All posts by Les Rosen

Kentucky Bill Would Require Criminal Background Checks for All Private Nursing Home Employees

 By Thomas Ahearn, Employment Screening Resources (ESR) News Editor

Proposed legislation in the state of Kentucky would require criminal background checks for all private long-term care facility employees to help to protect elderly and vulnerable Kentucky nursing home residents from being preyed upon by dangerous criminals.

Senate Bill 44 – introduced by Senator Tom Buford (R-Jessamine) – would prohibit any Kentucky long-term care facility, nursing home, or an assisted living community from employing a person who had been convicted of a felony related to:

  • Theft;
  • Abuse or sale of illegal drugs;
  • Abuse, neglect, or exploitation of an adult; or 
  • A sexual crime.

Current Kentucky law requires criminal background checks for all employees at state-run facilities, but only requires criminal background checks for those employees who provide direct care to residents at privately run nursing homes and assisted-living facilities. S.B. 44 – which is currently under review by the Senate Judiciary Committee – would extend the criminal background checks to all employees at private nursing homes and assisted-living facilities.

As reported previously on ESR News, many states are penalizing nursing homes that employ workers with serious criminal records. Recently, an Indiana an operator of nursing homes was hit with $376,000 in penalties for employing individuals at nursing homes who either had been convicted of criminal offenses or stripped of their licenses.

To assist nursing homes and other long-term care facilities conduct safe hiring programs, Employment Screening Resources (ESR) – a leading provider of background checks accredited by The National Association of Professional Background Screeners (NAPBS) – offers a OIG/GSA Name Search which searches the OIG (Office of the Inspector General) Excluded List and GSA (General Services Administration) Sanctions Report for individuals and businesses excluded or sanctioned from participating in Medicare, Medicaid, and other Federally funded programs.

Employment Screening Resources ESR Home Health Care Check provides background screening services specializing in home health care workers in private homes or elder care facitlites. For more information, visit http://www.esrcheck.com/services/homehealthcare.php.

For more information on background checks, visit Employment Screening Resources at http://www.ESRcheck.com.

Founded in 1996 in the San Francisco area, Employment Screening Resources (ESR) wrote the book on background checks with ‘The Safe Hiring Manual’ by ESR founder and President Lester Rosen and is accredited by The National Association of Professional Background Screeners (NAPBS®) . To learn more about Employment Screening Resources, visit http://www.ESRcheck.com or contact Jared Callahan, ESR Director of Client Relations, at 415.898.0044 or jcallahan@ESRcheck.com.

Sources:

http://www.lrc.ky.gov/record/11RS/SB44.htm

http://www.prweb.com/releases/prwebkentucky-nursing-home/abuse-neglect-attorney/prweb5009674.htm

Employment Screening Resources President Lester Rosen Discusses Challenges of Social Media Background Checks

By Thomas Ahearn, Employment Screening Resources (ESR) News Editor

In an exclusive interview on the top background screening trends of 2011, Employment Screening Resources (ESR) President and safe hiring expert Lester Rosen discusses the challenges of social media background checks, the importance of credit reports in screening, and how organizations can perform background screening more effectively. To learn more, visit http://www.bankinfosecurity.com/podcasts.php?podcastID=951.

While there is no hotter trend in background screening currently than social media, just as social networks can be used to background screen applicants, they also can be abused. As part of Bank Information Security Podcasts for BankInfoSecurity.com on the Insights on the Hottest Trends in Background Screening, Rosen talked to Editorial Director Tom Field on subject matter titled ‘Beware of Social Media for Background Screening.’

“Employers are using social media to not only look at people initially, bit for ongoing screening as well for current employees,” says Lester Rosen, who founded Employment Screening Resources (ESR), a San Francisco-area background screening firm accredited by The National Association of Professional Background Screeners (NAPBS), in 1996.

However, this hot new trend – using social media like blogs, Facebook, and Twitter for background checks – comes with a caveat: Is it too much information? “Through social media, for the first time perhaps in human history, employers are able to literally look inside someone’s head. It’s a real treasure trove of information,” Rosen says. “You’re going to learn all sorts of things as an employer that you don’t want to know and legally can not be the basis of a decision.”

Social media background checks are just one of the hottest background screening trends employers should study. In the interview, Rosen discusses the Employment Screening Resources 4th Annual ‘Top Ten Trends in Background Screening’ for 2011, including:

  • Challenges of social media background checks;
  • The importance of credit reports in background checks; and
  • How organizations can background screen more effectively.

Rosen, a retired attorney, is a consultant, writer, and frequent presenter nationwide on pre-employment screening and safe hiring issues. He is the author of ‘The Safe Hiring Manual – The Complete Guide to Keeping Criminals, Imposters, and Terrorists Out of Your Workplace’ and is also the key presenter in a Bank Information Security Webinar ‘Avoid Negligent Hiring – Best Practices and Legal Compliance in Background Checks.’ To learn more, visit http://www.bankinfosecurity.com/onDemand.php?webinarID=87.

Employment Screening Resources ‘Top Ten Trends in Background Screening’ for 2011 is at http://www.esrcheck.com/Top-Ten-Trends-In-Background-Screening-2011.php.

Founded in 1996 in the San Francisco area, Employment Screening Resources (ESR) wrote the book on background checks with ‘The Safe Hiring Manual’ by ESR founder and President Lester Rosen and is accredited by The National Association of Professional Background Screeners (NAPBS®) . To learn more about Employment Screening Resources, visit http://www.ESRcheck.com or contact Jared Callahan, ESR Director of Client Relations, at 415.898.0044 or jcallahan@ESRcheck.com.

Source:
http://www.bankinfosecurity.com/podcasts.php?podcastID=951

Employers Firing Employees over Information Found on Popular Social Media Sites Face Legal Risks

By Thomas Ahearn, Employment Screening Resources (ESR) News Editor

A recent article on the Wall Street Journal (WSJ) website ‘Employers Tread a Minefield’ – warns employers about “tripping over legal potholes in social media” if they choose to fire people over alleged social media infractions as more employees and job applicants access popular social networking sites such as Facebook and Twitter.

While job seekers and employees have been warned that what they post on popular social network sites such as Facebook and Twitter during their private time could come back to haunt their public careers, employers are now increasingly facing questions about their own policies regarding social media usage that outlines what is, and what is not, appropriate.

Due to the fact that these social network sites are a virtual treasure trove of personal information about employees and job applicants, the WSJ article cautions employers about the potential for litigation over social media use of employees, citing several legal cases as examples.

  • A National Labor Relations Board (NLRB) judge – in the federal agency’s first ‘social media complaint’ – will soon consider whether a medical transportation company illegally fired a worker in Connecticut after she criticized her boss on Facebook (UPDATE: Connecticut Facebook Firing Settlement Talks in Works).
  • Workers in New Jersey sued a restaurant company when they were dismissed after managers accessed a private Myspace page the employees set up to chat about work.
  • A Silicon Valley company was sued twice for comments an anonymous blogger (who was also an attorney for the company at the time) made about two lawyers and their patent-infringement suit against the company.
  • A former Georgia high school teacher has sued the local school district claiming that she was forced to resign her position over photos on Facebook that showed her drinking alcohol during a vacation in Europe.

