6 Tips for Effective Background Investigations Q&A

Q:       We would like to perform background checks on our applicants but are not sure what types of checks we should use. What do most employers do, and what issues should we be concerned about when conducting these investigations?


A:        You are smart to implement background investigations for potential employees. The failure to weed out unqualified applicants often leads to problems with performance, discipline, and turnover and

increases the likelihood of accidents and illegal activities, as well as lawsuits for careless hiring procedures. Further, if you have employees who enter customer homes, have access to sensitive customer or employee information, handle money or financial information, or work with vulnerable clients such as the elderly, children, and the disabled, you cannot afford to ignore criminal and credit records. Consequently, the key question becomes not whether to do background checks, but which ones to conduct and how to do them properly and effectively.


Still you have to be careful about the type of checks you perform and what you do with the information you uncover. Although criminal records are not specifically protected under Title VII of the Civil Rights Act (Title VII) or any other federal discrimination law, the EEOC takes the position that conviction records must be treated carefully to ensure that their use does not disproportionately exclude minorities from job opportunities. In 2012, the EEOC revised its guidance on the use of criminal convictions in hiring to emphasize that employers must be able to show that their reason for excluding an applicant based on a conviction record is “job related and consistent with business necessity,” if the policy has a disparate impact on minority candidates. Several states also ban employers from asking about convictions or taking action on these records unless the conviction is related to the job. (Note that the EEOC and most states also restrict the use of arrest records because of the adverse impact these inquiries can have by excluding minority applicants.)


One way for you can balance competing concerns about background checks is to consider carefully what information you need to select suitable employees. Background checks generally should be tailored to

obtain specific information that relates directly to the individual’s suitability for the particular job and the organization. In other words, not every applicant or employee needs to be subjected to a full criminal or credit record check. The following are examples of the types of checks you can conduct and when to request them:


  1. “Bare minimum” screening. Background checks for every individual hired should include at least a verification of employment information for jobs held in the last five to seven years. In addition, you should check at least two, and preferably three or more, work-related references regarding the individual’s qualifications, job performance, work behaviors, and any potential problems.


  1. Criminal history. As a general rule, criminal conviction records should be checked when there is a possibility that the person could create significant safety or security risks for the employer, coworkers, customers, clients, or the public. Examples include employees who will have close contact with children, the elderly, the disabled, or patients; have access to weapons, drugs, chemicals, or other potentially dangerous materials; do work in, or deliver goods to, customers’ homes; and handle large sums of money or other valuables or have access to financial information. In addition, some states require a check for criminal convictions before hiring individuals as employees of health care facilities, financial institutions, or public schools.


  1. Credit reports. Credit reports typically include financial information (such as payment history, delinquencies, amounts owed, liens, and judgments) relating to an applicant’s credit standing, creditworthiness, or credit capacity. Arbitrary reliance on the results of these checks can result in adverse impact discrimination against women and minorities. Accordingly, they should be used only when there is a legitimate business justification, such as for jobs that entail monetary responsibilities, the use of financial discretion, or similar security risks.


  1. Driving record. Motor vehicle records (MVRs) are available from state motor vehicle departments. They usually contain information about traffic violations and license status, and expiration date. As a general rule, drivers’ licenses and MVRs should be checked only for employees who will drive a company vehicle or a personal vehicle as part of their job duties. For these employees, employers at least should check an applicant’s driving record with the department of motor vehicles in each state in which the employee has held a license and should confirm that the employee has valid insurance and can be covered under the organization’s liability policies.


  1. Verification of academic credentials and licenses. Academic information (such as schools attended, degrees awarded, and transcripts) should be verified when a special level or type of education is necessary for a particular job. Similarly, proof of professional licenses (and their current status, expiration dates, and any related disciplinary actions) should be obtained if a license is required for the position in question.


  1. Personal background checks. Some employers interview neighbors, friends, or associates about an applicant’s character and general reputation. However, personal acquaintances are likely to be biased in favor of the applicant and may reveal sensitive information (such as medical history or personal problems) that has no bearing on the applicant’s ability to perform the job. Similarly, some employers check on applicants using social media sites such as Facebook, Twitter, and LinkedIn. These sites also tend to provide personal identifying information about applicants that may show their membership in a protected class (such as their race, marital status, age, etc.). The simple possession of any of these types of information may provide the basis for a discrimination claim if the applicant is rejected. In addition, several states have implemented laws prohibiting employers from requiring applicants and employees to provide passwords to their private social media sites, further limiting these checks.


Here are six steps you can take to help ensure your background checks identify potential problems without adversely affecting protected groups:


  1. Obtain written consent before conducting any background check, including simple reference checks. The federal Fair Credit Reporting Act (FCRA) requires this for any consumer or investigative consumer report obtained from third party consumer reporting agencies in conjunction with hiring activities. Even when all preemployment screening is handled internally, an explicit written authorization helps protect against invasion of privacy, defamation, and other tort (wrongful act) claims. For further legal protection, add waiver language to the consent form so that it releases the employer and those who assist with background checks (such as HR staff, former employers, and screening firms) from any liability that may arise from these activities.


  1. Perform checks as one of the last steps in the selection process. There is no need to spend the time and money, or to incur the legal exposure, for background checks on anyone who does not make it to your final round of consideration.


  1. Perform background checks relevant to the position being sought. Tailor the background check to the job in question. As noted in #2, above, not every applicant or employee needs to be subjected to a full criminal or credit record check. For example, consider credit checks on candidates who will handle money or have access to corporate accounts, or review the motor vehicle records of potential drivers.


  1. Conduct criminal conviction checks only on candidates who will be in “positions of confidence.” Make sure you have a business-related reason for conducting a criminal background check. For example, if you are filling a position in which the employee would work in a customer’s home, with impaired individuals, in a daycare center or hospital, or with confidential data, a criminal check is appropriate (and required by some state laws). Make sure these checks cover each jurisdiction where the candidate has lived. In addition, you should indicate that a criminal conviction does not automatically disqualify the applicant from consideration. This statement shows that your policy is not intended to screen out individuals solely based on the conviction. Do not check arrest records since most states and the EEOC prohibit these checks.


  1. Evaluate results fairly and consistently. Avoid “knee jerk” rejections when negative information surfaces during a background check. Consider the negative information in the context of the job to be performed. For example, to reject an otherwise qualified candidate solely because of a poor driving record may be inappropriate if the job requires no business driving, but could be the only prudent action in the case of a delivery driver position. To comply with the EEOC’s restrictions, consider refusing to hire an applicant based on a criminal conviction only where there is a direct relationship between the offense and the position sought, and no mitigating factors are present. However, you also should be aware that if you adopt the EEOC’s position, you may be vulnerable to negligent hiring claims which often assign liability if employers knew, or should have known, about a person’s potential threat to others. Accordingly, you should weigh carefully the risks of defending a discrimination claim from an ex-convict versus a potential negligent hiring claim involving serious personal injury. Remember, too, only minorities can bring a disparate impact discrimination claim regarding criminal conviction records.


  1. Restrict access to information obtained in background checks. Background check materials should be kept in confidential files and disclosed only on a strict “need to know” basis. Managers and supervisors usually will need to review certain background information about potential employees, such as employment verifications, references, licenses, and academic checks. However, records relating to criminal or financial history should be seen and reviewed by as few people within the organization as possible.


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