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Criminal Records

Report on Inaccurate Criminal Background Checks Loses Impact Due to Lack of Objectivity

November 07, 2013

By Lester S. Rosen
Employment Screening Resources (ESR)

A report issued by the National Consumer Law Center (NCLC) entitled “Broken Records: How Errors by Criminal Background Checking Companies Harm Workers and Business,” suggests that inaccurate criminal background checks are widespread and makes recommendations to remedy errors that can cost jobs.  The report cites a handful of anecdotal stories and some court cases where an inaccurate background check had grave consequences on a consumer’s ability to get a job out of the millions of background checks conducted yearly.  The report recommends steps state governments and federal agencies can implement laws to rein in errors.  See: http://www.nclc.org/images/pdf/pr-reports/broken-records-report.pdf

Although the report makes recommendations to help prevent reoccurrence of situations where job applicants have been the victim of inaccurate reporting or sloppy processes, the report loses credibility due to an apparent lack of objectivity as well as a lack of knowledge of how professional background screening firms operate as most of what they propose are standard procedures for professional background screeners.  A firm providing employment-related screening services is specifically defined and regulated under state and federal laws as a Consumer Reporting Agency (CRA) for short.  The Federal Fair Credit Reporting Act (FCRA) is the major controlling piece of legislation and source of consumer protection in the screening process.  The FCRA is enforced by the Federal Trade Commission (FTC).

The National Consumer Law Center is not alone in the mission set forth in the report, as protecting the consumer from having to face the adverse impact of the reporting of incomplete or inaccurate information is among the primary goals of any professional background screening firm.  Employers are not well served unless they receive accurate, actionable information in background check reports and screening firms who fail to do so suffer in the marketplace.

In reviewing the areas where the NCLC report falls short, it is critical to keep in mind that all background checks are done only with the specific written authorization of consumers, who also receive detailed disclosures about the process and their rights as required by existing federal and state law.  Nothing is done in secret or without the consumer’s full knowledge and consent.  It is also critical to understand that background checks are a mission critical process for employers of all sizes to prevent the legal and financial nightmare associated with even a single bad hire.  The screening industry provides millions of reports every year, and against that backdrop, the number of complaints, issues or problems is infinitesimally small. 

The following examples of erroneous information and unfounded conclusions need to be addressed:

1.)

There is an insinuation made that the problem of inaccurate reports is widespread by citing a few anecdotes. The background screening industry does millions of reports a year.  Yet, in the entire 43 page report, literally only a handful of examples are given with no statistical support.  The reports portray the issues as common and far reaching when, in fact, the only reasonable inference when the numbers are considered is that the opposite is true.

Ironically, one of the complaints made by the report  is that a background screening report can be misleading by presenting the same information multiple times, giving a misleading impression that the behavior is far more serious than it really is. The report then cites two occasions where that situation occurred.

By failing to acknowledge  that the number of inaccuracies are statistically minimal compared to the millions of background checks performed annually, the report is guilty of doing exactly what it is criticizes some screeners for doing.  In fact, based upon the amount of litigation and complaints that are generated from the millions of reports done annually on behalf of employers, it follows that errors that have an adverse effect on the consumer are few and far between. Of course, for the consumer that is adversely impacted, it does not matter how many checks were done right if they are the victim of an error. However, the report also fails to note, as outlined below, that victims of an inaccurate reporting have a number of rights, resources and recourses such as governmental agencies or consumer attorneys who are anxious to target background firms.  It’s noteworthy that by law every professional background screening company must have a notice on their website instructing the consumer how to contact them to contest inaccurate information along with an 800 number by which they can reach personnel trained to help them with the process. 

The bottom line is that statements such as “professional background screening companies routinely make mistakes,” (page 3) or “criminal background checks often contain incorrect information or sealed information,” (page 7) are simply not supported by competent information above and beyond few cases and anecdotes out of millions of reports prepared yearly.  Consequently, this report on errors and inaccurate information is itself fatally flawed with errors and inaccuracy. 

2.)