While information about job applicants and employees found on social media may seem tempting to employers, viewing such information could lead to issues of discrimination, privacy, and authenticity and accuracy if a person is a victim of “cyber slamming.”

Yet, despite these dangers, employers seem intent on using social media for screening. A 2009 survey of more than 2,600 hiring managers conducted by leading job networking site CareerBuilder.com found nearly half of employers – 45 percent – used social networking sites to research candidates. The survey also revealed that 35 percent of employers rejected job applicants based on what was uncovered on social networking sites. Of these 35 percent:

  • 53 percent cited provocative/inappropriate photographs or information.
  • 44 percent cited content about drinking or using drugs.
  • 35 percent cited bad-mouthing of previous employers, co-workers or clients.
  • 29 percent cited poor communication skills.
  • 26 percent cited discriminatory comments.
  • 24 percent cited misrepresentation of qualifications.
  • 20 percent cited sharing confidential information from a previous employer.

Experts quoted in the WSJ article say the best defense against legal action for employers is to establish a social media policy and train employees about the policy, something that experts estimate that fewer than half of U.S. companies have done. In the meantime, the amount of legal action resulting from employer missteps in social media is likely to rise.

The issue of using social network sites such as Facebook to screen job candidates increasing the legal risk for employers was the Number 6 Background Screening Trend for 2011 for 2011. For a complete list of the Employment Screening Resources (ESR) Fourth Annual ‘Top Ten Trends in Background Screening’ for 2011, visit http://www.esrcheck.com/Top-Ten-Trends-In-Background-Screening-2011.php.

In addition, Lester Rosen, safe hiring expert and founder and President of Employment Screening Resources (ESR),  a background check company accredited by The National Association of Professional Background Screeners (NAPBS), recently participated in a podcast on BackInfoSecurity.com, ‘Background Checks: Beware Social Media,’ and talked about how employers use, and sometimes abuse, social media for background checks. For more information, visit http://www.bankinfosecurity.com/podcasts.php?podcastID=951.

Founded in 1996 in the San Francisco area, Employment Screening Resources (ESR) wrote the book on background checks with ‘The Safe Hiring Manual’ by ESR founder and President Lester Rosen and is accredited by The National Association of Professional Background Screeners (NAPBS®) . To learn more about Employment Screening Resources, visit http://www.ESRcheck.com or contact Jared Callahan, ESR Director of Client Relations, at 415.898.0044 or jcallahan@ESRcheck.com.

Source:
http://online.wsj.com/article/SB10001424052748703954004576089850685724570.html
http://thehiringsite.careerbuilder.com/2009/08/20/nearly-half-of-employers-use-social-networking-sites-to-screen-job-candidates/

NABE Survey Finds Most Economists Polled Expect Increased Hiring and Economic Growth in 2011

By Thomas Ahearn, Employment Screening Resources (ESR) News Editor

A new survey from the National Association for Business Economics (NABE) revealed that economists are hopeful about economic growth and increased hiring while the number of firms planning to hire workers is at a level not seen in over a decade.

The NABE Industry Survey January 2011 – which includes the views of 84 economists for private companies and trade groups that are NABE members – also found that 42 percent of economists saw hiring by their firms increasing over the next six months compared with only 7 percent who expected to lay off workers, resulting in Net Rising Index, or NRI, of 35, the highest NRI in the 12 years that the question has been asked. The current NRI – the percentage of panelists reporting better outlooks minus the percentage whose outlook is bleaker – is the highest level it has been since 1998.

The NABE survey also found that:

  • Employment continues to improve, with 34 percent of firms reporting larger workforces compared to only 13 percent a year ago.
  • The number of firms cutting jobs shrank from an average of 13 percent over the past three quarters to 6 percent currently.
  • The hiring outlook for the next six months looks more robust with 42 percent of respondents indicated their firms will be increasing employment, up from 39 percent last quarter and 29 percent in January 2010.

As for economic growth, the NABE survey revealed that 62 percent of the economists surveyed expected Gross Domestic Product (GDP) growth of 2 to 3 percent in 2011 while one in five (20 percent) expected 3 to 4 percent economic growth. Overall, 82 percent expected the economy to grow by 2 to 4 percent in 2011, up from 54 percent in October.

Also, profit margins expanded for a sixth quarter in a row as 38 percent of economists surveyed reported that profits rose at their firm while 18 percent reported declining profitability. The resulting NRI of 20 is the largest spread since 2005. The survey concluded business decisions are “being driven by the fundamentals of an improving economy.”

The NABE Industry Survey was conducted between December 17, 2010 and January 5, 2011. The entire survey, with answers and historical data, is for NABE members only.

With more employment comes the need for more employment screening. Employment Screening Resources (ESR) is a leading provider of background checks for employers and is accredited by The National Association of Professional Background Screeners (NAPBS®). For more information, visit http://www.ESRcheck.com.

Source:
http://www.nabe.com/publib/indsum.html

GAO Report Notes Improvements in Accuracy of E-Verify Employment Eligibility Verification System

By Thomas Ahearn, Employment Screening Resources (ESR) News Editor

According to a new report from the United States Government Accountability Office (GAO), the U.S. Citizenship and Immigration Services (USCIS) bureau has taken steps to improve the accuracy and efficiency of the E-Verify electronic employment eligibility verification system used to check if workers are legally eligible to work in the country.

The report – GAO-11-146 Employment Verification (December 2010) – found that USCIS had boosted the E-Verify system’s accuracy by expanding the number of databases consulted to determine the legal status of a new hire and by establishing new quality control procedures that included making employers double-check information for employees found unauthorized to work in the U.S. and allowing E-Verify to automatically correct clerical errors.

More improvements to the E-Verify system mean that more eligible workers are being approved immediately. E-Verify immediately confirmed nearly 97.5 percent of 8.2 million new hires entered into the system during fiscal year 2009, while another 0.3 percent successfully contested their “tentative nonconfirmation” status. In addition, GAO found that the USCIS had taken more precautions to protect the personal information of employees.

Despite these improvements, GAO cautioned that “E-Verify remains vulnerable to identity theft and employer fraud.” Nevertheless, E-Verify – a free, web-based system that compares employee information on the Employment Eligibility Verification Form I-9 against records in the Department of Homeland Security (DHS) and Social Security Administration (SSA) databases – is currently being used by at least 243,000 employers that ran more than 16 million queries in fiscal 2010, according to USCIS.

Employment Screening Resources (ESR) – a leading background check provider to employers accredited by the National Association of Professional Background Screeners (NAPBS) – is also a Designated E-Verify Employer Agent that 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 on ESR’s E-Verify Service, visit http://www.esrcheck.com/formi9.php.

Founded in 1996 in the San Francisco area, Employment Screening Resources (ESR) wrote the book on background checks with ‘The Safe Hiring Manual’ by ESR founder and President Lester Rosen and is accredited by The National Association of Professional Background Screeners (NAPBS®) . To learn more about Employment Screening Resources, visit http://www.ESRcheck.com or contact Jared Callahan, ESR Director of Client Relations, at 415.898.0044 or jcallahan@ESRcheck.com.

