Yearly Archives: 2008

Screening Firms Join Effort to Prevent Threats to Consumers from Offshoring of Personal and Private Data

ESR has joined a group of like-minded Consumer Reporting Agencies that reject the offshoring of consumer data. ESR is pleased to display the Concerned CRAs logo that represents a higher standard of consumer privacy protections. As outlined in the May, 2008 ESR newsletter, some screening firms place job applicants and employers at risk by sending personal and identifiable information (PII) offshore for processing and preparing background reports. The purpose is to take advantage of cheap offshore labor. In some instances, foreign call centers are even used to contact past employers and schools, or to search public record databases for criminal records.  See: http://www.esrcheck.com/newsletter/archives/May_2008.php .  

The problem?  Once U.S. information leaves our shores, it is completely beyond U.S. Privacy Protections. In order to process background reports, a job applicant’s date of birth and social security number are often needed, which is the key ingredients needed to commit identity theft.  Articles available on the internet document that identities stolen from foreign call centers are often sold illegally for illegitimate purposes.   That is not to suggest that data theft cannot happen here in the U.S.  However, if there is theft of PII in the U.S., there are resources and legal recourse so consumers can protect themselves.  It is impossible as a practical matter for a U.S. consumer to try to contact the police department in a foreign country to file a complaint.

Firms displaying the Concerned CRA’s symbol have self-certified that they do not send data offshore for processing.  Although there is a cost savings to screening firms who offshore consumer data to countries such as India, the risk to consumers in terms of potential identity theft is significant. What is worse is that U.S. job applicants have no idea that when they sign a consent for a background check that their personal data is at risk of going offshore.

In the alternative, the seal can be displayed if a CRA clearly discloses that data is sent offshore and explains the risks, and employers in turn clearly disclose the same to job applicants.

An exception is where an international verification is requested and the information needed is offshore. Even then, however, firms that have joined this effort have certified that they take a number of steps to minimize sending personal information being sent offshore.  For example, before sending consumer data offshore, a firm should make every effort to obtain the information directly from the past employer or school directly.  Data should only be sent offshore to a foreign research firm as a last resort.

ESR strongly advises employers to ask screening firms about their privacy and offshoring practices before risking personal information about their job applicants.  For more information, see http://www.concernedcras.com/

From the Courts: Federal Case Demonstrates Employer Defense to a Negligent Hiring Lawsuit

A federal district court judge in New Haven, Connecticut dismissed a negligent hiring lawsuit against FedEx Kinko’s, where the employer hired a self-admitted sex offender who used his position to solicit customers for his own computer repair business and molested an 8 year old boy whose family he befriended while fixing computers in their home. Continue reading

Background Firm Sued for Reporting Criminal Matters without Using Reasonable Procedures

In another 2008 federal case, a consumer sued a national background screening firm for negligent violation of the FCRA, on the basis that the screening firm failed to utilize reasonable procedures before reporting possible criminal hits.

The federal trial court had granted a summary judgment in favor of the background screening firm, since the plaintiff did not present any expert testimony that the procedures used by the screening firm was unreasonable. On appeal to the United States Court of Appeals for the District of Columbia District, the appellate court reversed the trial court ruling, and ruled that an expert witness was not required in a case against a screening firm for negligence, and that the report by itself can be used as “evidencing unreasonable procedures. Continue reading

Lawsuits Against Background Firms are on the Rise

This issue of the ESR Legal Update and Newsletter reviews two of the lawsuits filed in 2008 against background screening firms by consumers. Although an employer may not always be named as a party in a lawsuit against a screening firm, employers should be concerned if a screening firm’s practices end up as court cases.

These court cases underscore two important facts about pre-employment background checks:

It is an area that is subject to a high degree of regulation by both federal and state law, since it involves such core societal issues as privacy, protection of the public and a safe workplace, and the ability of individuals to obtain employment.

Consumers and plaintiff’s lawyers have become very familiar with the rules that govern screening, and that unless it is done properly by knowledgeable professionals, there is an increased risk of lawsuits being filed.

