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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October 2004 Vol. 4, No. 10

Employment Screening Resources (ESR) Newsletter and Legal Update

1. New Survey Shows Increased Use of Background Screening Tools

2. Federal Trade Commission to Issue Commentaries on FCRA that may Effect Hiring

3. Myth Buster: Credit Scores Not Used for Employment

4. ESR Seminars and Publications

1. New Survey Shows Increased Use of Background Screening Tools

A new survey published in the September 2004 edition of the HR Executive shows that employers across the United States are increasingly utilizing pre-employment screening as a safe hiring tool. According to a survey of 322 human resources professionals, there has been a 64% increase or enhancement of background screening requirement over the past three years. Thirty-four percent (34%) reported no change while just 2% indicated they had decreased screening.

According to the survey, 73% of the employers screen all applicants in some way. In addition, 97% of employers indicated that at some time, screening revealed negative information not revealed by the applicant. In fact, 16% of the respondents indicated it occurred frequently.

The most utilized screening tools were criminal records and past employment verification. The screening results most likely to eliminate an applicant from further consideration were falsification of employment history, criminal convictions relevant to the job, falsification of educational history, and failure to be truthful about a past criminal conviction. Poor credit and workers’ compensation history were the least likely factors to be used.

See: for the full survey.

In 2004, a survey published by the Society for Human Resources Management (SHRM) showed that 82% of the respondents performed some degree of screening, up from 66% in a 1996 survey. See

The bottom line for employers: pre-employment screening is an essential part of an employer’s duty of care towards others and part of an obligation to exercise due diligence.

2. Federal Trade Commission to Issue Commentaries on FCRA that may Effect Hiring

Staff attorneys for the Federal Trade Commission (FTC) confirmed to representatives for the screening industry that there will be published commentaries to the federal Fair Credit Reporting Act (FCRA) in the future. The FTC is the federal regulatory agency with oversight for the FCRA. After the FCRA was substantially amended effective 1997, the FTC legal staff responded to letters from the public on issues surrounding the FCRA. Because of staff and budget limitations, the FTC discontinued the practice of issuing staff opinion letters.

However, two FTC staff attorneys informed representatives of the National Association of Professional Background Screeners (NAPBS; see at a meeting in Washington, D.C. in September that they would be issuing commentaries in the future on issues surrounding pre-employment screening. The commentaries are issued to give guidance on how to interpret the FCRA.

Before commentaries are adopted, the public is given a period of time in which to review and comment. ESR will carefully monitor all proposed commentaries and will submit comments to the FTC as necessary to protect employers. ESR will also keep employers updated on the proposed commentaries and their possible impact.

For more information, contact Jared Callahan at 415-898-0044 ext. 240 ([email protected]).

3. Myth Buster: Credit Scores Not Used for Employment

An issue recently in the news is the use of credit reports when it comes to hiring. Of particular concern to job applicants are suggestions in the media that employers are using “credit scores” to make hiring decisions.

Even though credit reports are utilized by some employers for particular positions, a “credit score” is not a tool used for pre-employment screening. For pre-employment credit reports, the credit bureaus use a special reporting format that leaves out the credit score, along with actual credit card account numbers, and age. Credit scores are not valid predictors of job performance and therefore are not part of a pre-employment screening.

Employers seek credit reports on job applicants for a variety of reasons. Some employers are concerned about hiring persons who cannot manage their affairs, or whose monthly debt payments are too high for the salary involved. Many employers limit credit reports to management and executive positions, or to positions that have access to cash, assets, a company credit card, or confidential information. For example, employers may be justified in running credit reports on bookkeepers or others who handle significant amounts of cash.

However, employers should approach the use of credit reports with caution and have policies and procedures in place to ensure that the use of credit information is both relevant and fair. For most job applicants a credit report is the one pre-employment tool that feels as though it encroaches on a zone of privacy.

An employer should first determine if there is a sound business reason to obtain a credit report. Unless the information in a credit report is directly job-related, its use can be considered discriminatory. For example, running a credit report for an entry-level person with low levels of responsibility or no access to cash is probably not a good practice. Unnecessary credit reports can discourage applicants from applying, and running mass credit reports on all applicants, regardless of the position, can have the effect of discriminating against certain protected classes. In addition, employers should avoid making negative hiring decisions on information that is old or relatively minor. Finally, employers need to realize that a negative credit entry could be due to something that is not job-related, such as a dispute over a debt, or medical bills.

For a more details on the use of credit reports and employment, see the ESR special report: “Credit Reports and Job Hunting”

4. ESR Seminars and Publications

ESR is pleased to announce the publication of the first definitive book on pre-employment screening and safe hiring. The book, The Safe Hiring Manual-the Complete Guide to Keeping Criminals, Terrorists and Imposters Out of Your Workplace, is by ESR President Lester S. Rosen. The 512 pages cover only pre-employment background checks and safe hiring. It is available from, Borders, Barnes and Noble and numerous other bookstores.

ESR is please to participate in the following seminars across the United States.

April 21 and 22, 2005–Dallas, TX “Criminals, Imposters and Recruiting – The Role of Pre-employment Screening in the Hiring Process.” SRHM 36th Annual Employment Management Association Conference and Exposition (EMA website).

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 for HR professionals and employers 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

November 17, 2004–Tampa, 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)

Contact ESR for further details.

Employment Screening Resources (ESR)

1620 Grant Avenue, Suite 7

Novato, CA 94945


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