Source:
http://www.gao.gov/new.items/d11146.pdf
http://www.nextgov.com/nextgov/ng_20110119_5352.php?oref=topnews

Colleges and Universities Learning to Avoid Mistakes with Higher Education Background Checks

By Lester Rosen, Employment Screening Resources (ESR) President

Institutions of higher education such as colleges and universities bear the same risk as other employers when it comes to hiring employees. Due diligence in hiring, including employment screening background checks, is critical for any organization seeking to avoid workplace violence, negligent hiring lawsuits, or any repercussions from hiring employees with unsuitable criminal records or false academic credentials.

Since colleges and universities have a higher duty of care when it comes to hiring given their special role in society to provide a safe place of learning for young people, these institutes should avoid the ten biggest mistakes that higher education Human Resources (HR) professionals make in the area of background screening of staff members:

  • No. 1 – Assuming all screening firms are the same

The mistake of assuming all background screening firms are the same is like saying that all schools are the same and a fake degree from a “diploma mill’ is as good as a degree from a school with a legitimate accreditation. In selecting a background screening firm, higher education HR professionals need to make sure the firm belongs to the National Association of Professional Background Screeners (NAPBS) and if it is accredited by the NAPBS Background Screening Credentialing Council (BSCC) for compliance with the Background Screening Agency Accreditation Program (BSAAP). Higher education HR professionals may also want to see if a background screening firm – also referred to as a Consumer Reporting Agency (CRA) – is a member of ConcernedCRAs and demonstrates a commitment not to “offshore” job applicant personal data overseas beyond U.S. laws.

  • No. 2 – Assuming database searches for criminal records are adequate protection

One of the biggest fallacies is the untrue premise that database searches are real criminal background checks. Even Federal Bureau of Investigation (FBI) database searches using fingerprints of job applicants can result in missed records since it relies in great part upon the accuracy and timeliness of reports made by state and local jurisdictions. Commercial privately assembled multi-jurisdictional commercial databases used by higher education HR departments can be full of holes since they are a crazy quilt of information complied from a variety of sources with no guarantee that the data is complete, updated, timely, or accurate. Large swaths of the country are not included in these databases and they are subject to both “false positives” and “false negatives,” meaning that criminals can come back as “cleared” and innocent job applicants can be falsely labeled as criminals.

  • No. 3 – Assuming a job applicant’s privacy is protected and personal information is kept within United States borders

Many background firms ship personal data of job applicants such as names, birth dates, and Social Security numbers (SSNs) outside of the U.S. for processing in order to save money. In recent years, there has been a substantial effort in the U.S. to protect what has come to be known as “Personally Identifiable Information” or PII. Unfortunately, these protections cease to exist as a practical matter once PII leaves the U.S. The lack of any meaningful protection once data is “offshored” is a major gap in the effort to combat identity theft. When identity theft occurs in the U.S., legal protections, resources, laws, and mechanisms help victims. Once data goes offshore, that protection dissipates rapidly. A reputable background screening firm should believe that risking PII to make more money is not justified by the potential damage to the consumer and the potential liability to the educational institution.

  • No. 4 – Assuming you need to have applicants sign a physical piece of paper

There is a “green” solution to the significant logistical challenges faced by institutions of higher learning that are hiring across numerous departments of large campuses, or even across multiple campuses. With the new technology available right now, background screening can be performed by a completely paperless system.  For example, if a school uses an Applicant Tracking System (ATS), a button can be added that says “Perform Background Check.”  Releases can be handled online as well with a legally valid E-Sign electronic signature, so that no paperwork is involved whatsoever.

  • No. 5 – Assuming temporary employees have already been screened by staffing firms

When a staffing firm uses the term “screening,” it may simply mean they are trying to match up applicants with your list of needs – not that they are performing due diligence background checks. It is crucial for higher education HR professionals to have staffing firms clearly specify what types of background checks they are doing, if any, including: who is ordering them, what searches are being conducted, who is reviewing reports, and what criteria is being used to decide who is eligible to work. Another best practice is to ask the staffing firm to include the school, college, or university in the language of the background release so that the HR professional can review the completed reports as well. Even though the worker is on the staffing firm payroll, a college or university can still be considered a “co-employer” and be on the hook for any crimes or misconduct.

  • No. 6 – Assuming that contacting past employers is not beneficial

Not checking those businesses or institutions where the applicant has worked for the past seven-to-ten years can be a big mistake for higher education HR professionals. Some HR professionals assume that since past employers are reluctant to give reference information that such calls provide little value. But there are many instances where past employment verifications can be just as valuable as a criminal records search. These include verifying dates of employment and job titles, confirming a job applicant’s whereabouts for the past seven to ten years, making certain there are no “unexplained gaps” in employment, and determining which jurisdictions to search for criminal records.

  • No. 7 – Assuming international background checks are too difficult

With the increased mobility of workers across international borders it is no longer adequate to conduct due diligence checks just in the United States. Based on the ‘Place of Birth of the Foreign-Born Population: 2009’ report issued in October 2010 by the U.S. Census Bureau, there are 38.5 million foreign-born U.S. residents, representing 12.5 percent of the population. In addition, an increasing number of workers have spent a significant part of their professional career abroad. Because of the perceived difficulty in performing international employment screening, some employers have not attempted to verify international credentials or to perform foreign criminal checks. However, the mere fact that information may be more difficult and expensive to obtain from outside the U.S. does not relieve employers such as colleges and universities of due diligence obligations.

  • No 8 – Assuming “one size fits all” for background checks

While HR processionals live by the rule that similarly situated people must be treated in a similar fashion, that does not mean all employees must undergo the same background check. It is perfectly acceptable to screen CEOs more intensely than janitors, as long as all CEOs are screened the same and all janitors are screened the same. The typical rule is that a higher degree of risk justifies, and may require, a higher level of background check. In considering the level of background screening, higher education HR professionals need to weigh the potential risks of the position. Examples of positions with of greater risk include workers with access to: student dorm rooms; personal or financial data; vulnerable groups such as the aged, young, or infirmed; and uniforms that may allow them to act under color of official authority.

  • No. 9 – Assuming the Internet and social networking sites can be used without limitations

Many employers have discovered that the internet can provide what appears to be a treasure trove of information when it comes to recruiting and hiring. By using search engines and social networking sites, recruiters are often able to source candidates for positions and use the Internet to pre-screen job applicants. However, in using the Internet for background screening, employers can uncover “TMI” or “Too Much Information” that reveals prohibited information such as ethnicity, national origin, sexual orientation, religious preference, or other factors that cannot be considered for employment. Social network sites such as Facebook may contain a photo that reveals personal characteristics or physical problems and raise questions of discrimination as well. Other concerns with using the internet for background screening include issues of privacy, off-duty conduct, and “cyperslamming” where defamatory material is placed anonymously online. Some schools now have a policy of requiring employers to reveal whether they do such online searches as a condition for recruiting at the school. One alternative is to get specific consent from applicants for an online search, and only after a conditional job offer.

  • No. 10 – Assuming it costs too much to do real due diligence

Although cost is an important factor in business, it is usually not advisable to choose the cheapest provider for any professional service since, as the old saying goes: “You get what you pay for.” It is especially true for an information-based and heavily regulated industry like background screening. Key criteria for selecting a background screening firm should be knowledge, training, experience, and privacy policies – not cost-cutting.

