High unemployment spurs need for background checks

Fairfield County Business Journal, February 2004
By Jen Malcom

In today's world of rampant theft, violence, false workers' compensation claims and poor performance at the workplace, employers must protect themselves, their employees, their clients, customers and the public from potential employees who can cause them harm, said Barry Nadell, president of InfoLink Screening Services Inc., a national provider of background screening.

"The states have laws regarding negligent hiring and consequently if someone hires a criminal because they haven't screened their background and they hurt someone, the company is liable," said Nadell.

"Fraud by applicants is at a ridiculously high rate these days and is far more prevalent when the unemployment rate is high," said David Lewis, president of Operations Inc.com, in Stamford and vice president of the Southern Connecticut Chapter of SHRM (the Society for Human Resource Management).

"People when unemployed for long periods of time are more desperate and more willing to compromise some of their values, and less likely to be honest on their resumes."

There is a trend to conduct more employment checks when the economy is down. "If an employer is hiring in a down economy, they have a more difficult time determining who is truly representing themselves accurately," said Lewis. Mary Beth Rippert, managing director of Strategic Staffing L.L.C. of Shelton, said before hiring a prospective employee she checks their references and confirms dates of employment as well as asking them to rate the employee from one to 10 on various categories such as communication skills and strengths and weaknesses. She usually talks to at least three people including a coworker and boss. She conducts drug or criminal screening if requested by the client.

"I feel employment checks are necessary. If applicants say they have experience programming and they just sat next to one or if they say they were a team leader and they were just an acting one for the day, I'll find out," said Rippert. "If they lie they are disqualified."

More employers checking

A recent survey completed by the SHRM found that the number of employers reporting they conduct criminal background checks has increased by 29 percent since 1996. Eighty percent of HR professionals now say they conduct such checks and 35 percent conduct credit checks to screen potential employees. Eighty-two percent of HR professionals report their organizations investigate the background of potential employees, which is up from 66 percent in 1996.

InfoLink Screening Services Inc. "found that of those employees checked who authorized a background check in writing: eight percent had criminal convictions, three and a half percent tested positive for drugs, 37 percent have DMV issues, 23 percent have something negative on their credit report, and 17 percent had discrepancies on their reference checks," said Nadell.

As a present employer looking to evaluate and verify information that is presented in a resume or application to insure it is accurate and complete, it is also vital to look for information that wouldn't be on a resume such as prior criminal history, said Lewis. It's essential to take a proactive approach to prevent future problems.

"Just calling a past employer today won't give you the answers you are looking for to see if the person has the character, experience and abilities to be a good worker," said Nadell. "Companies need to access all the possible information available to make good hires.

Reference checks are limited by companies not giving out information for fear of being sued, said Lewis. Background checks go deeper, they don't give performance information but they give dates of employment and educational background. It is becoming more and more common that checks come back with data that conflicts with information that comes from resumes or applications.

Components of a good check

A good background check includes "an onsite search of the courts in all counties where the individual resides, a social security check and a motor vehicle report (even if they don't drive for you)," said Nadell.

Employers must have a "permissible purpose to perform a background check or the subject may sue," warned Nadell. "For employment, a written disclosure must be authorized in advance. Before taking adverse action, the subject must be given a copy of the report with their rights as prescribed by the Federal Trade Commission (FTC) and an opportunity to dispute the information in the report."

Many times the applicants sign a release on the back of their employment application. "It's always a good idea to have an additional form signed saying this is what we're going to be checking with a space for social security number and name and signature," said Lewis. "Once the release is put in front of someone especially someone aware that the information they provided wasn't accurate they often request their application back to check their information."

Another screening tool, credit reports, should only be used when the person can affect the company financially but are a good indicator of character, said Nadell. "If someone has financial responsibility and can't handle their own finances, there may be a problem. Also, hiring someone in big debt for a low wage could be an indicator of a problem waiting to happen."

Ridgefield Bank, for example conducts a credit check, background check, and drug test for all new employees. "If we're hiring for a teller and they have bad credit that gives you a red flag, said Susie Costello, Ridgefield Bank, human resource systems. There are both federal and state laws that employers must follow while screening their employees. The Federal Fair Credit Reporting law and laws such as the Americans with Disabilities Act are the prevailing federal laws. In addition, many states have their own laws in this area including state fair credit laws, state labor codes, state civil laws and state civil rights laws, said Nadell.

In addition certain state laws also govern what you do with the information when you get the report back. In Connecticut, employers are required to keep at least two files per employee. One focuses on performance and other on qualifications. Benefits and personal info goes to another file to be held separately because no manager needs to know personal information about you in order to manage you, said Lewis.

It is most important to get a reputable service provider. The completeness of the report and ease that it gets back is key. Larger, well-established companies have great channels of info already established, said Lewis. The cost of background checks have "come way down over the years and one can obtain a good comprehensive background check for often less than $15 to $50 depending on the services requested," said Nadell.