There is no question that background checks are mission critical for any organization. Background checks are an essential part of any company’s due diligence efforts. The lesson from these cases, however, is that background screening has become a professional endeavor that requires a great deal of legal and subject matter expertise. Employers need to exercise caution in selecting a screening partner by making sure that the screening firm has that professional knowledge and expertise required to perform legally compliant screening.

The names of the litigants are not included in this newsletter, since it is the general principals that are important. A reader of this newsletter with a need to know the details may contact Jared Callahan, Director of Sales and Marketing at ESR for more details. He can be reached by e-mail at jcallahan@esrcheck.com

Background Firm Sued for Violation of FCRA by Reporting Existence of Prohibited Records

In this federal case, a national employment screening firm uncovered information that the applicant had an arrest record over seven years ago. There were no convictions, but arrests only. The federal Fair Credit Reporting Act (FCRA) prohibits the reporting of an arrest older than seven years old, unless the applicant is reasonably expected to make a salary of over $75,000 per year. See FCRA section 605 (15 U.S.C. 1681c). Continue reading

Top 10 Signs You are Hiring a Lawsuit Waiting to Happen

Employee lawsuits often catch employers by surprise. Yet, an examination of the employee’s application shows that an employer could often have predicted, well in advance, that they were hiring a lawsuit just waiting to happen.

By looking for the following ten (10) danger signals, an employer can avoid hiring a problem in the first place.

  1. Applicant does not sign application. An applicant with something to hide may purposely not sign the application form so they later cannot be accused of falsification.
  2. Applicant does not sign consent for background screening. When a firm uses an outside agency to perform screening, federal law requires a separate disclosure and consent. A background consent form protects employers in two ways: It discourages applicants with something to hide and encourages candid interviews. If a firm does not perform some sort of screening, they become the employer of choice for problem applicants. If a candidate fails to sign the consent, that is not a good sign.
  3. Applicant leaves criminal questions blank. An applicant with a past problem may simply skip the questions about criminal records. Every employment application should ask, in the broadest possible terms allowed by law, if the applicant has a criminal record. Most jurisdictions only permit questions about convictions and pending cases. Employers make a big mistake if they only ask about felonies since misdemeanors can be extremely serious. Although employment may not be denied automatically because of a criminal conviction, an employer may consider the nature and gravity of the offense, the nature of the job and the age of the offense in evaluating whether there is a sound business reason not to employ someone with a criminal record. If an applicant lies about a criminal record however, the false application may be the reason to deny employment.
  4. Applicant self-reports a criminal violation. Just because an applicant self-reports an offense does not eliminate the possibility of other offences, or that it was reported it in a misleading way to lessen its seriousness. An employer is well-advised to check it out.
  5. Applicant fails to explain gaps in employment history. It is critical to look for unexplained employment gaps. There can be many reasons for a gap in employment. However, if an applicant cannot account for the past seven to ten years, that can be a red flag. It is also important to know where a person has been because of the way criminal records are maintained in the United States. Contrary to popular belief, there is not a national criminal database available to most employers. Searches must be conducted at each relevant courthouse, and there are over 10,000 courthouses in America. However, if an employer knows where an applicant has been, it increases the accuracy of a criminal search, and decreases the possibility that an applicant has served time for a serious offense.
  6. Applicant fails to give sufficient information to identify a past employer for reference checks. If an applicant does not give enough details about past employers, that can be a sign of trouble. Verifying past employment is a critical and important tool for safe hiring. Some employers make a costly mistake by not checking past employment because past employers may not give detailed information. However, even if a reference check only reveals dates of employment and job titles, this critical information eliminates employment gaps. In addition, documenting the fact that an effort was made will demonstrate due diligence.
  7. Applicant fails to explain reason left past jobs. Past job performance can be an important predictor of future success.
  8. Explanations for employment gaps or reasons for leaving past jobs do not make sense. A careful review of this section is needed and anything that does not make sense must to be cleared up in the interview.
  9. Excessive cross-outs and changes. Can be an indication that an applicant is making it up as they go.
  10. Applicant failed to indicate or cannot recall the name of a former supervisor. Another red flag. Past supervisors are important in order to conduct past employment checks.