For more information on background checks in general, visit Employment Screening Resources (ESR) at http://www.ESRcheck.com.

Founded in 1996 in the San Francisco area, Employment Screening Resources (ESR) wrote the book on background checks with ‘The Safe Hiring Manual’ by ESR founder and President Lester Rosen and is accredited by The National Association of Professional Background Screeners (NAPBS®) . To learn more about Employment Screening Resources, visit http://www.ESRcheck.com or contact Jared Callahan, ESR Director of Client Relations, at 415.898.0044 or jcallahan@ESRcheck.com.

Sources:
http://www.esrcheck.com/higher_education_background_checks-common_mistakes.php

Safe Hiring Expert Lester Rosen to Present Webinar on Negligent Hiring and Background Checks

By Thomas Ahearn, Employment Screening Resources (ESR) News Editor

Attorney and safe hiring expert Lester Rosen, President of Employment Screening Resources (ESR), a background check company accredited by the National Association of Professional Background Screeners (NAPBS), will present a 60 minute webinar titled ‘Negligent Hiring and Background Checks – Best Practices, Trends, and Legal Compliance’ for Avant Resources on Wednesday, January 19, 2011 at 3:00 pm EST (12:00 pm PST). For more information on the webinar, visit http://www.avantresources.com.

“Employee problems are caused by problem employees, and this session will help employers and HR professionals avoid bad hires in the first place by practicing due diligence in their hiring programs,” says Rosen, the author of ‘The Safe Hiring Manual – The Complete Guide to Keeping Criminals, Terrorists, and Imposters Out of Your Workplace,’ the first comprehensive book on background screening. “Spending a great deal of time and energy to select the best hire quickly goes down the drain if an employer fails to exercise due diligence to ensure the candidate is for real.”

Without exercising due diligence, there is a near statistical certainty that a firm will hire someone with fake education or employment credentials or even an unsuitable criminal record. Even one bad hire can create a legal and financial nightmare, including workplace violence, unqualified workers and time wasted in recruiting and hiring the wrong person. Negligent hiring is one of the fastest growing areas of employment litigation.

In the webinar, participants will learn legally complaint best practices to keep a business productive and out of court, including how to obtain and utilize criminal records and background information on job applicants. In addition, participants will:

  • Learn why background checks and due diligence have become mission critical for employers.
  • Understand the importance of federal Fair Credit Reporting Act (FCRA), discrimination laws, and the impact of state specific rules and regulations.
  • Understand the basics of a negligent hiring lawsuit and defenses that work and do not work.
  • Get acquainted with cutting edge issues such as the new Equal Employment Opportunity Commission (EEOC) focus on criminal records and credit reports and the use of social network sites.
  • Learn how to spot fraudulent employment and education credentials.
  • Learn steps organizations can take today to implement a legally compliant program and to hire the best employees. 

Rosen is a consultant, writer and frequent presenter nationwide on pre-employment screening and safe hiring issues. He also was the chairperson of the steering committee that founded NAPBS, a professional trade organization for the background screening industry and served as the first co-chairman in 2004. His speaking appearances, which include numerous national and statewide conferences, are detailed at: http://www.esrcheck.com/ESR_Speaks.php.

Founded in 1996 in the San Francisco area, Employment Screening Resources (ESR) wrote the book on background checks with ‘The Safe Hiring Manual’ by ESR founder and President Lester Rosen and is accredited by The National Association of Professional Background Screeners (NAPBS®) . To learn more about Employment Screening Resources, visit http://www.ESRcheck.com or contact Jared Callahan, ESR Director of Client Relations, at 415.898.0044 or jcallahan@ESRcheck.com.

Controversial and Discriminatory Use of Job Applicant Credit Reports by Employers Tops Background Screening Trends List for 2011

By Lester Rosen, Employment Screening Resources (ESR) President & Thomas Ahearn, ESR News Editor

For the past four years, Employment Screening Resources (ESR) – a leading background check provider to employers accredited by the National Association of Professional Background Screeners (NAPBS®) – has compiled a “Top Ten Trends in Background Screening” list of emerging and influential trends in employment background screening predicted by ESR founder and President Lester Rosen, an Attorney at Law and author of ‘The Safe Hiring Manual,’ the first comprehensive guide for background screening.

For the Fourth Annual ‘Top Ten Trends in Background Screening’ for 2011, Rosen chose the controversial, and potentially discriminatory, practice of employers checking credit reports of job applicants as the number one background screening trend for the year ahead. Articles detailing the top background screening trends for 2011 were published on ESR News starting in December 2010. Below is a list of the background screening trends with a brief summary and links to the full article:

A great deal of misinformation about the basics of credit reports, background checks, and job hunting exists in the current economic climate. The topic has been in the news and states have passed laws or are considering laws to restrict the use of credit reports and employment. Furthermore, the U.S. Equal Employment Opportunity Commission (EEOC) is looking closely at this area and has filed lawsuits alleging discriminatory use.

Most employers are not using credit reports to find ways to eliminate people from jobs. A background check that includes a credit report is usually run only after an employer has gone through the time, cost, and effort to find the right candidate. Employers initiate background checks because they are interested in hiring the applicant and are conducting due diligence to make sure there is no reason not to hire. Under the rules of the federal Fair Credit Reporting Act (FCRA), a credit report is only obtained after the applicant has given consent and after a legally required disclosure has been given. If the employer utilizes the credit report in any way not to hire, applicants are entitled to a copy of their credit report, a pre-adverse action notice, as well as a statement of their rights. Before any employment decision becomes final, applicants also have the right to challenge the credit report before any denial of employment is made final.

However, employers should approach credit reports with caution when using them for employment background checks, and must articulate a clear rationale as to why a credit report is related to a particular job. Employers should also be aware of the potential for errors in credit reports. A debt may be reported incorrectly for various reasons or the applicant could be the victim of identify theft which can also lead to incorrect data. In addition, negative entries may well not be a valid predictor of job performance especially since many job applicants have faced a long period of unemployment that may lead to larger debts.  An overly broad use of credit reports by employers could lead to claims of discrimination from a disparate impact on protected groups such as Blacks and Latinos. The idea that credit reports can be used in a discriminatory manner in the eyes of the EEOC means employers will continue to face controversy with discrimination over using credit reports for employment screening.

To read the full article on Trend #1, please visit: http://www.esrcheck.com/wordpress/2011/01/11/controversy-over-whether-employers-using-credit-reports-for-employment-screening-is-discriminatory-increases/.

Employers have become increasingly aware of the importance of knowing if a job applicant has a criminal record since they have a legal duty to make reasonable inquiries about who they hire in order to provide a safe workplace. An employer who hires a person with a criminal record can be found liable for negligent hiring if the hiring decision results in harm and could have been avoided by a simple criminal record check. Checking criminal records demonstrates due diligence and is also an important preventative measure to protect against workplace violence. One of the most effective tools an employer has is the use of an employment application form in the hiring process which enables employers to directly ask applicants if they have a criminal record. The advantage is that an employer can use a well worded application form to discourage applicants with something to hide while also encouraging applicants to be open and honest regarding questions about past criminal convictions.

