All posts by Les Rosen

New FTC Rules on Employment Verifications Do Not Affect Users of Consumer Reports

By Lester Rosen, President of ESR

Some employers may have read about new rules that went into effect July 1, 2010, that potentially affect the accuracy of employment verifications.  For employers concerned about the new rules, the short answer is that it does not affect how and when an employer receives a background report.  It also does not impact a standard response to a request for a past employment check. At most, it may only affect certain limited employers in their role as a “furnisher of information to third parties as defined by the federal Fair Credit Reporting Act (FCRA).

For example, it has been suggested that the new rules could potentially impact an employer that is utilizing a  third party services firm that routinely collects employment data such as payroll data or creates an employment database.

The new rules are at They stem from the Fair and Accurate Credit Transactions Act (FACTA) of 2003, which among other things, provided consumers a means to obtain free yearly credit report from the credit bureaus. The new law also required federal agencies to implement new rules aimed at promoting the accuracy and “integrityof information that furnishers provide to consumer reporting agencies.  A furnisher is a party that provides information.  The main thrust of the new regulations is aimed at organizations such as banks, financial institutions and credit card firms that provide data to the credit bureaus that are used to create consumer credit reports.

Although ESR cannot provide legal advice and it is possible that future clarifications may come out from the Federal Trade Commission or other sources, it certainly appears that the regulations do not affect an employer that simply responds to a standard request for a past employment check, and does not impact employers at all that are users of background reports.

Please contact Employment Screening Resources (ESR) at if you have any questions.


More Colleges and Universities Considering Student Background Checks

By Thomas Ahearn, ESR news Staff Writer

In an effort to help ensure campus safety, higher educational institutions across the country are starting to consider conducting criminal background checks on both applicants and admitted students, according to a recent article on

As an example, reports that following the murder of a student at the University of North Carolina at Wilmington in 2004 by a classmate with a history of violence against women — and the subsequent lawsuit filed by the deceased student’s parents — the North Carolina system began requiring all of its campuses to conduct criminal background checks on students with red flags on their criminal records.

However, a panel discussion at the National Association of College and University Attorneys revealed that the questions of whether to conduct student background checks — and how to — are not resolved and that criminal background checks on applicants and students can be described as a “legal and policy jigsaw puzzle with pieces that include campus safety, legal risk, and individual rights, according to the USAToday report.

The article cites a recent survey by the American Association of Collegiate Registrars and Admissions Officers (AACRAO) in which 66% of educational institutions reported having collected criminal record information from students, with the most common method of getting criminal information being self-disclosure questions on applications. Yet of the 144 institutions that reported collecting criminal justice information from applicants, only ten used criminal background checks, reported.

Higher education institutions in North Carolina are not alone in considering student background checks. Both Maryland and Virginia are considering requiring colleges and universities to conduct background checks on students in the wake of a murder of a female student at the University of Virginia allegedly at the hands of a fellow student.

For more information about background checks, visit Employment Screening Resources (ESR) at


Can Recruiters or Employers Rely on Business Connecting Sites Instead of Background Checks?

By Lester Rosen, President of ESR

(Originally posted on

From the mailbag: I have heard the argument made that using business connections sites is more accurate than resumes and can even replace a past employment check, since a candidate is not as likely to lie on an online service where many friends and colleagues may see it.

Answer: Looking at business connection sites during the recruiting or selection stage can certainly be another tool for HR or recruiting to try to differentiate a large group of candidates and whittle it down to a smaller and more manageable group. Even then, there are significant issues to keep in mind, such as the potential for discrimination.

In terms of using such sites as a substitute for an application, background check or other tools to demonstrate due diligence, recruiters and employers may well be on thin ice.

First, if a person lies on a social networking site, there are no direct consequences. These sites do not independently verify any facts. The basic problem is that all of the qualifications are self-stated. Remember those bad home loans issued recently on the basis of “stated income, where a person just made up any income they needed? Some of these sites operate in a similar way.

These sites also do not contain a comment or feedback area where others can disagree, or warn employers that qualifications are overstated. Furthermore, if an applicant has listed a certificate or educational accomplishment that is not true, exactly how are colleagues suppose to knew that, much less bring it to anyone’s attention. A colleague may not even know that an applicant has lied.

Of course, if a person has legitimate recommendations, that can help somewhat. However, a determined con artist could well create a chain of other fake identities that can be used to verify the phony credentials. It may well take a determined recruiter or employer to notice the fraud or track it down. If such a fraud is even discovered, what is the mechanism to alert the business listing site of the fraud.