The report fails to mention that consumer litigation is a growth industry, which provides a powerful tool for consumers who may be the victims of an inaccurate report.  There appears to be dramatic increase in litigation claims against background screening firms as plaintiff’s attorneys have discovered a new and financially inviting target.  Background checks are inordinately complicated, and consumer attorneys have stepped up the filing of legal actions, including class actions, where consumer attorneys have the opportunity to make a great deal of money.  When representing a party claiming injury, a private attorney receives a percentage of any recovery based upon a contingency fee.  In the case of class action lawsuits, attorney fees can be six figures or higher.  It also appears anecdotally to members of the screening industry and attorneys that represent screening firms that the number of nuisance lawsuits lacking merit is clearly on the increase, and less than ethical parties are looking for an easy way to make money by threatening unfounded lawsuits.

3.)

In addition, the report fails to note that a United States Supreme Court case decided in June 2007, Safeco Ins. Co. v. Burr, substantially increased the risk of punitive damages under the FCRA by ruling that a reckless disregard of the FCRA could be sufficient to show “willful” non-compliance.  This has led to a dramatic increase in class action litigation.  Potential class members, including employees and prospective employees, may be entitled to statutory damages of up to $1,000 for each violation in the case of willful non-compliance. Class action lawsuits also create exposure for large awards of attorney’s fees and the potential exposure to punitive damages.  The net effect is that it is now easier to sue an employer or a background screening firm for punitive damages and there is an incentive for class action lawsuits, all of which serves as an additional form of market regulation of background screening firms.

4.)

One of the most glaring omissions in the report is a complete failure to recognize the great societal benefit that background screening reports provide in reducing workplace violence, theft and fraud, along with putting the best qualified candidate in each open position.  The employer also has the legal obligation to exercise due diligence in hiring.

On page three, the report seems to dismiss the need for employers to exercise care in hiring by stating: “Despite its promotion as a public safety service, the sale of criminal background report has become a big business generating billions of dollars in revenue.” 

A fair minded report truly aimed at advancing the public good and balancing the need for employers to hire appropriately with the need to protect against errors would in good faith recognize that background checks are a necessary process in today’s society.  For every anecdote cited by the report bearing on a loss of a job opportunity, there are hard facts showing that a failure to perform background checks resulted in identity theft, sexual assaults, child molestation, embezzlement, the destruction of a business entity, workplace violence, lawsuits for negligent hiring, and – in the worst case – homicide.  It is unfortunate that the report undermines its credibility by a failure to even recognize that these are important issues. 

For example, the horrific rape and murder of women, Sue Weaver,  in her own home by a workman that had been sent earlier to repair air ducts who had two convictions for sexual assaults and was on parole, encouraged the victim’s family to start an organization advocating increased background checks for workers that go into people’s homes.  See:  http://www.sueweavercause.org/.  

The Sue Weaver story is not an isolated anecdote.  Negligent hiring suites are filed constantly against employers for failure to perform adequate background checks or perform checks at all.  As an attorney and published author on the subject, I have been qualified as an expert witness in a number of these cases.  I have been involved in horrific cases involving innocent people murdered in their own homes, children molested, women brutally sexually assaulted, and other horrific events. These events resulted from a failure to exercise due diligence in hiring, including not obtaining criminal records. No one disputes that an erroneous criminal record costing a job has terrible and profound impact on a person's life.   However, that injustice can be corrected and the person will have the opportunity to move on.  Where the injustice causes measurable harm, they can also seek monetary damages through the courts.   But how does a society undo the impact and scars of a murder, rape, child molestation, or other sexual assaults or violent crimes that can result from a failure to perform criminal background checks?  A fair minded report would at least recognize that there is a legitimate societal need for these checks to occur.

5.)

