Are You at Risk?

YOU FACE SEVERAL PROBLEMS DAILY

NEGLIGENT HIRING LIABILITY
Courts throughout the U.S. declared "prior to the time the employee is actually hired, the employer ... should have known of the employee's unfitness" and is liable if they did not perform an adequate background investigation. A Rent-a-Car Company recently paid $750,000 to an employee who was raped by another employee. In 1999, Trusted Health was ordered to pay $26.5 Million dollars to the family of a murdered patient.

FALSIFIED EMPLOYMENT APPLICATIONS
With the job market toughening, applicant's tend to stretch the truth. Personnel Administrator says, "one out of every four job seekers is a resume faker". Statistics reveal that near 40% of applications are falsified!

EMPLOYEE THEFT
The U.S. Chamber of Commerce figures dishonesty costs 1%-2% of gross sales. It is estimated that 30% of business failures are directly related to employee theft.

LAWSUITS
The average jury plaintiff award in employment law cases continues to be in excess of $1,000,000! In California, the average award from 1998 to 2001 was in excess of $1,000,000. This does not include attorney fees!

In addition, statistics reveal that in both 1997 and 1998, Jury Verdicts were awarded to the employee in 46% of the time.

Finally, it is important to note that in 1998 there were 80,625 claims filed with the EEOC. Of these, 19,578 were in California (24%), of which 4,937 were for Sexual Harassment. 5% of settlements are for more than $500,000.

TURNOVER
The cost of hiring, training, and then terminating one employee can be very expensive. According to William M. Mercer, Inc., turnover costs a minimum of $10,000 with 20% of respondents indicating costs exceed $20,000.

"As an employer, things you must do today exceed things you have done in the past"
- Richard J. Simmons, ESQ.
SHEPPARD, MULLIN, RICHTER and HAMPTON

In its first background check, one Hotel found the applicant falsified his application and was convicted for possession of drugs.

Another firm had no idea eight felons were among its employees; and two were on trial.

In purchasing a company, the labor attorney recommended a background search on all employees before the deal was closed. The search revealed 8% of the workforce were using falsified social security numbers.

A guard service was found guilty for inadequately checking a guard's references when the guard helped steal from their client. The charge - negligent hiring as they failed to investigate and the employee had a criminal record. The damages paid were over $300,000.

An employee who had previously been convicted of passing bad checks forged signatures on sales contracts. The court judged his employer negligent and awarded $175,000.

A hospital in a very good part of town identified, in its first month of doing background searches, four felons that they would have hired.

An Appellate Court awarded $4 million to a woman who was raped by an employee. His employment application indicated no criminal convictions, when in reality he had.

A hospital was found negligent in hiring a kidney transplant coordinator who was unskilled in reading medical charts and a patient was given a transplant of a cancerous kidney which resulted in his death.

After driving for a telephone company for only a week, an employee was involved in a traffic accident. The jury learned that the company never saw the employee's driver's record which had five traffic tickets within 18 months. They awarded the injured party $550,000.

Negligent hiring litigation is a growing problem! Damages against employers are being awarded where the employer was negligent and failed to perform a reasonable search into the employee's background prior to hiring. Courts have ruled that "an employer has a general duty to check criminal records for employees who will have interface with the public, or who could have a foreseeable opportunity to commit a violent crime against someone in the course of their employment".

Today's litigious society has created an environment which requires management to be armed with numerous tools. Many employers currently spend little time verifying the accuracy of employment applications; and, although they would like to adequately screen applicants, the cost to do so has, in the past, been financially prohibitive.

"Employers can minimize their exposure to claims by conducting thorough reference checks and background investigations of job applicants."