Background Screening

Background Screening is a part of investigations. Many states in the US require private investigator licensing to conduct background investigations. Background investigations is the fundamental start to any investigation.

• Who am I investigating
• Where do they live
• Do they have criminal records, a propensity for violence or drug and alcohol use
• Who else lives in the home

Every investigation begins with a background investigation. The article below is an example of why the use of a professional investigator is essential to background screening investigations.  Membership in NAPBS does not guarantee any professionalism, only membership in a national association.

States with requirements for private investigators are seeking to protect the public from companies who are unable to obtain private investigator licensing.

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Employers must exercise caution with background checks

JUDY GREENWALD

Faulty screening can leave company exposed to risk

Employers must navigate a careful course in conducting employee background checks.

Conducting background checks helps to protect firms’ workers and customers and can shield companies from potential liability for negligence if a worker subsequently commits a crime.

But employers also must avoid the risk of violating federal and state laws that mandate background checks be conducted in a nondiscriminatory manner, protect against violating applicants’ privacy and maintain workers’ confidentiality.

The key is developing a well-crafted policy, say observers. “There’s some hoops to jump through,” but essentially, an employer must develop a narrowly tailored policy that is consistent with the job requirements and/or the public safety issues that must be addressed, said Larry R. Wood Jr., an attorney with Pepper Hamilton L.L.P. in Philadelphia.

Background checks are widely used. According to a 2004 survey by the Alexandria, Va.-based Society for Human Resource Management, 96% of respondents indicated their organizations conduct some form of background or reference check on job applicants.

“They’re critical,” said Courtney Larsen, human resources director for Phoenix-based Take Charge America Inc., a nonprofit credit counseling agency. She noted that the agency’s counselors have access to clients’ personal financial information. “We want to screen those folks as thoroughly and as carefully as possible,” she said.

It is important, though, that the background check be done correctly, experts say. Negligently conducted background checks will leave the employer with as much exposure “as if they didn’t do it at all,” said Craig R. Annunziata, an employer attorney with Fisher & Phillips L.L.P. in Chicago.

There have been cases, for instance, where an employer failed to check all the counties where an applicant had lived, and did not learn the applicant was a registered sex offender. “You can imagine what a jury would do with that,” he said.

Employers who are sued for negligent hiring have minimized their risks if they previously conducted a background check, said Kevin Klimas, president of Phoenix-based Clarifacts Inc., an employment screening firm. “They’re going to have data showing they’ve done their due diligence.”

Despite its somewhat misleading name, the federal Fair Credit Reporting Act, as well as parallel state laws, applies when employers conduct background checks through third parties. Under provisions of these laws, employers must notify applicants that a background check may be performed and obtain their written consent.

Furthermore, the applicant must be given an opportunity to respond if the background check reveals adverse information about the applicant that could lead to the withdrawal of a job offer. FCRA provisions also affect the disposal of background check information.

“We see a lot of issues arising on how to comply with the Fair Credit Reporting Act, and there are probably a number of employers out there who are still unaware that when they are paying a third-party service provider to do criminal background checks, they fall under the auspices of the FCRA,” said John F. Lomax Jr., an employer attorney with Greenberg Traurig L.L.P. in Phoenix.

Employers also must be concerned about Equal Employment Opportunity Commission regulations, which provide that obtaining criminal records inconsistently, whether based on the race, color, religion, national origin or sex of the applicant, is unlawful under Title VII of the Civil Rights Act of 1964. For example, doing background checks only on Muslims is a violation of the law.

Generally, the factors that must be considered in making hiring decisions in cases where there is an arrest or conviction include the nature and gravity of the offense, the time since the conviction and/or completion of the sentence, and the nature of the job held or sought, according to the EEOC.

“If you’re going to (reject an applicant), it has to be reasoned through and justified,” said Carol Miaskoff, EEOC assistant legal counsel in Washington.

An employer may be willing to hire an office worker with a driving while intoxicated conviction, but not if the applicant is seeking a job as delivery service driver, said Mr. Annunziata.

“I always say to my clients, `Don’t automatically exclude someone from being employed just because they’re a convicted criminal, unless it makes sense,”‘ said Mr. Annunziata.

“You don’t want to exclude any group from going through the process, and you want standards that are applied consistently across the board,” said Jenifer DeLoach, Nashville, Tenn.-based senior vp with risk consulting firm Kroll Inc., a subsidiary of Marsh & McLennan Cos. Inc.

Observers note, however, that employers still retain the right to reject or fire anyone who makes a false statement on a job application.

