.  And if the IRS didn’t already appreciate this complexity, maybe they will now—a recent... Read More

A Staffing Atlas to Guide You

What’s the temp penetration rate in your county? If someone asked you that, you would probably dismiss both the question and the person who asked. But for those in contingent workforce management, it’s... Read More

Rolling Out New Ideas In Staffing

It was a great coming of age. Executive Forum turned 21 and wowed the staffing industry. Talk shows, awards, great sessions, 900 plus people preening in the Red Rock, Las Vegas were just some of the... Read More

Contingent Workers Are the Survival of the Fittest

"What is a contingent worker?"

Five years ago, this was the most common response I received when I said I write on contingent workforce issues. And no, I am not talking about just my friends and... Read More

An Effectual Contingent Worker Onboarding System Is Crucial

What if you had to work in a different office every week? Logging in to an unfamiliar computer, figuring out the dos and don’ts of the software, sitting in a strange cubicle, not knowing where the restroom... Read More

Executive Forum Talk Show

It’s not your usual talk show. But for those in the staffing industry, it promises all the pizazz of an Oprah Winfrey spectacle. At Staffing Industry Report Live during the Executive Forum, our esteemed... Read More