Employment Screenings Resources has done advanced searches using the names of known diploma mills that offer worthless degrees. It is shocking the number individuals on these business connection sites working for well recognized firms that openly advertise a worthless degree obtained from a degree mill as part of their qualifications. This in fact was demonstrated at a recent meeting on the topic of education fraud by the National Association of Professional Background Screeners (

Finally the suggestion without metrics that people do not lie or fabricate on a social network site because others will view it will not likely be much of a defense in court if a firm hires a fibber and it turns out a background check costing a few dollars would have revealed it.

The bottom-line once again: There is nothing as effective as actual verification of a candidate’s claimed experience.

For more information on the use of social network sites and employment, see:

For more information on background checks in general, visit Employment Screening Resources (ESR) at


ICE Levies Record $3 Million in Civil Fines on Employers Hiring Unauthorized Workers So Far in 2010

By Thomas Ahearn, ESR news Staff Writer

According to a report in the New York Times, the U.S. Immigration and Customs Enforcement (ICE) has levied a record $3 million in civil fines so far in 2010 on employers that hired unauthorized workers not legally eligible to work in the country.

Unlike the immigration raids and work-site roundups popular during the previous administration, the Times reports the Obama administration favors a quieter enforcement strategy that involves federal agents auditing a company’s employee records for illegal immigrant workers, which usually result in the illegal workers being fired by employers.

Over the past year, ICE has conducted audits of employee files — called “silent raids” by some employers — at more than 2,900 companies, the Times reports, and thousands of those workers have been fired, immigrant groups estimate. Although ICE leaves it up to employers to fire workers whose documents cannot be validated, the audits still force businesses not wanting to risk prosecution to fire every suspected illegal worker on payrolls, and not just those working at the time of a raid, according to the Times report.

Due to the shift in the strategy used to uncover illegal workers in U.S., an immigration law consultant quoted in the Times story explained that instead of hundreds of agents going after one company, now one agent can go after hundreds of companies. In the story, ICE states that the goal of the audits is to create a culture of compliance among employers, so businesses need to avoid committing labor abuses and immigration violations — whether knowingly or unknowingly — or risk fines, penalties, and even jail.

Since ICE auditors may examine a company’s Employment Eligibility Verification forms — also known as I-9 forms, which all new hires in the country must fill out — employers need to make sure all employees on payroll are legally eligible to work in the country. Employment Screening Resources (ESR) — a national background screening provider and authorized E-Verify Designated Agent — can help employers virtually eliminate I-9 form errors, improve the accuracy of their reporting, protect jobs for authorized workers, and help maintain a legal workforce. For more information about the E-Verify Electronic Employment Eligibility Verification system, visit


Oregon Issues New Rules on Use of Credit History for Employment Decisions

By Lester Rosen, President of ESR, & Thomas Ahearn, ESR News Staff Writer

As noted previously on ESR, the state of Oregon recently passed a law preventing most employers from using the credit histories of job applicants or employees for employment-related decisions by prohibiting an employer from using credit history for employment purposes unless that credit history information is “substantially job-related” and the reasons for using credit information are disclosed to the employee or applicant in writing.

The new Oregon law — which took effect July — establishes any violation as an unlawful employment practice enforceable by the Civil Rights Division of the Bureau of Labor and Industries (BOLI). According to a BOLI press release, the final rules for employer use of credit histories were completed quickly to protect employees and assist employers. These rules prohibit employment discrimination by employers on the basis of worker’s credit history information with an exception for information that is “substantially job-related.”

In a document titled Employer Obtainment or Use of Credit History Information available on the BOLI website at, the determination of whether credit history information is substantially job-related must be evaluated with respect to the position for which the individual is being considered or holds and that credit history information of an applicant or employee is substantially job-related if:

  • An essential function of the position at issue requires access to financial information not customarily provided in a retail transaction that is not a loan or extension of credit (Financial information customarily provided in a retail transaction includes information related to the exchange of cash, checks, and credit or debit card numbers); or
  • The position at issue is one for which an employer is required to obtain credit history as a condition of obtaining insurance or a surety or fidelity bond.

Oregon’s new rules on credit history use by employers also define Unlawful Discrimination by stating it is an unlawful employment practice for an employer to obtain or use for employment purposes information contained in the credit history of an applicant for employment or an employee, or to refuse to hire, discharge, demote, suspend, retaliate or otherwise discriminate against an applicant or an employee with regard to promotion, compensation or the terms, conditions or privileges of employment based on information in the credit history of the applicant or employee.