Privacy is a related issue. “There’s definitely a fine line between making sure that you’ve done a proper background check” and invading privacy, said Mr. Klimas. “If you’re screening an employee properly, then you’re not going after information that is not public record,” such as personal medical histories, he said.

“You’re simply seeing what is available publicly,” which could include criminal and driving records, said Mr. Klimas.

Furthermore, once the background check is complete, disclosing it within the firm should be only on a “need to know” basis, said Kim Kerr, vp of background screening solutions at the Boca Raton, Fla.-based LexisNexis Risk & Information Analytics Group.

“We recommend a team approach” to disclosing the information only to representatives from human resources, security, the legal department and line managers, he said. “You really need to go through the matrix of risk associated with that information and make sure everyone” in these areas agrees “this is a good hire,” said Mr. Kerr.

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Article from Human Resource Executive

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http://www.hreonline.com/HRE/story.jsp?storyId=4295589&query=workplace%20violence

Background Backfire

Pre-employment screening has become a fast-growing multibillion-dollar industry. But beware: The process could cause more headaches than it relieves.

By Richard F. Stolz

Employers are worrying a lot about the possibly checkered pasts of employees and prospective new hires. As a result, the background-screening business is thriving.

“Employment screening is the front line of defense, your first and best opportunity to eliminate candidates who are dangerous, dishonest or have a history of poor work performance,” boasts one large screening firm in a pitch to employers.

But the boom in screening services could be another reason in itself for employers to lose sleep: Heavy and insufficiently critical reliance on these sleuths could trigger different headaches and legal problems, experts warn.

The forces fueling the growth of screening services are clear and compelling: the advent of “negligent-hiring” and “negligent-retention” litigation following workplace violence incidents, post-9/11 terrorism jitters, new legal mandates for background checks for employees in certain sensitive positions and industries (e.g., health care and transportation), a wide recognition that many prospective hires will brazenly lie about their employment history and employers’ own self-defeating refusal to share meaningful reference information on past employees.

“When I started out in the business, people would say, ‘You’re crazy; we trust our people,’ ” says Robert Capwell, co-chairman-elect of the National Association of Professional Background Screeners and founder of Comprehensive Information Services, a screening firm based in Pittsburgh.

Today, some 250 screening companies belong to NAPBS. Capwell’s ‘craziness’ has paid off as his company, mirroring the broader $4 billion industry, has been growing each year in the 25-percent-to-35-percent range. “Now, you’d be considered crazy if you didn’t do background checks,” says Capwell.

But the rapid growth in demand for screening services¿and employers’ frequent desires for instant results — can lead to service-quality problems and inaccurate or misleading reports. Thanks to low-cost research capabilities made possible by the computerization of criminal and other records, a raft of low-budget, low-margin operators are jockeying with well-established large vendors for employers’ screening business.

In addition, some smaller employers are using ad hoc, Internet-based do-it-yourself methods, increasing their legal risks due to their assuming more direct control over the process.

“As we see more background checks being conducted, we’re seeing more problems,” says Tena Friery, a researcher for Privacy Rights Clearinghouse in San Diego. While perhaps not a shocking revelation, Friery also notes that it’s not just the upstart screening firms that are the source of data-quality problems. Names of top players such as ChoicePoint and American Background Information Services Inc. crop up in anecdotes about mistaken identity cases relayed by angry victims to the Privacy Rights Clearinghouse.

The advice to HR in all this, then, would be to pick your screening companies wisely and be sure to keep an eye on them along the way.

Troubling Cases

In a fairly typical case, a prehiring background check by Alpharetta, Ga.-based ChoicePoint set off alarm bells that initially prevented Office Depot from hiring a Minneapolis woman named Jessica Smith as a cashier. When she reviewed a copy of the report, “I saw a list of all these things they said I had done that I had never heard of, in places I’ve never been,” she says.

Adding insult to injury, Smith says, she had to make multiple requests to ChoicePoint as well as a complaint to the local Better Business Bureau before the matter was resolved. She also says ChoicePoint was slow in relaying the corrected report to Office Depot, which ultimately hired her. “I never got an apology,” Smith says.

Chuck Jones, ChoicePoint’s director of external affairs, declined to comment on the case, but did say “background screenings are only as effective as the criteria and parameters set by the customer, as well as the information in public records.”

“If a customer chooses to purchase a background screening tool with narrow search criteria, that might return initial results that match a noncriminal applicant to a person with the same name and date of birth who has a criminal background.

“For instance,” he adds, “Social Security numbers are not normally included in criminal records and, as a result, cannot help refine a search.” But if identity mismatches occur, legally mandated notification requirements can resolve the matter, Jones says.

