Background screening is risky if not done right
By Margaret Steen
Checking candidates’ backgrounds can protect a staffing ﬁrm from liability, save it from embarrassment and even help generate new business. But background checks can be complicated, expensive and, if not done correctly, fraught with legal risks.
State laws regulating the use of background check vary. Further, companies face liability if they fail to discover a candidate’s criminal history, or if they pass a candidate over due to erroneous information that arises from a check.
“There are lots of lawsuits dealing with background checks,” says Barry J. Nadell, owner of Nadell Investigations and an expert witness. He previously owned a background screening company.
Nuts and Bolts
Background checks can range from cursory to in-depth, so if a staffing ﬁrm engages a third party to run them, it’s critical to know which checks are being run — and what their limitations are.
“You’ve got to make sure you understand what the client is expecting,” says Barbara J. Bruno, CEO of Good as Gold Training. “What are you verifying?”
Some clients want only basic checks, while others are willing to pay for more sophisticated checks.
Background screenings may include a check of online criminal databases nationally, sex offender registries, speciﬁc criminal searches in the counties where the candidate has lived, education and employment veriﬁcation, and checking the worker’s right to work in the United States. Many clients also require drug screenings, says Mary Hubbell, managing partner of Liberty Screening Services. Sometimes checks include civil court actions and driving records, as well. And social media checks, such as tracking the candidates’ activity on Twitter or LinkedIn, are becoming more sophisticated.
“As you go up through the job ranks, you’d want to do a more and more comprehensive check,” says Robert Capwell, chief knowledge officer of Employment Background Investigations, based in Owings Mills, Md.
Companies conducting background checks must be sure to comply with The Fair Credit Reporting Act (FCRA), which governs credit checks and says the candidate must sign an authorization for the check. The FCRA governs how the third parties that perform most background checks operate. It includes, among other things, an opportunity for the candidate to learn about and refute any derogatory information. (For more information regarding the FCRA, see Beneﬁt of Counsel in the February 2012 issue of Staffing Industry Review.)
The third party doing the check, called a consumer reporting agency, needs the candidate’s full name, date of birth, Social Security number and current residence. “You have to use many identiﬁers in order to determine that the individual you’re denying employment to is the person who has the record,” says Kenneth Bohan, owner and president of The Liberty Group in Houston, which includes staffing ﬁrms.
It’s important to understand how to use this information — and its limitations. For example, not all counties have electronic records, and those that do may not keep them up to date. “There’s nothing that demands that they report every week,” Bohan notes.
Further, state laws and the FCRA may limit what information can and can’t be released. For example, some states won’t allow the release of arrest records if the person wasn’t convicted, Capwell says.
Several trends are changing background screening:
SSN Checks. The Social Security Administration now oﬀers pre- employment veriﬁcation of Social Security numbers. “You don’t have to onboard a candidate and put them on payroll in order to legally verify that they can work in the United States,” Hubbell said.
International background checks. With job candidates increasingly working in different countries during their careers, checking a candidate’s work history and other records from time spent abroad is a good idea — but not always easy or inexpensive. Countries have different limits on how long criminal convictions can be reported, for example.
“Different countries have different laws and issues,” Nadell says. “It’s never been a foolproof situation.”
Social media screening. Social media screening “is very controversial,” Hubbell says and the information a social media search turns up is “extremely subjective information.”
In some cases, a recruiter may stumble upon information that isn’t supposed to be used in hiring, such as the fact that a candidate is pregnant. And something posted as a joke may be taken seriously.
“What if I’ve got a friend who decided to post something on my Facebook page that was totally made up or false?” Capwell says.
One way for employers to get the beneﬁts of social media screening while lessening these concerns is to use a third-party service. Social Intelligence Corp., based in Santa Barbara, Calif., and founded in 2010, uses a process similar to a traditional background screening, in which the employer gets the applicant’s consent, says Max Drucker, CEO. The employer speciﬁes what type of information they want to be notiﬁed about: illegal drug use, potentially violent or racist behavior, sexually explicit material. The company generates a report about these issues but nothing else, making it less likely that an employer will learn about the candidate’s religious views, for example, or disability.
“We protect the job applicant from that happening because the employer is never exposed to anything that’s not legally allowed for hiring,” Drucker says.
Drucker’s company looks only at publically available information such as blogs, photo- and video-sharing sites, and social networks. “We only evaluate things that the job applicant has put out there themselves,” Drucker says. “We are vehemently opposed to asking for passwords to social networking sites as part of the screening process.”
As with a traditional credit report, the candidate has a right to see and dispute derogatory information that leads to them not getting a job.
Drucker likens public online postings to the way candidates present themselves in interviews. “If a job applicant comes into an interview with ﬂagrantly racist remarks on a T-shirt, nobody would expect the employer to hire that applicant,” he says. “It’s part of how they represent themselves publically.”
Use of credit reports. Credit checks are sometimes part of background checks, most commonly for people who will have authority to spend money for their employer.
“If someone can’t manage their personal funds, can they manage corporate funds?” Capwell notes.
However, some states limit how this information can be used, because there can be “very good reasons for bad credit,” Hubbell says. A worker who has been unemployed, for example, may have gotten behind on bills.
A number of states have restrictions on the circumstances under which a credit report can be considered in hiring.
Background checks can protect staffing ﬁrms and their clients from bad hires. Aggressive background checks help in another way, too: “Most people that have something shady in their background usually don’t go for jobs where they know they’re doing a background check,” says Elise Lewis of Distinguished Domestic Services in Los Angeles, which places household staﬀ members in private homes.
Margaret Steen is a writer in Los Altos, Calif., who writes frequently about the workplace.