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

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August 2004 Vol. 4, No. 8

Employment Screening Resources (ESR) Newsletter and Legal Update

1. Las Vegas Casino Finds Taking Chances with the FCRA to be Costly

2. Tools of the Trade: Verifying Current Employment

3. Molestation of Children by Registered Sex Offenders Employed by Major Retailer Leads to Proposed Law

4. ESR Safe Hiring Seminar Schedule

1. Las Vegas Casino Finds Taking Chances with the FCRA to be Costly

A Las Vegas and Mississippi casino learned the hard way that it is not worth taking chances when it comes to background screening and legal compliance with respect to the federal Fair Credit Reporting Act (FCRA). The casinos agreed to pay fines of $325,000 to settle allegations of failure to give job applicants notice that if a credit report was the reason a job was denied. Although the agreement does not constitute an admission of a law violation, it underscores that employers need to understand and follow the FCRA when it comes to hiring.

Background checks in the United States are regulated by the Federal Trade Commission (FTC). According to a July 14, 2004 release on the FTC web site, Las Vegas based Imperial Palace and Biloxi based Imperial Palace of Mississippi ran credit reports on job applicants. The casinos rated applicants as “favorable” or “unfavorable.” However, according to the FTC, the casinos did not always give job applicants the notices required by the FCRA if they were rejected for employment.

According to the FCRA, if an employer makes a decision based in whole or in part on a consumer report, which includes a credit report, there are certain notices that must be given to the applicant. An applicant is entitled to a notice of pre-adverse action including a copy of the report and a summary of their rights. If the employer intends to make the action permanent, then the applicant is entitled to a notice that an action was taken, along with certain other rights. These notices afford job applicants an opportunity to object or correct information that is incomplete or inaccurate. For a full description of the adverse action procedures, see the ESR Special Report, “Complying with the FCRA in Four Easy Steps.”

The procedures are particularly critical if an employer uses a credit report because of the possibility that a credit report can contain information that is incorrect, incomplete or not relevant to employment. For a special report on the dangers and limitations involved with the use of credit reports, See the ESR Special Report, “Credit Reports and Job Hunting.”

2. Tools of the Trade: Verifying Current Employment

A recurring issue in any past employment check is sensitivity about contacting the current employer. A current employer should NOT be contacted unless the applicant specifically gives permission.

The reason is that some employers, who upon learning a current employee is looking, will immediately take steps to terminate the employee. This is especially true for positions of greater responsibility where the applicant may have access to customer lists or trade secrets. In some industries, within minutes of learning an employee is actively looking for a new position, the current employer will have Security box up the employee’s personal items, confiscate all computers and disks, turn off all access to any computer systems, deactivate the parking permit and building access code, and have the person physically escorted off the premises with a last paycheck.

If such a hasty departure is caused by a phone call by the prospective new employer, and the job offer does not come through, the applicant is left without a job and free to contemplate whether they should visit a lawyer.

In order to avoid this, here is a simple two-step program—

1. On the application, make sure there is a box some place in large enough letters asking an applicant, “May we contact your current employer?”

2. Do NOT call the current employer unless the applicant has clearly marked the “Yes” Box. If the applicant failed to check either box, then do not call until that is clarified. Anything other than a clear indication of YES can create problems.

If the employer still needs to verify the current employment, there are three options for doing so—

1. Ask the applicant for the name of a past supervisor or co-worker who is no longer working with the applicant at the current place of employment. (Again, if there is any question about the authenticity of the supplied name, the employer can call and verify the ex-employee did in fact work at the current workplace).

2. Ask the applicant to bring in W-2’s for each year of work, or at least the full past year.

3. Wait until after the employee is hired to call the past employer, providing the hire is subject to a written offer letter that clearly states continued employment is conditioned upon a background screening report that is satisfactory to the employer. Once the new employee comes aboard, there can be a final phone call. By making current employment part of the written offer letter, an applicant has a powerful incentive to be accurate about his or her current employment situation, since any false or misleading statement or omission will have serious consequences. It is also important to say the screening report must be “satisfactory to the employer” in order to not get into a debate with an applicant/new employee about what is, or is not, a satisfactory screening report.

The above is an excerpt from the new book written by ESR President Lester S. Rosen, called The Safe Hiring Manual—The Complete Guide to Keeping Criminals, Imposters and Terrorists Out of Your Workplace (Facts on Demand Press–512 pages). The book is available online through the publisher, or, and will be available later this summer at Borders and Barnes and Noble.

3. Molestation of Children by Registered Sex Offenders Employed by Major Retailer Leads to Proposed Law

A South Carolina Lawmaker has announced plans to introduce a bill in South Carolina to require major retailers to perform criminal background checks on prospective employees. The proposed legislation would apply to large employers who sell toys or children’s clothing.

According to a story posted July 27, 2004 on, the move was prompted by reports in a South Carolina paper about two girls, ages 10 and 12, who were molested in separate incidents in a major national retail chain.

Incredibly, in both instances, the accused molesters were registered sex offenders hired by the retailer. The retailer did not perform any type of background check.

According to the National Retail Foundation in Washington, D.C., there are no state or federal laws requiring retailers to do background checks.

This legislation is part of a growing trend by lawmakers in Congress and in state legislatures to mandate background checks when there are vulnerable third parties who are at risk, such as children, the elderly, or individuals with a disability.

For a 27 point safe hiring audit by ESR, see: ESR Safe Hiring Audit

4. ESR Safe Hiring Seminar Schedule

ESR is pleased to participate in the following seminars across the United States:

February 23, 2005–San Francisco, CA “Keeping Imposters and Criminals Out of the Workplace–An Introduction to Safe Hiring and Pre-employment Screening in California.” (A three hour workshop sponsored by the NCHRA)

February 9, 2005–San Jose, CA “Keeping Imposters and Criminals Out of the Workplace–An Introduction to Safe Hiring and Pre-employment Screening in California.” (A three hour workshop sponsored by the NCHRA)

November 17, 2004Tampa, FL “Pre-employment Screening, Safe Hiring and Homeland Security.” Full-day seminar on safe hiring and due diligence by ESR in conjunction with the HR Screener, a national publication on pre-employment screening and safe hiring for HR professionals. For further details contact ESR. Details will be posted on the HR Screener>>>.

November 15, 2004–Tampa, FL – National Conference of Background Screening Firms-“Legal Update-What Every Background Firm Needs To Know About the FCRA and Laws Effecting Pre-Employment Screening.” (intended for background firms and record retrievers)

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

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

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

September 13/14–Oakland, CA “Extreme Caution Advised: Dealing with Federal and State Laws that Regulate Pre-Employment Screening and Safe Hiring.” Northern California Human Resources Association (NCHRA) Annual Conference. See

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

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

Contact ESR for further details.

Employment Screening Resources (ESR)

1620 Grant Avenue, Suite 7

Novato, CA 94945


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