However, the issue of whether employers can use a job application to ask about a job applicant’s criminal record is becoming more complicated. Many states, counties, and local governments have joined the “ban the box” movement removing the “box” job applicants are asked to check next to the question asking about past criminal convictions. In addition, more employers are facing lawsuits accusing them of violating Title VII of the Civil Rights Act of 1964 by rejecting or firing qualified individuals with criminal records even when the criminal history has no bearing on the ability to perform their job. Due to these factors, questions about criminal records of job applicants are becoming much more difficult for employers to ask.

To read the full article on Trend #2, please visit: http://www.esrcheck.com/wordpress/2011/01/06/questions-about-criminal-records-of-job-applicants-become-more-difficult-for-employers-to-ask/.

According to an age old platitude, “If something looks too good to be true, it probably is,” so employers should be wary of fast and cheap online criminal background checks that promise accurate and legal information on job applicants at the click of a mouse or the touch of a screen. The need for accurate and reliable information should be obvious to anyone dealing with background checks. Even so, numerous internet sites have sprung up recently promising cheap, almost instant background checks that deliver criminal information to anyone, anywhere, and in seconds. These sites utilize a so-called “national criminal database” and vendors of such databases typically claim to have compiled millions of records from every state so users can know instantly if someone is a criminal at a very low price.

Although a multi-state records database can be a powerful tool when used by a qualified employment screening firm as part of an overall background check, employers who think they are getting a real criminal background check can be in for a rude awaking when they discover that such searches are far from the real thing. Applicants with criminal records can easily be missed, while people without records can be incorrectly identified as criminals. Both results carry negative financial and legal implications for employers. Employers using these databases for employment purposes need to understand the limitations and legal exposure associated with using them or risk finding themselves embroiled in litigation. Employers are quickly discovering that fast and cheap online background checks using criminal databases not always accurate or legal.

To read the full article on Trend #3, please visit: http://www.esrcheck.com/wordpress/2011/01/03/employers-discover-fast-and-cheap-online-background-checks-using-criminal-databases-not-always-accurate-or-legal/.

Many employers do not realize they potentially face the same exposure from vendors, independent contractors, and temporary employees from staffing firms as they do from their own full-time employees when it comes to negligent hiring lawsuits. Risk management controls of employers often do not take into account the “need to know” through background checks of workers who are not on their payroll but are on their premises, with access to computer systems, clients, co-workers, assets, and the general public. The law is absolutely clear that if a vendor, independent contractor, or temporary worker harms a member of the public or a co-worker, the employer can be just as liable as if the person were on the employer’s full-time payroll. All of the rules of due diligence – which include background checks – apply with equal force to vendors, temporary workers, or independent contractors. A business can be liable if, in the exercise of reasonable care, the business should have known that a vendor, temporary worker, or independent contractor was dangerous, unqualified, or otherwise unfit for employment. An employer has an absolute obligation to exercise due diligence not only in whom they hire on payroll, but in whom they allow on premises to perform work. Employers can also be held liable under the legal doctrine of “co-employment,” which means that even though the worker is on someone else’s payroll, the business that uses and supervisees the worker can still be held liable for any misconduct.

However, many employers have found out the hard way that workers from a vendor or staffing firm or hired as an independent contractor without proper background checks can also cause damage. When an employer is the victim of theft, embezzlement, or resume fraud, the harm is just as bad regardless of whether the worker is on their payroll or someone else’s payroll. No employer would dream of walking down the street and handing the keys to the business to a total stranger, yet many employers across America essentially do exactly that everyday when engaging the services of vendors and temporary workers with proper background checks. So-called “temporary” workers can cause permanent problems for employers without the background checks that are performed on full-time employees. As hiring of temporary workers increases – and since the hiring of temporary workers is usually an indication of hiring full-time workers in the future – employers will become increasingly more concerned with background checks of temporary workers in the coming year.

To read the full article on Trend #4, please visit: http://www.esrcheck.com/wordpress/2010/12/28/background-checks-of-temporary-workers-cause-for-concern-for-employers-as-hiring-increases/

In 2011, due to the mobility of workers across international borders in a global economy making it no longer adequate to conduct background screening checks just in the United States, a major trend will be the necessity of international background screening since an increasing number of workers will have spent part of their professional careers abroad. Employers in the U.S. have long recognized that conducting due diligence on new hires with background screening is a mission critical task that can help them avoid being the subject of negligent hiring lawsuits if they hire someone that they should have known – through the exercise of due diligence – was dangerous, unfit or unqualified.

However, with the increased mobility of workers across international borders it is no longer adequate to conduct these background screening checks just in the United States. Background screening also must be done internationally since an increasing number of workers have spent part of their professional careers abroad. The number of foreign countries from which U.S. employers may seek information about applicants with international background screening is expansive, and includes Australia, Brazil, Canada, Chile, China, France, Germany, India, Ireland, Israel, Japan, Malaysia, Mexico, Nigeria, Pakistan, Philippines, Russia, Singapore, South Africa, and the United Kingdom (U.K.).

To read the full article on Trend #5, please visit: http://www.esrcheck.com/wordpress/2010/12/23/international-background-screening-more-necessary-due-to-mobility-of-workers-in-global-economy/.  

A background screening trend that recently emerged where employers used social network sites such as Facebook – the most popular social networking site with over 500 million active users worldwide – to run ‘Social Network Background Checks’ on job candidates should become even more prevalent in 2011, and increase the legal risks for employers. No discussion about background screening these days is complete without an analysis of how the Internet is used for hiring. From social network sites such as Facebook and Twitter to blogs, videos on YouTube, and business connection sites like LinkedIn, employers focus with laser-like intensity on how to use the Internet for background screening job candidates. What is sometimes overlooked in the rush to use the Internet for background screening is the one question employers need to ask: What are the legal risks in using the Internet for hiring? The answer involves issues of discrimination, authenticity, and privacy. If employers insist on using social network sites for background screening, then they must realize that much of the ‘new media’ available to them for background screening is still covered by current employment regulations.

To read the full article on Trend #6, please visit: http://www.esrcheck.com/wordpress/2010/12/21/esr-background-screening-trend-6-for-2011-using-social-network-sites-such-as-facebook-to-screen-job-candidates-increases-legal-risk-for-employers/.   

A background screening trend that gained much attention in 2010 that will continue to do so in 2011 will be increased workplace violence prevention education to help protect both employers and employees. While the term “workplace violence” is appropriate for a quick definition or diagnosis of a problem, fully defining all aspects of “workplace violence” can be nebulous at best. Many employers loosely define workplace violence as: Assaults, other violent acts, or threats which occur in or are related to the workplace and entail a substantial risk of physical or emotional harm to individuals, or damage to company resources or capabilities. The Occupational Health and Safety Administration (OHSA) defines “workplace violence” as “violence or the threat of violence against workers” that involves any physical assault, threatening behavior, or verbal abuse occurring in, or related to, the workplace, and includes behaviors ranging in aggressiveness from verbal harassment to murder. According to the U.S. Bureau of Labor Statistics (BLS), there were 521 workplace killings in the United States in 2009, 420 of them committed by gunfire.

To read the full article on Trend #7, please visit: http://www.esrcheck.com/wordpress/2010/12/16/esr-background-screening-trend-7-for-2011-more-workplace-violence-prevention-education-helps-protect-employers-and-employees/.