In addition to the new rules available online at, Oregon has also provided a Technical Assistance for Employers hotline at 971-673-0824 for further assistance.

For more information about use of credit history for employment screening, visit Employment Screening Resources (ESR) at


New Case from New York Gives Potential Guidance on Issue of Which State Law Applies for Reporting Criminal Records

An ongoing issue for employers and background screening firms is the question of what law applies when a criminal record is found in one state impacts an employment decision in another state.  Since state reporting laws can vary widely, employers and screening firms are sometimes left without clear guidance if a criminal record can be reported or utilized because it is not clear which state law to apply. Continue reading

Utah and Virginia to Require E-Verify Use

By Thomas Ahearn, ESR News Staff Writer

Utah and Virginia have recently passed bills mandating E-Verify participation and requiring certain employers to use the E-Verify Electronic Employment Eligibility Verification to check the work eligibility of new hires in the United States.

In Utah, as of July 1, 2010, the Private Employer Verification Act requires all private employers with 15 or more employees to use a status verification system broadly defined to include E-Verify, the Social Security Number Verification Service (SSNVS), or other DHS-approved systems to verify the employment eligibility of new employees.

According to Utah’s E-Verify law — which exempts new hires on the H-2A or H-2B seasonal visas — as long as the E-Verify system indicates the employee is work authorized, employers observing the law will be shielded from civil liability for the unlawful hiring of an undocumented worker. In addition, an employer may not be held liable for refusing to hire an individual E-Verify indicated was not work authorized.

Meanwhile, Virginia’s E-Verify law (HB 737) requires only state agencies to enroll in the E-Verify Program by December 1, 2012 — extended from the original effective date of December 1, 2010 — and for these agencies to thereafter use the E-Verify Program for each newly hired employee who is to perform work within the Commonwealth.

Employment Screening Resources (ESR) — a national background screening provider and authorized E-Verify Designated Agent — can help employers virtually eliminate errors, improve the accuracy of their reporting, protect jobs for authorized workers, and help maintain a legal workforce. For more information about the E-Verify electronic employment eligibility verification system, visit


All GSA/FSS Contracts Mass Modified to Include E-Verify

By Thomas Ahearn, ESR News Staff Writer

On June 24, 2010, a mandatory mass modification — or “Mass Mod” — was issued requiring all U.S. General Services Administration/Federal Supply Services (GSA/FSS) contracts to include the most recent standard contract clauses, capture exceptions, and incorporate E-Verify into all contracts, according to the website.

E-Verify — a free, web-based Electronic Employment Eligibility Verification system — requires federal contractors to electronically verify the employment eligibility of employees working on federal contracts in the United States by comparing information from paper Employment Eligibility Verification (I-9) Forms to data in Department of Homeland Security (DHS) and Social Security Administration (SSA) databases.

E-Verify implements Executive Order 12989, and subsequent Federal Acquisition Regulation (FAR) rule, to require federal contractors to electronically verify the employment eligibility of employees working on federal contracts in the United States. The E-Verify modification incorporates FAR clause 52.222-54, Employment Eligibility Verification (January 2009), into all FSS contracts unless certain exceptions apply.

According to, so-called Mass Mods are initiated by the government when uniform changes to large numbers of GSA/FSS contracts are required, and are generally identical for all recipients unless there are contract-specific changes. Examples of Mass Mods include solicitation refreshes and the addition of contract requirements.

Contractors with a GSA/FSS contract are affected by this Mass Mod and must now verify the employment authorization of new employees and certain categories of existing employees with E-Verify. However, issues regarding compliance with E-Verify may be complicated and the consequences for violations of E-Verify can be severe, including the loss of federal contracts, civil penalties, and suspension from government contracting.

Some employers needing to comply with  E-Verify may use a designated third party agent to assist them with E-Verify compliance. One such authorized E-Verify Designated Agent –leading national background check provider Employment Screening Resources (ESR) — can help employers virtually eliminate errors, improve the accuracy of their reporting, protect jobs for authorized workers, and help maintain a legal workforce.

With over 200,000 employers currently using E-Verify and many believing that E-Verify should be mandatory, E-Verify Designated Agents ESR are helping businesses with the E-Verify process. For more information about the E-Verify Electronic Employment Eligibility Verification system, visit


The Dangers of Do-It-Yourself Background Checks

By Lester Rosen, President of ESR

(Originally Posted on Toolbox for HR)

From the mailbox: Why shouldn’t employers simply do their own background checks in-house? They can hire people from the screening industry and can certainly figure it out.