At least that story has a happy ending, more or less, with Smith’s ultimate hiring. In another case, suburban Chicago resident Patricia Hill took a job with Hewitt Associates, the Lincolnshire, Ill.-based human capital consulting firm, last May, only to be terminated a month later on the basis of what she says was an inaccurate background check. In this case, she claims, faulty data — including statements about her prior employment and educational credentials — appeared to have entered the report simply on the basis of sloppy research.

For example, Hill maintains the screening company (ABI) incorrectly sought to verify that she was a graduate of Columbia University, a school Hill never claimed to have attended, instead of Columbia College in Columbia, Mo., the school she identified as her alma mater. This, she says, led to the false statement that she had lied about having a college degree.

Hill, an HR professional herself, provided a detailed blow-by-blow account of her experience to Human Resource Executive®. It includes accusations of foot-dragging and misstatements of fact on the part of ABI, and callousness on the part of her former employer. She was not rehired, despite her efforts to rebut false statements contained in her report. She later obtained an HR generalist job with another Chicago-area employer.

Scott Smith, president of ABI, declined to comment on the case, but, like Jones, suggests screening companies are bound by strict legal requirements to resolve disputes promptly. “We are obligated to amend the report based on whatever new findings we may or may not uncover and provide that information back to the individual and the entity that has requested the report,” he says.

Further, Smith adds, screening companies “cannot attest to the accuracy of the private or public record, nor the thoroughness of the person at the other end of the phone, whether an employer or an educational institution is properly researching its records . . . .”

Hewitt Associates also declined to comment on Hill’s account, but did issue a statement about its policies: “Hewitt has very strict guidelines and processes around background checks. We clearly state in our offer letters that a new associate’s offer of employment is contingent upon a completed and acceptable background check. If there’s a discrepancy in that check, the new hire is immediately advised of the issue in accordance with the Federal Fair Credit Reporting Act, and provided an opportunity to resolve the matter. If the associate is unable to satisfactorily address the issue within the timeframe allowed, Hewitt will withdraw its offer of employment.”

Although it is generally the screening company that bears the brunt of liability for errors, employers can also be drawn into costly legal skirmishes when background checks go awry. In one such case, the Vanguard Group, the Valley Forge, Pa., investment management giant, elected to settle a lawsuit with a money manager it had fired after receiving an inaccurate report from a screening company (conducted in conjunction with a routine licensing renewal) stating that the employee — James R. Gorman — was guilty of loan and credit-card fraud. Gorman asserted that, despite his subsequent reinstatement, his reputation within the firm had been sullied and his future career at Vanguard ruined by the episode.

Gorman had been whisked out of the office abruptly by Vanguard officials, without even being given time to clear out his desk, according to his lawsuit, filed in the Court of Common Pleas in Philadelphia in 2001. Gorman charged Vanguard, the screening company (Business Information Group) and Aegon Financial Services Group (a licensing company that subcontracted the research to BIG), with libel, slander and failure to exercise due diligence by not properly reviewing the information contained in the initial background report.

“I can’t imagine a more egregious case,” says Harold I. Goodman, Gorman’s attorney. “To verify whether someone has a criminal or bad credit record does not take much effort to corroborate.”

Goodman, a partner with the Philadelphia law firm of Raynes, McCarty, Binder, Ross & Mundy, says he’s aware of similar cases in which employers have agreed to compensate victims before the case was taken to court. “This is not an isolated case,” he says. “But it’s not generalized.”

Lots of Land Mines

Reflecting on her bitter experience with a false background screening report, Office Depot cashier Jessica Smith muses, “You wonder how they can mess something up like this.”

Wonder no more, Jessica: There are plenty of ways it can happen — even if the actual percentage of faulty reports is very small. (ChoicePoint says it conducts more than 13 million background checks a year, and less that one-tenth of 1 percent are disputed.) But one bad report in a million can create a heap of trouble. In her own case, for example, Smith was told that ChoicePoint only used her name and the month and day of her birth, but not the year, when it scoured the criminal records. So, an older or younger Jessica Smith, living in another city, was the crook she was mistaken for. Simple sloppiness, as was charged in the case of background screeners checking out Hill, or people providing information to those screeners, is also a frequent culprit.

A 2005 study of the National Crime Information Center conducted for the NAPBS identified a host of data-quality issues that could compromise the quality of — or at least create confusion with — background checks. For example, the study, the National Crime Information Center: A Review and Evaluation, pointed to inconsistent classifications of crimes from one state to the next (a crime that’s a misdemeanor in one state might be a felony in another), and delayed filing of criminal records. “The utility of a criminal history record is dramatically affected by the lack of up-to-date information,” the study states.