A new background screening trend emerging in 2011 will be the increased concern over the “offshoring” of Personally Identifiable Information (PII) of U.S. consumers. A recently signed California law appears to be the first in the United States to regulate the “offshoring” of Personally Identifiable Information (PII) of U.S. consumers collected for background checks, a controversial practice where private data of U.S. citizens – such as names, dates of birth, addresses, and Social Security numbers (SSNs) – is sent overseas, outside the United States and its territories, and beyond the reach of U.S. privacy laws. In September 2010, Governor Arnold Schwarzenegger signed into law California Senate Bill 909 (SB 909), which addresses the issue of personal information being sent offshore. SB 909 – which takes effect January 1, 2012 to allow time for background check firms to provide new releases to employers or modify online language – amends the California Investigative Consumer Reporting Agencies Act (ICRA) that regulates background checks in California and requires that a consumer must be notified as part of a disclosure before the background check of the web address for “information about the investigative reporting agency’s privacy practices, including whether the consumer’s personal information will be sent outside the United States or its territories.”

To read the full article on Trend #8, please visit: http://www.esrcheck.com/wordpress/2010/12/14/esr-background-screening-trend-8-for-2011-increased-privacy-concerns-over-offshoring-of-personally-identifiable-information-pii/.

An October 2010 press release from the Department of Homeland Security (DHS) announced record-breaking immigration enforcement statistics achieved under the Obama administration, which included issuing more financial sanctions on employers who hired unauthorized workers than during the entire previous Bush administration. Since January 2009, when President Barack Obama took office, U.S. Immigration and Customs Enforcement (ICE) – the principal investigative arm of DHS – has audited more than 3,200 employers suspected of hiring workers not legally eligible to work in the U.S., debarred 225 companies and individuals, and imposed approximately $50 million in financial sanctions, according to the DHS. A summary of fines and penalties from ICE reveals that this surge in enforcement of a legal U.S. workforce included a 500 percent increase in penalties from worksite enforcement actions (over $5 million), a nearly two-fold increase in I-9 audits (2,200), a record-breaking 180 criminal prosecutions of employers, and the debarring of more than 97 businesses, compared to 30 last fiscal year, with average fines exceeding $110,000. Due in large part to increased scrutiny on employers from ICE through I-9 audits – where employee information on Employment Eligibility Verification Forms (“I-9 forms”) is checked for accuracy by Government agents – penalties from worksite enforcement inspections have increased recently.

To read the full article on Trend #9, please visit: http://www.esrcheck.com/wordpress/2010/12/09/esr-background-screening-trend-9-for-2011-e-verify-and-i-9-audits-help-government-find-employers-with-illegal-workers/.

Before this year, employers were largely on their own when selecting a background screening firm. With hundreds upon hundreds of background screening firms to choose from, employers faced a bewildering landscape of competing claims that touted any number of bells and whistles that made it hard to distinguish one background screening provider form another. Some background screening firms had ISO (International Organization for Standardization) certification, but as noted in the article “Backgrounds to the Foreground” in the December 2010 issue of HR Magazine, the ISO designation is not specific to background screening and does not guarantee quality of products or services. Employers were also faced with “commercial” rankings published by private “for-profit” publications, which only added to the confusion. The problem for employers is that background screening is a critical function subject to intense legal regulation, and so the stakes are high. In 2010, the National Association of Professional Background Screeners (NAPBS®) Background Screening Credentialing Council (BSCC) took significant steps towards solving this perplexing problem with the creation of the Background Screening Agency Accreditation Program (BSAAP) that covers all areas related to the background screening process and, most important, is professional and objective and not based upon any commercial considerations. The BSAAP advances professionalism in the background screening industry through the promotion of best practices, awareness of legal compliance, and development of standards that protect consumers.

To read the full article on Trend #10, please visit: http://www.esrcheck.com/wordpress/2010/12/06/employment-screening-resources-top-ten-trends-in-background-screening-for-2011-no-10-new-accreditation-standards-help-employers-select-background-screening-firms/.

The Employment Screening Resources (ESR) Fourth Annual ‘Top Ten Trends in Background Screening’ for 2011 is available at: http://www.esrcheck.com/Top-Ten-Trends-In-Background-Screening-2011.php.

For more information on background screening or to purchase background checks, visit Employment Screening Resources (ESR) at http://www.ESRcheck.com.

Founded in 1996 in the San Francisco Bay area, Employment Screening Resources (ESR) is the company that wrote the book on background checks with ‘The Safe Hiring Manual’ by ESR founder and President Lester Rosen. Employment Screening Resources is accredited by The National Association of Professional Background Screeners (NAPBS®) Background Screening Credentialing Council (BSCC) for proving compliance with the Background Screening Agency Accreditation Program (BSAAP). ESR was the third U.S. background check firm to be ‘Safe Harbor’ Certified for data privacy protection. To learn more about ESR’s Leadership, Resources, and Solutions, visit http://www.ESRcheck.com or contact Jared Callahan, ESR Director of Client Relations, at 415.898.0044 or jcallahan@ESRcheck.com.

EEOC Reports Workplace Discrimination Charges Hit Record High of Nearly 100,000 in FY 2010

By Thomas Ahearn, Employment Screening Resources (ESR) News Editor

Private sector workplace discrimination charge filings with the federal U.S. Equal Employment Opportunity Commission (EEOC) agency nationwide hit an unprecedented level of 99,922 during fiscal year (FY) 2010, according to an EEOC press release.

The EEOC ended FY 2010 – October 1, 2009 to Sept. 30, 2010 – with 250 lawsuits filed, 285 lawsuits resolved, and 104,999 private sector charges resolved. Overall, through enforcement, mediation, and litigation programs to promote inclusive and discrimination-free workplaces, the EEOC secured more than $404 million in monetary benefits from employers, the highest level of relief ever obtained by the agency.

According to the FY 2010 data, all major categories of charge filings in the private sector – which include charges filed against state and local governments – increased. These include charges alleging discrimination under:

  • Title VII of the Civil Rights Act of 1964, as amended;
  • Equal Pay Act;
  • Age Discrimination in Employment Act;
  • Americans with Disabilities Act (ADA); and
  • Genetic Information Nondiscrimination Act (GINA).

In FY 2010, retaliation under all statutes (36,258) surpassed race (35,890) as the most frequently filed charge with the EEOC for the first time ever since race had been historically the most frequently filed charge since the EEOC became operational in 1965. In addition, allegations based on religion (3,790), disability (25,165), and age (23,264) increased. In its first year of enforcement, the EEOC received 201 charges under GINA. 

The FY 2010 enforcement and litigation statistics are available online at http://www.eeoc.gov/eeoc/statistics/enforcement/index.cfm. To see EEOC Charge Statistics FY 1997 Through FY 2010, visit http://www.eeoc.gov/eeoc/statistics/enforcement/charges.cfm.

Recently, part of the EEOC enforcement has targeted employers that may be using credit reports of job applicants for employment screening in a discriminatory manner in the eyes of the federal law. Credit checks for employment purposes have become a very controversial subject. Job applicants looking for work in a tough economy are caught in a “Catch-22” situation where they have bad credit because they cannot get a job but cannot get a job because they have bad credit. As a result, the EEOC held a public Commission meeting in October 2010 to hear testimony on the growing use of credit histories of job applicants as selection criteria during employment background screening to see if the practice is discriminatory.