Answer: First, the fact that a firm may be able to set up an internal screening program does not mean it makes sense. All sorts of professional services could be done in-house. Successful firms typically spend time and energy doing what they are good at (their core function), and they outsource functions that although critical, do not need to take up in-house resources. Of course, if a firm is large enough it may make sense. Of if the firm has a special place in the market where there is a need to be able to tell people they control the process, then that may be a good reason to perform services in house. Most successful firm outsource those HR endeavors that are unusually complicated or regulated, which would include many human resource services such as benefits, retirement planning and screening.

Secondly, it can be a trap to think that the federal Fair Credit Reporting Act (FCRA), the law that controls third party background checks has no application to in-house processes. An employer that performs these activates in-house can easily hit an FCRA “tripwire” thus invoking the FCRA. There are numerous examples. Hiring an out of state agency to pull a court record for example could, per an FTC staff letter, make what appears to be a non-FCRA investigation into an FCRA regulated activity. Accessing non-public databases can make it an FCRA event. California has applied some FCRA type rules on a limited basis to employers that do public record checks in-house. So unless every single thing an in-house department does is done by your own W-2 employees and you only access public records, you may end up tripping the FCRA. Our advice is that even if done in-house, act as though the FCRA applies.

One argument made in favor of in-house processes is that a firm can conduct better reference checks because it knows what it is looking for. Verifications are an interesting issue. There are two types of verifications. Managers may call to determine if someone should be hired. Screening firms are typically called upon AFTER a tentative hiring decision has been made for the purpose of a methodical review of the work history to confirm employment. Hiring managers cannot always be counted on to document the entire work history. Either Human Resources, an internal department or an outside vendor needs to ensure that all employers have been contacted.

Finally, there are a number of specialized skills and resources that are needed, such as figuring out education fraud, or if a criminal record can be used. Unless a firm has access to experts on the laws of all 50 states, and an understanding of EEOC rules, etc, doing it in-house can be very risky. Accessing records from thousands of different courts can be very tricky. A great deal of knowledge is required,

The bottom-line is that if a business does it in-house and they miss a record that a competent third party firm would have found and someone is harmed, it would not be much of a jury defense that the business was trying to save a few bucks by doing something in-house that requires such specialized skills and knowledge.

There is also the cultural issue that some firms find it advantageous to have a third party do the background checks, so the employment relationship does not start with what may seem an invasion of privacy.

So, the bottom-line is an organization needs to figure out if at the end of the day, the time and effort it takes to perform service in-house is worth it, if it can be outsourced. There are certainly organizations that for cost savings have essentially set up their own internal background units successfully, but they essentially have became an in-house background firm that needs to know how to do everything a third party firm can do. However, for the right firm, an in-house process can make sense as long as they know how to do everything a third party firm can do and if it makes economic sense.

For more information about background checks, visit Employment Screening Resources (ESR) at


June Jobs Report Shows Unemployment Rate Dropped to Lowest Level since Last July

By Thomas Ahearn, ESR News Staff Writer

The U.S. Department of Labor’s (DOL) Bureau of Labor Statistics (BLS) has reported that the nation’s unemployment rate dropped to its lowest level in roughly a year in June.

According to the BLS Employment Situation Summary for June 2010, the unemployment rate edged down to 9.5 percent, the lowest level since last July, while the number of unemployed persons also decreased to 14.6 million.

In addition, private-sector payroll employment edged up by 83,000. However, total nonfarm payroll employment declined by 125,000 in June, reflecting a decrease of 225,000 temporary employees working on the once-in-a-decade Census 2010.

The 83,000 new jobs in private employment is due to modest increases in several industries, and private-sector employment has increased by 593,000 so far this year.

  • Leisure and hospitality employment rose in June by 28,000 job in amusements, gambling, and recreation.
  • Professional and business services employment continued to increase in temporary help services (+21,000 jobs), management and technical consulting (+11,000 jobs) and business support services (+7,000 jobs) in June.
  • Transportation and warehousing added 15,000 jobs in June, and has added 44,000 jobs since a recent low in February.
  • Health care employment edged up in June (+9,000 jobs) and has gained 217,000 jobs over the past 12 months.
  • Mining employment added 6,000 jobs in June and has gained 56,000 jobs since October 2009.
  • Manufacturing employment added 9,000 jobs in June and has added 136,000 jobs since December 2009.

On the negative side, construction employment decreased by 22,000 in June and government employment fell by 208,000 during the same month due to the loss of 225,000 temporary workers hired for Census 2010.

For news and information about employment screening and background checks, visit Employment Screening Resources (ESR) at