ESR Newsletter and Legal Update

This newsletter is sent to clients of Employment Screening Resources (ESR) as well as employers, Human Resources and Security professionals, and law firms who require information on pre-employment screening, safe hiring, the FCRA and legal compliance. If this was sent in error, you can be removed from this mailing by using the “remove” feature at the end of the newsletter.

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April, 2004 Vol. 4, No. 4

Employment Screening Resources (ESR) Newsletter and Legal Update

1. Recent Court Case Increases Ability to Screen Current Employees for Retention or Promotion

2. “Genuine” Fake Diplomas on the Rise

3. Canada Implements Privacy Program

4. ESR Featured in Nationwide Conferences on Safe Hiring and Due Diligence

1. Recent Court Case Increases Ability to Screen Current Employees for Retention or Promotion

Since the events of 9/11, and the publicity surrounding negligent hiring lawsuits, many employers are examining whether their background screening checks should extend to current employees. The need to screen current employees can also be necessitated by contracts with a customer that requires all workers have a background check, or when a firm “acquires” another workforce through merger or acquisition.

An employer has the right to conduct background checks on existing employees, even if they are not suspected of misconduct or wrongdoing. There are two factors to consider in screening current employees — legal and practical. It is perfectly legal to screen current employees as long as all of their rights are respected. A current employee is entitled to the same legal rights as a new applicant (and if there is a union involved, perhaps even more rights). If the background check is performed by a background screening firm, then current employees are entitled to the same rights as job applicants under the federal Fair Credit Reporting Act (FCRA), including Disclosure and Consent. The practical consideration is whether the employer wants to ask existing employees to consent to a background check. The issue is one of corporate culture–not alienating employees that have been hardworking and loyal.

What happens if a current employee refuses to sign the consent? In the first case to address that issue, a federal District Court in Pennsylvania decided that an employer can terminate a current employee who refused to sign a consent for a background check. In Kelchner v. Sycamore Manor Health Center, 2004 U.S. Dist. Lexis 2942 (M.D. Pa. 2004), the employer required all employees to sign a consent to a consumer report. A worker with 19 years on the job refused to sign and was terminated. The Court held that the plain language of the statute, as well as Congressional intent, demonstrated that employers had the right to require such a consent and could terminate if an employee refused, just as an employer could refuse to hire an applicant who did not consent to a consumer report in the first place. Although this one District Court case is not binding on other courts, it demonstrates an argument that is available to employers.

The case also underscores the need for an employer to be sensitive in how to roll-out a background screening program to current employees in order to promote “buy-in” and minimize a negative reaction. For suggestions on how to successfully approach current employees, contact Jared Callahan at Employment Screening Resources (415-898-0044 ext. 240).

2. “Genuine” Fake Diplomas on the Rise

Getting a college diploma no longer requires years of hard work, taking tests, paying tuition or even reading a book. Why bother going through the formalities when all a person needs is a credit card and a web browser in order to buy an authentic-looking diploma that mimics real colleges, universities and even high schools across the US?

One such website advertises that it creates, “very realistic diplomas/transcripts. These diplomas/transcripts are extremely high quality, printed on official parchment quality paper. You can show your employer and they’ll never doubt that you indeed attended college. You will not find better quality anywhere!!!”

These sites officially caution that the diplomas and transcripts are intended for “Novelty and Entertainment Use Only.” However, the fake documents do not have a disclaimer written any place on them.

With statistics showing that resume fraud is a significant issue, employers must be very cautious about accepting a physical diploma as proof of a degree. When presented with a physical diploma or transcripts, employers should fax a copy to the school to confirm its authenticity.

These fakes have not entirely escaped official attention. In Illinois, the legislature passed a law in 2004 aimed at addressing educational fraud. It is a class A Misdemeanor in Illinois to knowingly manufacture, or produce for profit or for sale, a false academic degree, unless the degree explicitly states “for novelty purposes only.”

3. Canada Implements Privacy Program

Effective Jan. 1, 2004, a new privacy law went into effect for all Canadian employers that effects pre-employment background screening in Canada. The complex law is called the Personal Information Protection and Electronics Document Act, or PIPEDA. The law went into effect in three stages and the third stage covered most private employers.

Under the new law, employers can still conduct pre-employment background screening, but under some stringent privacy controls. The Canadian arguably law goes well beyond the American Fair Credit Reporting Act. The Act identifies ten principals for privacy:

1. Accountability

2. Identifying purposes

3. Consent

4. Limiting collection

5. Limiting use, disclosure, and retention

6. Accuracy

7. Safeguards

8. Openness

9. Individual access

10. Challenging compliance

US employers with offices or facilities in Canada need to review their compliance with the new laws, not only for employment screening purposes, but numerous other aspects of their businesses. ESR has prepared a sample release form that employers may review with their legal department in order to design a form that can be used for employment screening in Canada.

For more information on PIPEDA, contact Jared Callahan at Employment Screening Resources (415-898-0044 ext. 240).

4. ESR Featured in Nationwide Conferences on Safe Hiring and Due Diligence

November 4, 2004–Santa Rosa, CA “Practical Tips For Successful HR Management,” Lorman Seminars. See

October 6, 2004–Dallas, TX “Crimes, Criminals and Human Resources” HRSouthwest Annual Conference. See

September 29, 2004–Dallas, TX “Safe Hiring Audit-Implementing and Measuring Due Diligence.” ASIS International 2004 Seminar & Exhibits . See

September 2, 2004–Long Beach, CA “Safe Hiring Audit-Implementing and Measuring Due Diligence.” 2004 Professionals in Human Resources Association (PIHRA) Annual Conference. see

August 24, 2004–Santa Rosa, CA “How to Hire Winners!” Lorman Seminars. See

May 19, 2004–Sacramento, CA ” How to Avoid the Nightmare of a Bad Hire.” American Society of Safety Engineers (ASSE). See

May 18, 2004–San Rafael, CA “Ten Safe Hiring Tools Employers Can Use Today and Cost Nothing.” Marin HR Forum-noon

May 6, 2004– -National Audio Conference sponsored by BNA “Criminal Records Use: What the HR Professional Must Know To Avoid Bad Hires and Legal Problems.” Expert panel including ESR president Lester S. Rosen. Time: 2:00 to 3:15 EST. Additional details to be posted

May 5, 2004–San Rafael, CA “It’s a Small World After All–International Background Screening for Employers” ASIS Golden Gate Chapter Noon

April 20-21, 2004-Washington, D.C. SHRM 35th Annual Employment Management Association (EMA) Conference and Exposition. Topic: “Safe Hiring Audit-Implementing and Measuring Due Diligence in Your Hiring.”

April 13, 2004–Houston, TX ” How to Avoid Hiring Criminals and Problem Employees.” Gulf Coast Symposium. See

Contact ESR for further details.

Please feel free to contact Jared Callahan at ESR at 415-898-0044, or, if you have any questions or comments about the matters in this newsletter. Please note that ESR’s statements about any legal matters are not given or intended as legal advice.

Employment Screening Resources (ESR)

1620 Grant Avenue, Suite 7

Novato, CA 94945


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