Where to Find a Good Application Form

Application forms are available from a number of sources.

The local or state Chamber of Commerce may have forms available.

A firm’s business or labor attorney will normally have a new employee package available with an application form.

Human resources consultants and HR organizations may have forms.

Office supply stores sell basic business forms including application forms (but be careful about some of the points raised in this newsletter).

Books about hiring are available from local book stores and HR associations, such as SHRM, and contain sample forms.

There are firms that specialize in selling employment related forms and products
on the internet.

Many firms design their own employment forms to reflect the particular needs of their firm or industry.

One word of caution — many states have unique rules regarding what can and cannot be on an application. Some of these rules concern what an employer may ask about past criminal convictions. It is beyond the scope of this newsletter to review the requirements for all fifty states. However, an employer is well-advised to consult with a labor attorney for every state they hire within to review the legality of their application forms.

Three Problems with Application Forms Asking About Past Convictions

One of the most effective uses of an application form is to enable an employer to directly ask an applicant if he or she has a criminal record. Unfortunately, many employers use language in their applications that is either too narrow, too broad, or too ambiguous. Each of these mistakes can put an employer in a difficult situation. Let us go over this language in detail—

Too Narrow

An example of a question that is too narrow is to only ask about felonies. Many standard employment applications only ask if an applicant was convicted of a felony. That allows the application form to be used in all states. However, misdemeanors can be very serious. Under California law, for example, most employers would want to know if an applicant had a conviction for offenses such as fighting with a police officer, illegal possession of weapons, spousal abuse or child abuse, commercial burglary, assault and many other offenses. Yet in California and other states, these can all be misdemeanors. Many serious offenses are plea-bargained down to misdemeanor offenses as well. Without the proper language, an applicant can honestly answer that he or she has not been convicted of a felony even though there may be serious misdemeanor convictions an employer needs to know about. A best practice would be to utilize an application form that asks about past criminal conduct in the broadest language allowed by law in your state

Too Broad

On the other hand, some employers ask questions that are so broad that it improperly covers matters that are protected. An example may be, “Have you ever committed a crime?” Or “Have You Ever Been Convicted of Any Crime?” There are a number of limitations under state and federal law concerning what an employer may legally ask about or “discover” concerning an applicant’s or employee’s criminal record. In fact, it can be a misdemeanor in California for an employer to knowingly violate some of these rules. Furthermore, if an applicant is placed in a position where he is forced to reveal information about himself that he is legally entitled not to disclose, an employer can actually be sued in some states for “defamation by compelled self-publication.” In other words, if forced to say something defamatory about himself, an applicant may be able to file a lawsuit against the employer for defamation.

Too Ambiguous

The third mistake is to ask an applicant, “Have you ever been convicted of a felony or serious misdemeanor?” or “Have you ever been convicted of a crime of violence?” or a similar question that calls for an opinion. The problem occurs when an applicant is called upon to make a judgment about his own offense. To determine if a crime can be labeled as “serious” can call for a very complex legal and factual determination on which lawyers and even judges could disagree. At times an applicant may be simply confused by court proceedings and may not understand the results or what they mean. By asking a question that is ambiguous and leaves waffle room, an applicant can argue that in his or her mind the offense was not serious and a “no” answer was truthful. That is why a question cannot contain any ambiguity

Ten Critical Items Every Application Needs

These ten critical areas need to be addressed in every application as part of a Safe Hiring Program—

