CWS 3.0: August 24, 2011 - Vol. 3.21


Feature: How to Manage the Risk and Cost of Contingent Background Screening

According to the U.S. Chamber of Commerce, U.S. businesses lose $50 billion each year due to employee theft and fraud and a staggering 18 percent of violent crime is workplace-related. But just 35 percent of companies require background checks on contingent workers. In the face of these numbers, companies may be more inclined to change that. However, it’s important to look before you leap into the dicey world of background screening, because using a haphazard process may inadvertently skirt the law and land your company in hot water.

That warning applies to employers at all levels — even the federal government. For instance, the U.S. Census Bureau is embroiled in a lawsuit for allegedly screening out temporary census takers last year based on decades-old arrest records for minor or unconvicted offenses.

Meanwhile, the Equal Employment Opportunity Commission (EEOC) is currently reviewing its 20-year-old background check guidelines regarding criminal and credit histories, because the policies may discriminate against minorities.

“It’s a difficult time to be a human resources professional because the background check laws are subject to interpretation and it’s hard to define the exposures that are truly work-related,” says Christine Cunneen, CEO of Hire Image LLC.

While there are no bullet-proof solutions, these tips can help you manage the risk and cost of background screening contingent workers.

Adopt Consistent, Legal Policies

Background investigations should be the same for regular employees and contingent workers, because a company is exposed to equal liabilities and risks no matter who fills the position. Spell out the basic investigation and screening criteria in staffing firm agreements and conduct regular audits to ensure compliance.

And because the EEOC prohibits blanket screening policies, document decisions involving a collaborative review of discretionary criteria and background information so you can respond quickly and decisively if you receive a claim.

The EEOC sued Peoplemark Inc. in 2008 for allegedly refusing to hire anyone with a criminal record. Although the staffing firm eventually prevailed and recovered nearly $750,000 in expenses, it was an arduous process. The company had to hire experts and cull through thousands of records in order to prove they hadn’t discriminated.

Be mindful of federal, state and local laws and create policies that comply with the most stringent requirements — in addition to the mandates imposed by the Fair Credit Reporting Act. But the best way to avoid discrimination claims is by ensuring that all risk assessments and background investigation policies are work-related.

“Educate everyone in the company on the EEOC guidelines to make sure the exposures and background screening criteria are work-related," Cunneen advises. Also, be sure to audit hiring decisions that are made based on screening results to make sure they’re fair and unbiased.

For example, it makes sense to run a credit report on a temporary accountant or controller who has access to the company’s sensitive financial data, but you could be asking for trouble if you use credit information to gauge the character of a dock worker.

“The EEOC is onto the fact that credits checks have become a red herring for turning down workers,” says Bruce Berg, president of Berg Consulting. “To avoid discrimination claims, make sure the contingent workers are handling cash or engaging in another risky activity.”

Screen Proportionally and Sequentially

Companies can save money by interviewing contingents before ordering an investigation and only reimbursing staffing firms for background checks on contingents who pass and complete an assignment. While companies can reduce costs by as much as 20 percent by awarding contracts to one or two background screening firms, one of the best ways to lower the total cost of investigations is by ordering critical reports first.

For example, order a driving record and drug test before a criminal check if a contingent worker has to drive a company vehicle and verify the degrees and licenses of professional contingents before ordering other reports because college and university registrars report that at least 60 percent of the degrees they’re asked to verify are false.

Also, run a social security check to uncover omitted information before requesting a criminal history so a wily worker can’t evade scrutiny by camouflaging his or her past.

“Running a social security trace is a good way to start an investigation,” says Cunneen. “Because it checks for identity theft and undisclosed criminal convictions by researching tax records and the death index and returning all previous addresses and aliases for anyone using that number.”

Running a federal criminal records search can be cheaper and faster than checking every county, says Berg, and most federal searches also look for registered sex offenders.

But vetters must proceed with caution when reviewing federal information because providers can only access data from about half the states. Verify harmful information with each county before rejecting a contingent because the national information might be outdated and workers have increasingly taken steps to expunge old criminal records after struggling to find employment.

Some companies are running social media checks before ordering a full background investigation, a practice that is controversial because there’s no way to verify the accuracy of online information and the search may expose staffing firms and line managers to discriminatory information.

It’s often possible to ascertain a person’s age, race, religious preference or sexual orientation by reading their Facebook page and some workers have sued employers for taking adverse action after viewing personal photos or posts on social networking sites.

Recycle Workers

Re-assigning screened and proven contingents is a great way to reduce both cost and risk. So ask staffing vendors and program managers to highlight screened contingents and referrals when filling requisitions or compiling a slate of contenders and offer contingent assignments to full-time candidates and retirees who’ve already passed a background investigation. Monitor each staffing firm’s assignment completion rates, because it’s expensive to run another investigation each time a position has to be refilled.

Be sure to review current risk assessments and screening policies, too, to make sure they don’t discriminate and monitor the results of EEOC meetings and pending legal cases in case you need to make additional modifications.

“You can’t avoid all the risks and costs associated with contingent background screening,” Cunneen notes. “But it still beats the cost of theft or fraud.”

Leslie Stevens-Huffman is a freelance writer in Southern California who has 20 years' experience in the staffing industry. She can be reached at


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