“Gig Economy” Businesses Will Continue to Try to Build Consumer Trust Through Their Background Screening Programs

ESR Top Ten Background Check Trends
Employment Screening Resources® (ESR) Top Ten Background Check Trends for 2021

Written By Employment Screening Resources® (ESR)

“Gig economy” businesses that use online applications or “apps” to facilitate on-demand services for consumers that are provided by relative strangers in an extended workforce will continue to try to build trust with consumers through their background screening programs, according to the “ESR Top Ten Background Check Trends” for 2021 compiled by leading global background check firm Employment Screening Resources® (ESR).

Examples of gig economy firms are transportation network companies (TNCs) such as Uber and Lyft and housing apps such as Airbnb. Other examples include websites that provide access to people who provide their time as caregivers, babysitters, home repair workers, house cleaners, tutors, and deliverers of groceries, meals, dry cleaning, and a host of other services where providers and customers are brought together by technology.

Background checks performed by gig economy firms have come under more scrutiny in recent years. In December 2020, a judge ruled that Uber – the most popular TNC in the United States – must pay a fine of more than $59 million for repeatedly refusing to turn over data from the company’s 2019 sexual assault report to the California Public Utilities Commission (CPUC) that regulates the background checks of TNCs in the state.

In August 2020, the Pennsylvania Public Utility Commission (PUC) Bureau of Audits released a background check process review of Uber’s main TNC competitor Lyft to assess the effectiveness of Lyft’s driver onboarding, background check, and driver quality assurance programs, and identify areas where deficiencies exist or improvements are warranted. In all cases, recommendations were offered to improve these conditions.

Both Uber and Lyft have attempted to improve the background checks of their extended workforces. In 2018, Uber began performing continuous screening on drivers in the United States in an effort to improve safety for its riders after a CNN investigation found more than 100 Uber drivers were accused of sexual assault. In 2019, Lyft announced the adoption of continuous screening for its drivers after similar accusations reported by CNN.

In June 2020, the Professional Background Screening Association (PBSA) released its 4th annual industry survey entitled “Background Screening: Trends and Uses in Today’s Global Economy” that revealed considerable increases in the number of organizations screening “individuals who are not traditional full-time employees” that included part-time employees, contingent/temporary workers, volunteers, and vendor representatives.

“This could indicate that employers increasingly realize the importance and accessibility of background screening and are applying it accordingly. It could also mean that organizations are now hiring a larger number of individuals who are not traditional full-time employees, as would befit the ‘Gig Economy’ moniker applied to U.S. workforce trends in recent years,” the survey released by the PBSA with HR.com reported.

In 2020, ESR founder and chief executive officer (CEO) Attorney Lester Rosen participated in the Marketplace Risk Masters Program that included a webinar he presented about the “trust economy” – another name for the gig economy – titled “Why Background Checks are More than Just an Added Cost – Moving Towards Building Trust in the Trust Economy” and a podcast titled “Background Checks and Beyond” in which he was interviewed.

Background checks are essential to building trust in the gig economy. However, the term background check is nearly meaningless since it can encompass such a wide range of activities. The 45-minute webinar with Rosen explored why some background checks may be nearly worthless and why the gig economy marketplace may want to consider national standards to regulate what is covered and how the background checks are performed.

In the 32-minute podcast, Rosen talked about background screening for the gig economy that can bring total strangers together to interact with benefits and risks. “The essential element of the gig or platform economy for a lot of firms is that total strangers come face to face with you, and there are situations created where a great deal of havoc could be caused if that goes wrong,” Rosen explained to podcast host Else Tucker.

In 2019, Rosen wrote an article that he posted on LinkedIn Pulse titled “Why Consumers Cannot Trust the Trust Economy – The Inherent Conflict of Interest between Gig Economy Firms and their Customers and How to Fix It” where he explained that the basic problem for the trust economy is trust since there has been negative publicity about the selection of trust economy workers who have not proven to be safe and pose a risk to consumers.

“As the trust economy grows, stories of consumers being harmed by criminal acts of providers can be expected to increase as well. Given the negative fallout from such publicity to any firm in the trust marketplace space, it would seem that an effort to create some standardized and generally accepted background screening protocols would be of great benefit to both providers and consumers,” Rosen wrote in the article.

“The obvious solution is for firms in the trust economy to formulate a nationally accepted standardized approach to due diligence and background checks. The keywords are ‘nationally accepted.’ Merely creating self-serving industry standards that benefit the gig marketplace will not go nearly far enough to assure consumers, the government, or plaintiff’s lawyers that the sector is truly regulating itself,” he concluded.

Employment Screening Resources® (ESR) – a leading global background check provider that was ranked the number one screening firm by HRO Today in 2020 – provides state of the art technology that helps gig economy firms perform background checks and offers employers a white paper titled “Background Screening of Extended Workforce Necessary to Compete in Modern Economy.” To learn more about ESR, visit www.esrcheck.com.

Since 2008, Employment Screening Resources® (ESR) has annually selected the “ESR Top Ten Background Check Trends” that feature emerging and influential trends in the background screening industry. Each of the top background check trends for 2021 will be announced via the ESR News Blog and listed on the ESR background check trends web page at www.esrcheck.com/Tools-Resources/ESR-Top-Ten-Background-Check-Trends/.

NOTE: Employment Screening Resources® (ESR) does not provide or offer legal services or legal advice of any kind or nature. Any information on this website is for educational purposes only.

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