The study cites an earlier analysis by a task force of law-enforcement agencies in Florida comparing the accuracy of criminal checks using fingerprints versus basic record searches for 96,147 individuals. Without using fingerprints, the searches yield 11.7 percent “false negatives” (people with criminal records were not identified) and 5.5 percent “false positives” (an innocent person was identified as a criminal).

And then there’s identity theft, a more vexing challenge for background screeners when an identity thief sets out on a crime spree. Sadly, even after a victim — let’s call him John Doe — has recovered his “stolen” identity and corrected the records, the fallout can haunt him indefinitely.

That’s because a court record involving the identity thief may refer to the real culprit — let’s call him Bill Smith — both by his real name and his aliases. A computerized scan of a criminal record might pick up “John Doe” and trigger a false “hit” even if the name followed “Bill Smith,” as in: “Bill Smith, also known as John Doe, was convicted of . . . ,” says Friery.

Background checks can also inadvertently create misleading information, as Chris Steilberg, vice president of talent for Ryder Systems, the Miami-based transportation systems company, explains. “A report can be objectively correct, but subjectively false,” he says. “Someone might say they worked for a company for four years, although for one of those years they were technically employed through a staffing firm like Randstad.”

The applicant may have honestly sought to give the essential picture of his employment, but a mechanical screening report might flag the discrepancy and brand the applicant as a liar.

And it is the adding-insult-to-injury aspect of the problem — when victims of incorrect reports are given the runaround and rude treatment by screening companies and employers themselves — that magnifies the pain and raises the threat of litigation. In a quick-turnaround, high-volume, price-sensitive and competitive business environment, the occasional cutting of corners by harried screening company personnel should not come as a shock.

Vanguard was drawn into the fray after the inaccurate report involving Gorman, not because of the false information, but because of how the company responded to the report, Gorman’s attorney says. “The employer should have said, ‘Let me look into this further,’ before doing what it did.”

Of course, whether a court ultimately would have upheld Gorman’s claims against Vanguard is unknown since the case settled. But what do lawyers who represent companies say about employers’ legal obligations?

Use Good Judgment

The basics — well-known to HR professionals with the most rudimentary grasp of compliance matters — are dictated by the Fair Credit Reporting Act. FCRA spells out very specific consent and notification requirements. (Prospective employees must consent to a background check, they must have access to the report, must be given an opportunity to challenge the report if it is used as the basis for a decision not to hire, and so on.)

But scrupulously following all of FCRA’s requirements won’t always immunize employers from legal troubles if they fail to exercise good judgment at a higher level, warns Stephanie Dodge Gournis, a partner with Gardner, Carton & Douglas in Chicago. “Any credible background-check company will go back and do some additional research” if it digs up any serious negatives on an individual, she says. But if the background-check company fails to do that, and the employer “relies exclusively on that information, and the information is bad, the employer is completely liable, as if they obtained the information themselves.”

That’s why Ryder, a self-described “heavy user of background-check services,” maintains a “thorough checklist” for internal users of background-check reports to guide them on proper procedures when such a report throws up a red flag, says Steilberg. “We want to give [the subject of the report] an opportunity to contest what was discovered. If they can give enough evidence to invalidate what was turned up,” the red flag is lowered, he says.

Given varying requirements under different state statutes, employers must also know what type of questions the background-check companies are asking. Gournis notes, for example, that in Illinois, “you’re not allowed to use arrest information in a hiring decision. Therefore, you [directly or indirectly] should not be asking whether someone has been arrested, because there is going to be that implication that if you ask, you used that information in making a decision.”

Gournis also warns employers they could get themselves into hot water if they try to finesse FCRA notification requirements on an adverse action after viewing a negative background check. An employer is “liable to get into a lawsuit and would not be able to establish what criteria were used for the decision, if there was nothing documented and if you had the report,” Gournis warns. “A jury could make a reasonable inference that you used the information.”

A more basic issue for most employers, however, is having confidence in the accuracy of the background-check reports. And that’s where due diligence in the vendor-selection process comes in. Membership in an industry organization such as NAPBS is no guarantee of quality, but board member Capwell says the association works hard to set quality and ethics standards for its members.

In addition, a growing general awareness among employers of background-check data-quality issues has encouraged screening companies themselves to rededicate themselves to accuracy, and to compete for business using that strength, combined with the sophistication of their information technology, as opposed simply to price.

But even the most dazzling information technology and painstaking administrative safeguards can’t eliminate the need for basic interpersonal commonsense especially when there’s a problem, says Goodman, the lawyer who successfully represented the wrongly accused Vanguard money manager.

“Employers,” he says, “must exercise sensitivity.”

January 25, 2006

Copyright 2006© LRP Publications