However, while credit checks are one method employers may use to hire an honest and trustworthy employee that also provide some legal cover if that employee turns out to be dishonest, Employment Screening Resources (ESR) does not encourage routine credit checks on all candidates since credit checks often contain errors and can feel like an invasion of privacy to applicants. Employers should limit credit checks to relevant positions such as those that involve money. In fact, with many states recently passing laws limiting the use of credit checks for employment purposes, employers need to be careful when, to whom, and how they perform credit checks on prospective job applicants.

However, in response to seeing an increase in claims of discrimination based upon criminal records and credit reports, the EEOC began the E-RACE (Eradicating Racism And Colorism from Employment) Initiative. More recently, the EEOC filed a nationwide hiring discrimination lawsuit against a nationwide provider of postsecondary education charging the company engaged in a pattern of unlawful discrimination by refusing to hire a class of black job applicants nationwide by rejecting them based on their credit history, a practice with an unlawful discriminatory impact because of race and is neither job-related nor justified by business necessity. As a result of these practices, the company allegedly violated Title VII of the Civil Rights Act of 1964, according to the EEOC press release.

The controversy over whether employers using credit reports for employment screening is discriminatory is Trend #1 in Employment Screening Resources (ESR) Fourth Annual ‘Top Ten Trends in Background Screening’ for 2011.

To read more articles about the EEOC on ESR News, see posts Tagged ‘EEOC’ at: http://www.esrcheck.com/wordpress/tag/eeoc/.

For more information about background screening, visit Employment Screening Resources (ESR) at http://www.ESRcheck.com.

Founded in 1996 in the San Francisco Bay area, Employment Screening Resources (ESR) is the company that wrote the book on background checks with ‘The Safe Hiring Manual’ by ESR founder and President Lester Rosen. Employment Screening Resources is accredited by The National Association of Professional Background Screeners (NAPBS®) Background Screening Credentialing Council (BSCC) for proving compliance with the Background Screening Agency Accreditation Program (BSAAP). ESR was the third U.S. background check firm to be ‘Safe Harbor’ Certified for data privacy protection. To learn more about ESR’s Leadership, Resources, and Solutions, visit http://www.ESRcheck.com.

Sources:
http://www.eeoc.gov/eeoc/newsroom/release/1-11-11.cfm

Controversy over Whether Employers Using Credit Reports for Employment Screening is Discriminatory Increases

By Lester Rosen, Employment Screening Resources (ESR) President & Thomas Ahearn, ESR News Editor

A great deal of misinformation about the basics of credit reports, background checks, and job hunting exists in the current economic climate. Most employers are not using credit reports to find ways to eliminate people from jobs. A background check that includes a credit report is usually run only after an employer has gone through the time, cost, and effort to find the right candidate. Employers initiate background checks because they are interested in hiring the applicant and are conducting due diligence to make sure there is no reason not to hire. Under the rules of the federal Fair Credit Reporting Act (FCRA), a credit report is only obtained after the applicant has given consent and after a legally required disclosure has been given. If the employer utilizes the credit report in any way not to hire, applicants are entitled to a copy of their credit report, a pre-adverse action notice, as well as a statement of their rights. Before any employment decision becomes final, applicants also have the right to challenge the credit report before any denial of employment is made final.

However, employers should approach credit reports with caution when using them for employment background checks, and must articulate a clear rationale as to why a credit report is related to a particular job. Employers should also be aware of the potential for errors in credit reports. A debt may be reported incorrectly for various reasons or the applicant could be the victim of identify theft which can also lead to incorrect data. In addition, negative entries may well not be a valid predictor of job performance especially since many job applicants have faced a long period of unemployment that may lead to larger debts.  An overly broad use of credit reports by employers could lead to claims of discrimination from a disparate impact on protected groups such as Blacks and Latinos.

The idea that credit reports can be used in a discriminatory manner in the eyes of the U.S. Equal Employment Opportunity Commission (EEOC) means employers will continue to face controversy with discrimination over using credit reports for employment screening.

This is Trend #1 in Employment Screening Resources (ESR) Fourth Annual ‘Top Ten Trends in Background Screening’ for 2011.

Credit checks for employment purposes have become a very controversial subject. Job applicants look for work in a tough economy are caught in a “Catch-22” situation where they have bad credit because they cannot get a job but cannot get a job because they have bad credit. As a result, the EEOC held a public Commission meeting in October 2010 to hear testimony on the growing use of credit histories of job applicants as selection criteria during employment background screening to see if the practice is discriminatory. At that meeting, a representative of the Society for Human Resource Management (SHRM) told the EEOC that the federal government should not eliminate an employer’s use of credit histories to help make decisions about job candidates since credit history is just one of many factors – including education, experience, references, and past criminal history – that employers use to narrow the job applicant pool to the most qualified. Data from a 2010 SHRM survey on the use of credit reports for employment screening revealed that:

  • 13 percent of employers surveyed conducted credit checks on all job candidates.
  • 40 percent of employers did not conduct any credit checks on job candidates.
  • 47 percent of employers considered credit history for candidates of selected jobs.
  • 91 percent of employers that conducted credit checks did so for jobs of financial or fiduciary responsibility such as handling cash, banking, and accounting.

Overall, SHRM found that 60 percent of employers ran a credit check on at least some applicants, an increase from the 42 percent in 2006 and 25 percent in 1998. The EEOC heard public comment from SHRM and others to determine the extent of the practice of using credit checks during the background screening of job candidates, the effectiveness of its intended purpose, and its potential impact on different populations. The EEOC works to ensure all U.S. workplaces are made free of all barriers to equal opportunity. For more information, visit http://www.eeoc.gov/eeoc/meetings/10-20-10/index.cfm.

For employers, hiring an applicant that will handle money or assets, make fiduciary decisions, or has access to private data without running a credit report could result in allegations of negligent hiring if embezzlement or identity theft occurs and a credit report as part of a background check would have lead to relevant information. It is an urban myth that employers receive credit scores of the applicant. Employment credit reports are much different than credit reports used for lending and do not contain a credit score since there is no evidence of a connection between credit scores and successful employment. 

In addition to the federal regulations of the FCRA and EEOC, some states are considering passing, or have passed, legislation to restrict the use of credit reports for employment purposes. For example, effective January 3, 2011, the State of Illinois restricts employers from using credit reports for employment purposes. Under Illinois House Bill 4658 ‘The Employee Credit Privacy Act,’ employers in Illinois may not use a person’s credit history to determine employment, recruiting, discharge, or compensation. As reported on ESR News, other examples of stories about limiting the use of credit reports for employment purposes include:

Employers argue that credit checks during employment screening are done responsibly, and are not barriers to employment. They may check credit history during background checks to help them determine whether a prospective employee is a possible risk to the financial health of a business or to its customers. Prohibiting credit checks in screening makes employers, other employees, and customers vulnerable to fraud and identity theft.

