Are you too trusting?
Criminals come in all shapes and sizes. As do tellers of little white lies. The moral: Don’t forget that all important background check when next you hire.
By Christopher Bibey
DO YOU KNOW WHO YOU'RE HIRING? IN AN AGE WHERE NEGLIGENT hiring lawsuits are on the rise, fear of terrorism is rife, corporate accountability is at an all-time high, 30 to 40 percent “of all job applications and résumés include some false or inflated facts,” according to the Privacy Rights Clearinghouse, and “the typical US organization loses 6 percent of its annual revenues to (occupational) fraud,” according to the Association of Certified Fraud Examiners 2004 Report to the Nation, it’s little surprise that background checks are the norm when hiring.
In fact, the most recent survey by the Society for Human Resource Management showed that, in 1996, 66 percent of companies performed general background checks, which included references and past work history. That number increased to approximately 82 percent by 2003. As far as criminal record checks are concerned, the same survey revealed that 80 percent of companies conducted these checks, up from 62 percent in 1996. This shows that, over the past 10 years, there’s been a healthy increase in the number of employers formerly assessing the merits of—and the potential risks associated with—prospective hires.
Simply put, background checks—or consumer reports, as they’re formally known—in today’s business environment are simply indispensable. The cost of a workplace violence lawsuit filed against your company, for example, or of embezzlement of company funds, far outweighs the cost of a comprehensive background check, which averages approximately $50 (including criminal history, past employment, confirmation of degree and references).
Setting up the necessary procedures with an outside consumer report agency is very simple—and very quick. Here are five key steps:
- Ask questions. Thoroughly research all of the pre-employment screening companies that you are considering. Questions you may ask include: “How many employees does your company have?” “Do you currently work with any other clients in our industry?” “Can you supply us with references?” These questions will help you make the right decision.
- Identify searches. Decide which searches are most appropriate to your needs. Do you want to check references, degrees and past employment, or just criminal records? The majority of companies offer more than 35 different searches, so make sure the one you choose will give you the information you’re after.
- Consider the costs. Call a sales representative and ask for the price of your chosen searches. Also ask if a volume discount is available. Though price should not be the sole reason for choosing one company over another, it is obviously a determining factor. Also check for hidden costs. Some companies charge set-up, software download and invoicing fees. Ask about these up front so you’re not surprised when your first bill arrives. Finally, ask about the methods of payment accepted. Make sure the company you choose allows you to be consistent with your organization’s accounting practices. Not all companies accept credit cards, for example, so ask before it’s too late.
- Assess turnaround time. Ask how long it will take to get the results you need to make your hiring decision. This is extremely important to companies that need to hire on the spot, or that feel they need to beat out the competition by jumping in with an offer quickly. Ideally, search for a company that can have results to you within one or two days.
- Consider how reports are sent and retrieved. Most companies offer three options: email, fax or online access. The most common option is an online order entry and retrieval system. This allows the user to enter the searches and retrieve them from any computer, anywhere.
Before you set up background check procedures, however, make sure you know what can and cannot be included. The Privacy Rights Clearinghouse states that, “Background reports can range from a verification of an applicant's Social Security number to a detailed account of the potential employee's history and acquaintances…[M]any of these sources are public records created by government agencies.” They include driving records and vehicle registration; credit records and bankruptcy information; criminal, court and incarceration records, in addition to sex offender lists; education records; workers’ compensation; character and personal references, and neighbor interviews; medical records; property ownership; military records; state licensing records; drug test records; and past employers.
However, the federal Fair Credit Reporting Act (FCRA) sets national standards for employment screening performed by an outside consumer reporting agency (as opposed to in-house, employer-conducted background checks). Furthermore, “[M]any state labor codes and state fair employment guidelines limit the content of an employment background check,” the Privacy Rights Clearinghouse advises, so research what your specific state requires.
Items that, according to the FCRA, cannot be reported, include: bankruptcies after 10 years; and civil suits and judgments, records of arrest, paid tax liens, collections and any other negative information (with the exception of criminal convictions) after 7 years. Also, be aware that, before you can obtain a consumer report, the individual in question must be notified in writing, and must provide you with written authorization for the report to be conducted.
What if a background check reveals negative information—the kind that sways you toward adverse action? The FCRA provides that, before taking any adverse action based on the results of a consumer report, the company must give the individual a “pre-adverse action disclosure,” including a copy of the consumer report and a summary of the candidate’s rights under the FCRA. Furthermore, after the adverse action has been taken, the company must announce the fact to the individual in the form of an “adverse action notice.” This should include the consumer report agency’s name, address and contact information, a statement that the consumer report agency is not responsible for making the decision not to hire, and a notice that the individual has a right to dispute the contents of the report, and a right to a free copy of the report if requested within 60 days.
Background checks are indeed indispensable if you wish to mitigate risks in hiring practices. But, as with all things related to business, employers are held accountable for invasions of privacy or misuse of information—and quite rightly so. While setting up background check procedures with an outside consumer report agency is quick and easy, it’s up to you to familiarize yourself with employee and personal privacy rights. Just as you expect potential hires to conduct the interviewing and hiring process by the book, so too must you, the potential employer, take measures to ensure you abide by the rules.