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RISKVUE ARCHIVE | RISK BITES
How To Conduct Background Investigations
Part 1
By Don Stebbins
Checking an applicant’s records is generally necessary in order to avoid liability for negligent hiring practices. Several factors contribute to a successful pre-employment screening program. To meet due-diligence requirements, most pre-employment screening programs should:
1. Check all references offered by the applicant.
A reference check can be just as vital as a criminal background check in assessing the character of the applicant. Most employment lawyers will verify that defending an employer on negligent hiring practices allegations can be difficult, if not impossible, where the employer has failed to check employment references. If for no other reason, employment-reference checks verify the location of the applicant for the past several years and eliminate unexplained gaps in an applicant’s history that could represent undesirable activity. A solid work history is often indicative of stable character.
2. Obtain factual information to supplement impressions gleaned during personal interviews.
The background check should only seek out information that has either been directly requested from the applicant or that the applicant could voluntarily provide. There exists a fine line between diligent background investigation and invasion of privacy. If the screening process is used as a verification process of information offered by the applicant instead of a search for information that may disqualify an applicant, the process likely will not violate individual rights.
3. Be thorough enough and transparent enough to discourage applicants with something to hide, and to encourage applicants to be truthful.
Ironically, the most effective means of sorting applicants is notifying them of the company’s intention to gather and use background information. Employers find applicants with nothing to hide are not discouraged by citing successful completion of a background check as a condition of employment. Applicants who fear they may not survive a background review are not likely to apply. Therefore, make the required consumer-reporting disclaimer a vivid part of the application process, beginning with the advertisement. Prominent notice provides sufficient transparency. Remember, applicants should be asked to sign a background search consent form to reduce employer liability and to make all applicants aware that such checks will be performed. This is especially critical with respect to criminal background checks.
4. Comply with federal and state legislation.
In addition, employers developing employment-screening processes must consider the impact of expanding legislation regarding consumer reporting, discrimination and equal opportunity hiring. In particular, employers must consider the impact of sweeping changes in three major areas: consumer reporting, disability discrimination and immigration.
Compliance With The Fair Credit Reporting Act
The Fair Credit Reporting Act (FCRA) covers far more than just consumer credit reports. By definition, the FCRA covers any information generated by an outside agency for use in hiring decisions, and mandates that employers disclose such reports before taking any action. Therefore, employers who conduct background investigations using any outside agency to gather information, including credit checks and criminal records checks, must comply with the FCRA.
Compliance with the FCRA should come almost naturally to most employers who follow basic notice, consent and disclosure procedures. Under the FCRA, employers must first provide clear and independent notice to all potential applicants, in writing, of their intent to obtain a consumer report and possibly use that report in the hiring process.
Next, the employee must consent in writing to the gathering and use of the report. Then, to obtain the report from a consumer-reporting agency, the employer must certify that it (1) has provided the applicant with ample notice, (2) will comply with the FCRA if the report results in an adverse hiring decision, (3) will not violate the FCRA or any equal opportunity employment laws, and (4) will provide the applicant with a copy of the report if the employer decides not to hire that individual. Any in-depth investigation conducted by the employer into an applicant’s character (personal interviews with neighbors, for example) is classified as an investigative consumer report and subject to higher scrutiny.
Compliance With The Americans With Disabilities Act
In theory, the Americans with Disabilities Act (ADA) is a simple piece of legislation that prohibits employers from discriminating against disabled persons. In practice, however, the implications of the ADA are much more subtle and require careful attention to detail. The ADA prohibits employers from discriminating on the basis of physical or mental disabilities, inquiring into physical or mental wellness, or maintaining work facilities that restrict the movements of disabled persons. The ADA applies to both private and public organizations with 15 or more employees, and protects applicants who, though disabled, are capable of performing the essential functions of the job based on their skill, experience and training.
The difficulty in complying with the act lies in questioning applicants during the hiring process. Before the Act, employers were permitted to inquire whether applicant’s had been hospitalized, treated for a mental condition, or treated for any physically debilitating disease. The ADA prohibits such inquiries. But employers still need information regarding applicants’ physical and mental abilities in order to make effective hiring decisions. Again, employers must make a fine-line distinction between important information and over-intrusive questions. Generally, employers may inquire into an applicant’s ability to perform job-related tasks and only job-related tasks.
Compliance With The Immigration Reform And Control Act
The onslaught of phony or doctored identification materials in the workplace can make compliance with the Immigration Reform and Control Act a little tricky. The Immigration Reform and Control Act,3 makes it unlawful to hire an individual without complying with certain employment eligibility verification requirements. For example, when an employer hires an individual, the potential employee must sign INS Form I-9, certifying first their eligibility to work, and second that the documents presented to the employer demonstrating the individual’s identity and work authorization are genuine. The employer must sign the same form, indicating which documents were examined, and attest that the documents appear genuine.
The employer must accept any documents presented by the employee that reasonably appear on their face to be genuine and to relate to the person presenting them. The Immigration Act of 1990 established that an employer’s refusal to accept certain documents or demand that an employee submit other forms of identification in order to complete Form I-9 violates anti-discrimination policies of the Act.