  1. The application needs to clearly state that “there will be a background check” or “a background check will be performed.” A well-worded application form discourages applicants with something to hide, and encourages applicants to be open and honest.
  2. There should be the broadest possible language allowed by the laws of your state asking about convictions and pending criminal cases.
  3. An application should state that “untruthfulness or material omissions are grounds to terminate the hiring process or employment, no matter when discovered.” This is critical for example when an applicant is not truthful about a criminal conviction.
  4. The form should clarify that “a criminal conviction is not automatic grounds for rejection.” It could be a form of discrimination to automatically reject an applicant because of a criminal record. The keyword is “automatically.” Without the statement that there is no automatic rejection, an applicant may be deterred from applying in the first place out of fear of being automatically rejected upon honestly answering the question. The chilling effect on an applicant could be a form of discrimination in itself, which is why this additional language is necessary. Conversely, if a person has lied about a criminal violation, then dishonesty may become the basis for disqualification.
  5. The application form should indicate the applicant consents to “pre-employment background screening, including verifying educational and professional credentials, past employment and court records.” Such a release may discourage an applicant with something to hide, or encourage an applicant to be forthcoming in an interview. If an employer uses an outside service to perform a pre-employment screening, the federal Fair Credit Reporting Act requires there must be a consent and a standalone disclosure form separate from the application.
  6. The consent portion on any release form used for a background check should indicate the release is “valid for future screening for retention, promotion or reassignment (unless revoked in writing).”
  7. The application form must ask for ALL employment for the past 5-10 years. This is critical. A standardized application form makes it easier to spot unexplained gaps in employment. That is an important step in the hiring process and a critical part of exercising due diligence. Even if an employer hires a background company to perform a pre-employment criminal check, records can be missed because there is no national criminal record resource available for use by private employers. Criminal checks must be done in each county where the applicant has lived, worked or attended school. If a person has an uninterrupted job history, an employer may have more confidence that the applicant has not been in serious trouble over the years.
  8. The form should indicate that all educational accomplishment the applicant wishes the employer to consider should be listed. This covers an employer in a situation where an applicant was not honest about their educational accomplishments, but a degree is not part of the job description. The lack of honesty can be the basis for an employer to take action regardless of the listed job qualifications.
  9. The form should allow the applicant to indicate whether the current employer may be contacted for a reference.
  10. Finally, an employer can cover other standard matters. Examples include: the organization’s “at will” policy; the employer is “a non-discriminatory employer;” uses mandatory arbitration in disputes; and requires that applicants provide original documents to verify their identity and right to work in the United States.

Reprinted from The Safe Hiring Manual by ESR President, Lester S. Rosen (2004)

The Reasons Employers Should Not Rely on Resumes

Some employers still hire based primarily upon a resume. This can be a major mistake from the viewpoint of safe hiring. For an applicant, a resume is a marketing tool. Many resumes start by describing the type of job that an applicant is looking for, or a statement of skills and experience. In a resume, an applicant picks and chooses whatever information he or she wants to share. Many job hunters use a resume writing service, and while there is nothing wrong with using a service to prepare a professional looking resume, the service typically will attempt to enhance the applicant’s experience. The service’s goal is to get the applicant to the interview stage.

Employers, however, need facts in order to make hiring decisions.

What are some of the dangers in using a resume?

First, job applicants often feel compelled to reveal things about themselves that an employer does not need, or legally should not, know. Resumes often reveal volunteer affiliations, hobbies, interests or memberships in groups that reveal such prohibited information as race, religion, ethnicity, sexual orientation, or age. For example, a resume may reveal a person does volunteer time with a church, or belongs to a group that is clearly associated with a particular race or nationality. The problem is the Federal EEOC and states’ rules prohibit an employer from obtaining or using such information. Having this information in the form of a resume in the employer’s file is not a good practice in the event the employer is ever the subject of civil litigation or a government investigation into their hiring practices. By using an application form, an applicant cannot volunteer irrelevant information an employer should not possess.

Conversely, resumes may not give an employer all the information needed to make an informed hiring decision. With a proper application, an applicant cannot skip over jobs he or she would rather not mention. An application can allow an employer to spot unexplained employment gaps. Also, job applicants typically do not self-reveal their criminal records in a resume.

In addition, it is much easier for an employer to prescreen candidates using a standardized application. An employer trying to screen a large number of resumes can more easily compare applicants.

Finally, an application form can contain critical elements that an employer may want to convey to the applicant, or critical questions that an employer way want to ask, such as whether the applicant has a criminal record.