Using Background Checks

There are several types of background checks that can be done on a job candidate. These include: credit checks, criminal record checks, driving records, past employer checks, and others. Even when it is difficult to find employees to fill all positions within your company, prudent business practices require you to conduct certain necessary checks on potential employees for the sake of limiting potential liabilities that can occur from negligent hiring practices.

Credit Checks

Using credit checks for employment screening purposes is regulated by the Fair Credit Reporting Act (FCRA). Credit checks are often performed for positions that involve financial responsibilities. This is especially true if the position involves handling large sums of money or exercising financial discretion. If the position does not involve this type of responsibility, the employer must be very cautious. It is a good practice to limit the use of credit reports to situations where this type of information is necessary. The EEOC has found that credit checks may have an adverse impact on minorities.

There are two types of credit checks: investigative consumer credit reports and consumer credit reports. An investigative consumer credit report includes a written report along with interviews from friends and neighbors. Written notice must be given to an applicant before an investigative credit check is performed. In addition, the applicant should be briefed as to the types of questions that will be asked. The consumer credit report is a written report issued by a third party. Written notice is not required for a consumer credit report, although the applicant must sign a statement authorizing the employer to obtain the consumer credit report in accordance with the Fair Credit Reporting Act.

If an applicant is denied employment for reasons relating to the credit report, the applicant must be informed of this fact and furnished with the name of the credit agency that issued the report.

Provisions of the Bankruptcy Act must be followed if the employer finds that the applicant has declared bankruptcy. This Act states that it is unlawful to terminate an employee or to discriminate in the hiring of an employee solely because the individual:

• has sought the protection of the Bankruptcy Act
• has been insolvent before seeking protection under the Act
• has not paid a debt that is dischargeable under the Act. The purpose of this section of the Act is to ensure that the applicant's bankruptcy does not prohibit them from finding employment.

Criminal Records Check

Employers should do a criminal record check for positions which involve close, unsupervised contact with the public. Obtaining criminal conviction records does not necessarily mean that this information can be used in making the hiring decision. Some states have laws prohibiting discrimination against people who have a criminal record. It's advisable to check with the state Department of Labor before securing the criminal record information.

Previous Employer Record Checks

When verifying employment with a former employer, it is likely that the former employer will only be willing to provide the dates of employment and the position of the employee. Litigation resulting from negative reference checks has increased in recent years. As a result, many employers now choose to say nothing when asked for information on a previous employee. This may appear to protect the company from liability, but this is not always the case. Employers may be sued by other employers if they fail to disclose negative information about an applicant that could adversely impact the inquiring organization. For example, if a previous employee had been terminated for stealing money, and the previous employer failed to disclose this, they could be sued for withholding that pertinent piece of information.

Negligent Hiring

This basic concept of negligent hiring can be extended to situations where the employer failed to investigate the background of the applicant and therefore placed the applicant in a position that was dangerous to others. An example of this occurred when a carpet installation company failed to conduct a criminal background check on a new employee. That employee subsequently assaulted a woman customer after entering her home to install carpet. The company was found to be negligent because a criminal records check would have discovered several convictions for assault.

Providing Previous Employee Information

When you are asked to provide a reference on a former employee, be sure the former employee knows the company's reference checking policy and obtain their written permission before providing references. Refer to actual performance evaluation records, including both positive and negative comments, when giving a reference. It is important to provide accurate and truthful information, because truth is an "absolute defense" to a potential defamation charge. You should never volunteer information. Be certain that the information that you do provide is job-related. You should also be certain of the identity of the person asking for the information. Write down the individual's name, title, address, and telephone number and return the call. Returning the call allows you to verify the identity of the potential employer and ensures that it is not an unauthorized call.

Driving Records

Employers should check the driving records of all applicants who will be using a company vehicle. This should be done before the applicant is hired and periodically throughout the period of employment. It is the responsibility of the employer to check the driving records. The employer could be held liable for negligent hiring if they knew or should have known about anything contained in the employee's driving record. Employers should also check to see if the applicant has a valid driver's license.

Other Types of Checks

There are several other types of background checks that are recommended for most positions:

• Social Security Number Verification - verifies that the Social Security number of the potential employee matches the identity of that individual
• Educational Credentials Check - verifies that the individual does have the educational credentials as claimed on the application
• License and Certificate Checks - verifies that the individual does have the licenses and certificates as claimed on the application

Summary

There are no guarantees when it comes to background checks. The consequences of failing to conduct the appropriate checks can be disastrous. Employers should be as thorough as they can be, within the limits of the law, when checking into an applicant's background. By being thorough and accurate with background checks, employers can significantly reduce their risks. Each company should consider its own particular needs and its own situation when using background checks, and they should consult with appropriate legal counsel when necessary.