Calling a Halt to the "Parade of Horribles" for the Staffing industry

Excerpts from a feature article on pre-employment background screening from the November/December 1999 issue of the SI (Staffing industry) Review

Pre-Employment Screening: A Vital Part Of Your Business

STOPPING THE ‘PARADE OF HORRIBLES’

Les Rosen, attorney-at-law and President of pre-employment screening and credentials verification firm Employment Screening Resources (Novato CA) says, "Screening companies discuss the ‘Parade of Horribles’ that can occur if a firm does not engage in pre-employment screening." These include:

• Lawsuits by employees or third parties
• Workplace violence
• Unqualified employees
• Lost business and customers
• Theft, embezzlement, or property damage
• Negligent hiring exposure
• Sexual harassment difficulties
• Financial losses
• Fraudulent claims
• Time wasted in recruiting, hiring, and training.

STAFFING AND PRE-EMPLOYMENT SCREENING

Rosen mentions the special challenges to the staffing industry, " Many staffing firms are reluctant to test, for two reasons, first, in the competitive environment of staffing, with smaller margins, staffing firms do not want to incur the cost. The second issue is turnaround time. Staffing companies need to make placements immediately. If they have to wait for a criminal record, they can lose the applicant to a staffing firm down the street that does not do backgrounds, or they can lose a day or two worth of placements. For these reasons, many staffing firms only screen when their client makes it a requirement of the placement."

This is a mistake, according to Rosen, "Firms that do not screen are playing a game of Russian roulette with their future."

" A staffing agency’s worst nightmare is sending out a temporary worker or a candidate for permanent placement who has a criminal record. Should that person harm a coworker or member of the public, the staffing company will certainly be sued," Rosen continues.

Under current Due Diligence legislation, "The staffing agency would have little legal defense when the attorney for the injured party argues that if the staffing company had been willing to spend just a few dollars to know who they were hiring, the criminal act would not have happened. Unfortunately, it is just a matter of time before staffing companies will face that nightmare, because statistically, approximately 10% of all job applicants have criminal records that would affect employment decisions."

In a worst-case scenario, says Rosen, a disaster could lead to the loss of the company. "There are staffing companies that no longer exist because they provided employment to people on parole for serious violent offenses who re-offended in the workplace, resulting in disastrous civil litigation."

SCREENING BENEFITS

There are numerous reasons to screen, and any number of benefits. According to the experts we spoke with, employers typically engage in pr-employment screening for four reasons: (Note: the following is from Employment Screening Resources literature on background screening)

1. To discourage applicants with something to hide. In this case, just having a pre-screening job program discourages job applicants with a criminal background or falsified credentials.

2. To eliminate uncertainty in the hiring process. Many employers have learned the hard way that relying on instinct alone is not enough.

3. To demonstrate Due Diligence. Employers have a reasonable duty of care in the hiring process. Failure to exercise the duty of care can lead to lawsuits for negligent hiring.

4. To not only discourage the wrong kind of applicant, but encourage the right applicant to be open and truthful. This introduces honesty into the application and interview process. Employers’ find that just having a background program will encourage application to be more forthcoming about their history.

SERVICES OFFERED

The companies we spoke with all provide substantial resources to those staffing companies that wish to implement a screening program. Rosen says, "Background companies typically offer criminal record checks for both county courts and federal criminal courts, driving records, credit reports, social security tracers, educational verification, employment references and verification, workers compensation records (subject to ADA rules) and judgments, liens, and bankruptcies."

WHAT ARE THE LEGALITIES?

For the great majority of companies that do not work with the government, Due Diligence is the most applicable regulation. Says Rosen, " The primary legal inducement [for employers] is Due Diligence. Every employer has a reasonable duty of care in whom they hire. An employer breaches that duty of care when the employer knows or should know facts that would warn a reasonable person that the employee presents an undue risk of harm of third parties or co-workers in light of the work to be performed. By engaging in a background check, a staffing agency demonstrates that it has taken reasonable steps to insure that a job candidate is safe."

The main legislation regarding background screening is the Fair Credit Reporting Act. Under the FCRA, when an employer uses a background screening company to prepare a report, it must follow several steps.

The employer must clearly disclose to the applicant in a separate document that a report is being prepared. The disclosure cannot be buried in the fine print in an application.

A signed release is required before checking records such as criminal convictions or pending criminal cases, driving records, credit reports, or educational credentials.

An additional notice is required when a background firm checks references, such as asking previous employers about job performance.

If an employer intends to deny employment based upon information in the report, the job applicant must receive a copy of the report and a notice of legal rights.

If an applicant believes the information is wrong, the applicant can inform the screening agency, which must remove or correct inaccurate or unverified information.

Applicants have the right to inspect their files.

Says Rosen, " For a job applicant, honesty is always the best policy. Negative information honestly disclosed in an interview with an explanation may well have no effect [on the hire].

However, if the employer discovers that information through a third party, then the lack of honesty may be the reason for not getting the position."