The report fails to recognize or understand the service background screening firms perform in working with applicants to help correct inaccurate data.  Background check reports are often the first time an applicant discovers there is information in the public sphere that needs correcting.  Background check firms are in most cases the ones who assist applicants in correcting mistakes as a result of flawed information coming to their attention as a result of the legally required adverse action where they are provided with a copy of the report “before” the employer makes an adverse employment decision.  As noted earlier, professional screening firms have specially trained personnel to help applicants correct any errors. Through a review of their background check reports to which they are legally entitled to a copy in all cases, and must have a copy before any adverse action, applicants discover issues such as:

  • A court clerk has failed to update a court  file to show there was some sort of judicial set aside or similar post conviction action by the court;
  • The consumer has a “computer twin,” meaning someone with a similar name and perhaps even similar year of birth that has a criminal record that may come up in the future.  In the event, the applicant is able to advise  new potential employers that may happen, paving the way for a much smoother process in getting a new job;
  • The consumer was a victim of identity theft;
  • A consumer has a warrant out for his or her arrest they did not know about.  This can happen where a consumer thought  a traffic matter or other case  had been handled, but it was not;
  • A past employer shows differ dates of employment then the applicant recalls;
  • A past employer gives a different job title then the applicant believes they had; and
  • A past school’s records do not accurately reflect educational credentials.

The authors of the report apparently do not understand or appreciate the role that a CRA plays in working with consumers in correcting such issues “prior” to the employer taking adverse action.  It is important to keep in mind that background checks only occur after an employer has invested time, energy and money in whittling down a large applicant pool to the finalists.  By that time an employer has a vested interest in hiring the individual whenever possible.  Of course, such assistance may not be rendered every single instance, but it happens a considerable amount of time.

6.)

Part of the reason that the NCLC report may not reflect the active role that CRA’s play in working with consumers, is that the report apparently does not appreciate or understand the difference between “data brokers” who dispense aggregated/unconfirmed data and Consumer Reporting Agencies that assemble and evaluate material from a number of sources to provide a background check report where all information reported has been confirmed at the source during its preparation.  The report erroneously focuses on some data brokers who assemble and sell unconfirmed bulk data.  However, a CRA cannot report any information sourced from bulk data without first confirming it at the source which means the abuses referred to in the report are coming primarily from data brokers as opposed to regulated professional screening firms.

It appears that the single biggest source of errors in the report had to do with these aggregated databases gathered and sold by data brokers who do not fall under the FCRA.  The failure of the report to distinguish between an unregulated data broker and a CRA regulated by both federal and state laws is a fundamental flaw that seriously undermines the findings of the NCLC report and demonstrates a lack of understanding of employment screening in the real world.

A CRA will use bulk data purchased from a data broker but only as tool used locate possible criminal records and the underlying jurisdictions; a contemporaneous check of the records is then undertaken at the jurisdiction is question to confirm the record’s current state before it is included in the background check report as required by both sections 607(b) and 613 of the FCRA that every CRA must abide by.   In other words, a CRA only uses bulk data to point to areas of additional primary source research.

In fact, many professional background screeners share the report’s critical view of the activities of data brokers, and there is wide spread concern in the background screening industry that data brokers are engaging in practices that potentially harm CRA’s.  However, by lumping CRAs and data brokers together, the report does exactly what it purports to oppose—the spreading of inaccurate information that results in an adverse impact

7.)

Related to the inaccuracy of the report in lumping CRAs together with data brokers is that the lack of notice of any kind that roughly 170  leading Consumer Reporting Agencies have joined 'Concerned CRAs' and have publically rejected the use of databases without taking the steps necessary to a ensure accuracy and completeness as required under the FCRA.  The Concerned CRAs and their position statements on bulk data and offshoring can be found at their website http://www.concernedcras.com.

 . According to the Concerned CRAs website, the organization’s membership who all are committed to maintaining FCRA compliant standards are concerned that:

. . .some employment background screening firms sell "national criminal records databases" to employers without appropriate safeguards to ensure that the information they are delivering is accurate and up to date. We believe that criminal records databases are valuable sources of information if they are used in a responsible manner.

We are concerned that these practices do not appropriately protect employment applicants from avoidable harm. Likewise, employers are placed at increased risk of litigation and public relations problems when their employment background screening partners employ these practices. Ultimately, we are concerned that ongoing media coverage related to errors in background checks and the potential for litigation and overreaching legislative solutions place our profession at risk.