Unfortunately, personal financial health can be an indictor of potential employee fraud. The Association of Certified Fraud Examiners (ACFE) reviewed occupational fraud between 2006 and 2008, and found that the top two “red flag” warnings exhibited by perpetrators of fraud leading up to the crime were instances of living beyond their financial means (39 percent of cases) or experiencing financial difficulties (34 percent of cases). To learn more, visit http://www.acfe.com/occupational-fraud/occupational-fraud.asp.

While it is wrong to say all financial difficulties lead to fraud, some employers believe it is also wrong to undercut fraud prevention by outlawing the use of credit report information that may show a correlation between past behavior and future fraud. Credit checks of potential employees protect companies – particularly small businesses – from fraud. According to ACFE, the median loss suffered by organizations with fewer than 100 employees was $190,000 per incident, higher than median losses in large organizations. Overall, employee theft accounted for over $15 billion in losses annually, with companies losing a median of 5 percent of their annual revenue to employee fraud.

Because many myths surround credit reports and employment and to get to the bottom of how credit reports are really being used, Lester Rosen, founder and President of Employment Screening Resources (ESR), recently commented about credit reports of job applicants being used for employment purposes in a San Francisco area blog:

  • Employers don’t randomly access credit reports from all job applicants. They only do so for those who are solid candidates.
  • If they are pulling a credit report, congratulations! They are doing a background check, and that is good news, as they are seriously considering the applicant for the position. They won’t run it before the applicant is a finalist.
  • Credit reports aren’t checked for all occupations or industries. Most employers are looking at credit reports for people applying for positions that are clearly related to finance or have access to cash or credit. They usually don’t access credit reports for people applying for minimum wage jobs.
  • The only way an employer can pull an applicant’s credit report is with the applicant’s permission. Therefore, if the employer asks, the applicant should head over to the human resources department and explain his or her particular situation.
  • A potential boss does not have access to the same type of reports that lenders do. The credit reports employers can see never include credit scores or list dates of birth. All they can view is an applicant’s credit history.
  • If applicants are concerned about how these credit report pulls may harm their credit report further, they can relax. Unlike when a prospective creditor checks it, no “inquiry” will be listed.

As for the real impact of a job applicant’s credit damage, Rosen recommends in the blog that they should not worry about even that too much. “Our experience is that employers are very sensitive to the fact that credit reports are not perfect. And everyone in the world knows there is a recession, and employers take that into consideration,” says Rosen. “It’s a misconception that people are being blacklisted because of their credit reports. However, if the employer does make an adverse decision based on your report, you have a right to know about it and get a copy of the report they used.”

Another article quoted Rosen as saying employers are “looking at the debt level compared to the potential income from the job” and added that “if someone is under water financially as shown by the credit report, the thought is perhaps there could be a motive to embezzle or steal.” However, while Rosen says credit checks are one method employers may use to hire honest and trustworthy employees that also provide some legal cover if that employee turns out to be dishonest, he does not encourage routine credit checks on all candidates since credit checks often contain errors and can feel like an invasion of privacy to applicants. Rosen’s advice for employers is to limit credit checks to relevant positions such as those that involve money. In fact, with many states recently passing laws limiting the use of credit checks for employment purposes, employers need to be careful when, to whom, and how they perform credit checks on prospective job applicants.

However, job applicants and the EEOC are taking matters into their own hands regarding use of credit reports during background checks. Workplace discrimination charge filings with the federal agency nationwide rose to an unprecedented level of 99,922 during fiscal year 2010, according to an EEOC press release. In response to seeing an increase in claims of discrimination based upon criminal records and credit reports, the EEOC began the E-RACE (Eradicating Racism And Colorism from Employment) Initiative. Most recently, the EEOC filed a nationwide hiring discrimination lawsuit against a nationwide provider of postsecondary education charging the company engaged in a pattern of unlawful discrimination by refusing to hire a class of black job applicants nationwide by rejecting them based on their credit history, a practice that has an unlawful discriminatory impact because of race and is neither job-related nor justified by business necessity. As a result of these practices, the company has violated Title VII of the Civil Rights Act of 1964. To read the EEOC press release, visit http://eeoc.gov/eeoc/newsroom/release/12-21-10a.cfm.

Another federal agency, the Federal Trade Commission (FTC), issued a notice in May 2010 explaining ‘Credit Reports and Employment Background Checks’ to consumers who have applied for jobs. To see the FTC notice, visit http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre36.pdf. The FTC enforces the Fair Credit Reporting Act (FCRA), a law that protects the privacy and accuracy of the information in a credit report. The FCRA also spells out the rights of job applicants and the responsibilities of employers when using credit reports and other background check information to assess an application for employment. The FTC warns that there are legal consequences for employers who don’t comply with the FCRA if they:

  • Fail to get an applicant’s okay before getting a copy of their credit report or background check report;
  • Fail to provide the appropriate disclosures in a timely way; or
  • Fail to provide adverse action notices to unsuccessful job applicants.

To help both employers and job applicants better understand use of credit reports during background checks Rosen has written articles on using credit reports during background checks:

Employment Screening Resources (ESR) also co-authorized a white paper with LexisNexis, ‘The Use of Credit Reports in Employment Background Screening – An Overview for Job Applicants,’ on the protections applicants have for credit reports available at: http://www.napbs.com/files/public/Consumer_Education/Credit_Reports_for_Background_Screening.pdf

ESR also provides information – at no charge – to job applicants on background checks and credit check reports can help job applicants navigate the background check process and maximize their chance at employment. The information is available on the ESR ‘Applicant Resources’ page at: http://www.esrcheck.com/Applicant-Resources.php.

Whether the use of credit checks for employment purposes is discriminatory to certain job applicants – which ESR also named Trend #1 in its Third Annual Top Ten Trends in the Background Screening Industry for 2010 – is a question that will be asked as long as employers run credit checks on job applicants with money troubles. For more information about the use of credit reports during background checks, please visit http://www.esrcheck.com/wordpress/tag/credit-reports/.

To read an extended article – Is It Discriminatory For Employers To Use Credit Reports for Employment Screening? – on the subject, visit http://www.esrcheck.com/articles/Is-It-Discriminatory-for-Employers-to-Use-Credit-Reports-for-Employment-Screening.php.

Employment Screening Resources (ESR) is releasing the ESR Fourth Annual ‘Top Ten Trends in Pre-Employment Background Screening’ for 2011 throughout December. This is the First of the Top Ten Trends ESR will be tracking in 2011. To see an updated list of ESR’s ‘Top Ten Trends in Pre-Employment Background Screening’ for 2011, visit: http://www.esrcheck.com/Top-Ten-Trends-In-Background-Screening-2011.php.

Founded in 1996 in the San Francisco Bay area, Employment Screening Resources (ESR) is the company that wrote the book on background checks with ‘The Safe Hiring Manual’ by ESR founder and President Lester Rosen. Employment Screening Resources is accredited by The National Association of Professional Background Screeners (NAPBS®) Background Screening Credentialing Council (BSCC) for proving compliance with the Background Screening Agency Accreditation Program (BSAAP). ESR was the third U.S. background check firm to be ‘Safe Harbor’ Certified for data privacy protection. To learn more about ESR’s Leadership, Resources, and Solutions, visit http://www.ESRcheck.com or contact Jared Callahan, ESR Director of Client Relations, at 415.898.0044 or jcallahan@ESRcheck.com.