However, the employer-sanctions provisions of the Act authorize civil and criminal penalties against employers who employ unauthorized aliens in the United States, and further authorizes civil penalties against employers who fail to comply with the statute’s employment verification and recordkeeping requirements.
So, employers must balance the need to discover forgeries with harsh penalties associated with immigrant employment discrimination. Employers in a sense have their hands tied, in that they are required to apply “good faith efforts” to identify phony I-9 documents, yet are restrained from asking for identity verification or employment authorization other than the documents listed on the I-9. It is a fine line, with the potential for negative repercussions on either side.
Conclusion
Research aside, the only way to develop a successful pre-employment screening program, one that comports to relevant due-diligence requirements, is to dedicate company resources to the task. Often, pre-employment screening receives minimal attention, and that’s exactly how due-diligence requirements get missed.
Often a function of the human resources department, background investigations and pre-employment screening processes should be reviewed and updated regularly by corporate representatives from senior management, legal counsel and department managers. Like any corporate process, pre-employment screening requires constant review, improvement and refinement. 
ABOUT THE AUTHOR
Don Stebbins is Managing Director of Vance International Consulting. Mr. Stebbins directs domestic and international investigations, security surveys and consultations. For more information on this or other security related topics, contact Mr. Stebbens at 703-385-6754 or visit www.vancesecurity.com.
Part 2: Types of Background Checks
By Jim McSherry and Karen Caruso
Within the often-hurried timeframe of hiring, it is nearly impossible to obtain all relevant information about potential candidates. Nevertheless, the following reports are available to all employers as a way to check the relevancy of the information supplied by potential candidates.
Social Security Number Tracing
This report will verify the Social Security number provided by the applicant as valid and used by the person to whom it was issued. It is the least expensive report and should be done first. It gives the employer valuable information to cross-reference with job interviews and applications. By highlighting prior addresses, the Social Security trace alerts the employer where to begin and how extensive a criminal record check is necessary. Determining that the Social Security number provided is legitimate and is being used by the proper person can help rule out false identities.
This tool also can aid in verifying previous addresses and sometimes provides date of birth and employment information. In addition, a message may appear whenever a listed Social Security number has been used previously in fraudulent activities. It also may identify individuals who are using the Social Security number of a deceased person.
Cost: $5 to $10
Time to get report: Usually within 24 hours
Criminal Record Checks
Criminal conviction records research is recommended for all applicants. It provides a history of the applicant’s criminal activity, an indicator of the person’s attitude toward honesty, and helps identify applicants who are prone to violence. It especially can help prevent and defend negligent-hiring lawsuits. Caution: State records usually rely on county records that may or may not be electronic. If they have paper records, the lag time for the county information to reach the state level may impact how current a state criminal report might be.
Cost: $14 to $19 for a county search; $20 to $40 for a state search
Time to get report: 24 to 72 hours
Credit History
Tracing a person’s credit history can identify those who are financially overextended or on the brink of problems that could adversely affect their performance on the job. Credit histories also will identify previous jobs, inquiries for additional credit and public record identifying bankruptcies, liens, etc.
Cost: $5 to $12
Time to get report: Around 24 hours
Motor Vehicle Report
Motor vehicle records research is a must for any applicant seeking a position that requires driving responsibilities. This research reveals the applicant’s type or class of driver’s license, any restrictions or violations, convictions and license revocations, auto insurance cancellations, accidents, full name, and in some states, applicant’s address at the time of last license renewal.
Cost: $2 to $20
Time to get report: Varies greatly by state now due to recent legislative changes. In the state of Pennsylvania, for example, employers are now required to mail a signed, notarized release to the Department of Motor Vehicles.
Education Verification
Information found on resumes is often exaggerated or outright false. The lack of appropriate credentials also may mean that the individual is not competent to perform in the position being considered. It also lends to the applicant’s level of honesty.
Cost: $8 to $10
Time to get report: Varies from 24 hours to several weeks, depending on the requirements of the institution queried
Work and Personal Reference Interview
Many employers do not find the time to do this. Previous employment and experience are often overstated and sometimes fictitious. Reference-checking verifies references listed on applications for authenticity including dates of employment, job titles and responsibilities. Salary, circumstances of termination and eligibility for rehire are researched and reported if available. As an employer, you should check all references that are provided to you by the applicant.
Cost: $8 to $20, depending on the level and depth of the reference verification
Time to get report: Varies from 24 hours to several weeks
Professional License Verification
The search is critical when a particular professional designation is claimed and is necessary for job performance, job description, or credibility. Verification includes the type of license, expiration date, standing, and license number.
Cost: $8 to $10, depending on the level and depth of the reference verification
Time to get report: 24 hours to several weeks
ABOUT THE AUTHORS
Jim McSherry is President and CEO of the workplace HELPLINE of Boston, a provider of “value-added” human resource loss control services to businesses through insurers, associations and business-to-business providers. He can be reached at 617-247-6100 or jmcsherry@hrhelpline.com.
Karen Caruso is principal of Mind Your Business, Inc., an investigations group providing security solutions for its clients’ business and personal needs. Specializing in background investigations, Mind Your Business, Inc. provides a broad range of services aimed at increasing the level of information, profitability and security for clients. She can be reached at 888-758-3776 or kcaruso@mybinc.com.
riskVue | The webzine for risk management professionals
October 2001
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