The Concerned CRAs statement on use of criminal databases:

Often marketed as "national" or "nationwide", criminal records databases are compiled by private companies who purchase information from a patchwork of sources: county courts, state criminal records repositories, sex offender registries, and prison systems.

Criminal records database searches are valuable because they cover a much larger geographical area than searching only the jurisdictions associated with an employment applicant’s residential history. People may get into legal trouble in jurisdictions where they don’t live.  Because there are more than 3,200 counties in the United States, not all courts can be effectively checked on-site.

While criminal records databases are useful in identifying potential criminal records they should not be relied upon as accurate or complete for several reasons:

  • Most jurisdictions do not make their records available in bulk electronic format, which means that many important criminal records are missing from criminal records databases.
  • Many jurisdictions remove key pieces of defendant’s identifying information (such as date of birth). This often leads to criminal records being associated by the database with the wrong person. For example, an employment applicant with a common name might be confused with a registered sex offender with the same name.
  • Because criminal records often change over time, databases sometime report outdated information to employers. For instance, expunged or sealed cases are sometimes found in database records. Likewise, probated cases that later turn into convictions when the defendant fails to successfully complete probation are often misreported.

 A CRA that chooses to display the “Responsible Criminal Databases” seal is self-certifying that they subscribe to the following standards when using criminal records in databases in the context of employment-related screening, exclusive of the screening of volunteers, tenants, and other non-employment relationships:

  1. Criminal records databases compiled by non-government entities will only be used as indicators of possible records. Prior to making any report about a potential or current employee to an employer about a criminal record from a database, the CRA will verify the information directly with the reporting jurisdiction. This ensures that employers make decisions based on accurate and up-to-date information.
  2. When using these databases it is important that current or prospective employer clients are provided information about the limited nature of criminal records databases and the importance of researching each applicant's criminal history in the jurisdictions in which the applicant currently or previously has lived or worked.

Although the NCLC report does correctly note that there are a large numbers of “firms” that provide background screening services, many of them are an essential a one-person operations. This may be, for example, a retired police officer or human resources professional, or a private investigator that offers screening as an additional service.  The 170 member of Concerned CRA’s reflect substantial businesses that focus on background checks.  This demonstrates, contrary to the suggestions in the report, a widespread industry concern to the issue of inaccurate data.  The report would have carried a great deal more critically if the existence and purpose of Concerned CRAs had been included.

8.)

The report encourages CRAs and employers to engage in behavior that is potentially discriminatory.  The report seemingly urges that factors such as race, gender and physical characteristics be utilized in some circumstances as identifiers.  The issue of course is that such use raises grave concerns that an applicant may be a victim of discrimination.  These are all potential protected categories.  Physical attributes can also raise concerns under the Americans with Disabilities Act (ADA).  The EEOC and anti-antidiscrimination advocates would look closely at such a suggestion.  In reality, the suggestion once again raises questions as to the level of understanding of how the background screening process works that could have been resolved if the authors had contacted background screeners or the National Association of Professional Background Screeners (NAPBS)http://www.napbs.com – before issuing the report.  Generally speaking, screeners and employers do not possess or want to possess data as to gender, race or physical characteristics in their possession initially.  Although such information may be useful in particular cases, this area must be approached with extreme caution due to its sensitivity.

9.)

Finally, the report fails to recognize and recommend what is likely the single most critical reform that is need to significantly increase accuracy.   FCRA section 613 should be amended to prohibit the so-called “letter option” for criminal matters.  

Under section 613, if a CRA reports items of information as matters of public record that are likely to have an adverse effect upon a consumer's ability to obtain employment, the CRA must maintain strict procedures designed to insure that whenever public record information that is likely to have an adverse effect on a consumer's ability to obtain employment is reported, is complete and is up to date. For purposes of this duty, items of public record relating to arrests, indictments, convictions, suits, tax liens, and outstanding judgments shall be considered up to date if the current public record status of the item at the time it is reported. See FCRA Section 613(a)(2). The duty to accurately report a criminal matter under FCRA section 613 is typically satisfied by a CRA sending a researcher directly to the courthouse and pulling any public record to insure it is accurate and up to date, and to also look for identifiers.

However, the FCRA does provide an alternative procedure under FCRA section 613(a)(1). Instead of going to the courthouse, a CRA can notify the consumer of the fact that public record information is being reported by the consumer reporting agency, together with the name and address of the person to whom such information is being reported (See FCRA Section 613(a)(1)). 

It is the letter option that is a significant cause of inaccurate data.   In California, by comparison, a background screening firm can only report a criminal conviction or other matters of public record for employment purposes if “it is complete and up to date,” which is defined as checking the status at the time the matter is reported.  See California Civil Code section 1786.28(b).

Double-checking a database “hit” at the courthouse certainly affords employees, applicants, and background screening firms the most protection and the highest degree of accuracy. The duty to deal with adverse information in a public record can have an important impact when using criminal record databases.

If the goal is to increase accuracy and to prevent unsubstantiated bulk data from being provided to employer’s, the obvious and most immediate remedy is to apply the California rule nationally, and to prohibit the letter option. 

Conclusion

The bottom line is that the screening industry preforms millions of background checks a year.  The big question is whether the problems noted are anecdotal, or an inherent part of the system. For example, not all doctors are perfect, but that does not mean we should believe that the entire medical system is flawed?  It is also important to remember all of the harm that is prevented.  When something bad happens in the workplace, the first question asked is why was not there more background checking done.

The real issue is that background checks occur at the intersection of two fundamental American values: security and giving people a second chance. On the one hand, background checks can promote safety, security, and honesty while lessening the chance for workplace violence or the hiring of unqualified workers with fake credentials. On the other hand, employers using background checks should be concerned with issues of fairness and privacy while combating discrimination, as well as the need to give ex-offenders a second chance so that they can become law abiding tax paying citizens, which requires a job.  Otherwise, as a society we will build more jails and prisons and less schools and hospitals. “

There are certainly valid points made in the report, but it would have carried much more credibility if the authors had sat  down with screening firms, crime victims, civil rights lawyers as well as security and Human Resources professionals to critically review the report before releasing a one sided report that appears biased and flawed.  That would have demonstrated that the report was aimed at finding real solutions instead of obtaining headlines.

About Attorney Lester S. Rosen
Attorney Lester S. Rosen is Founder and CEO of Employment Screening Resources (ESR) and the author of ‘The Safe Hiring Manual,’ the first comprehensive guide to background checks, and ‘The Safe Hiring Audit.’ He is a nationally recognized safe hiring expert who was the chairperson of the steering committee that founded the National Association of Professional Background Screeners (NAPBS) and served as the first co-chairman. He is a frequent presenter nationwide and his speaking appearances have included numerous national and statewide conferences for the “ESR Speaks” background check training program. 

About Employment Screening Resources (ESR):
Employment Screening Resources (ESR)– ‘The Background Check AuthoritySM’ – provides accurate and actionable information, empowering employers to make informed safe hiring decisions for the benefit for our clients, their employees, and the public. IN fact, ESR has long engaged in the practices described in the NCLC report as best practices for accuracy.  ESR literally wrote the book on background screening with “The Safe Hiring Manual”by Founder and CEO Lester Rosen. ESR is accredited by The National Association of Professional Background Screeners (NAPBS), a distinction held by a small percentage of screening firms. By choosing an accredited screening firm like ESR, employers know they have selected an agency that meets the highest industry standards. For more information about Employment Screening Resources (ESR), visit http://www.esrcheck.com/or call 415.898.0044 or 888.999.4474.

(C) 2012 by Employment Screening Resources.

 
 

Certified with the National Association of Professional Background Screeners ESR's SOC 2 Audit Report confirms it meets high standards set by the American Institute of Certified Public Accountants (AICPA) for protecting customer information PCI-DDS Compliance Privacy Shield Framework Services Perfromed in the USA Safe Hiring Manual Founding Member of the National Association of Professional Background Screeners