Delaware Employment Law Blog

Employers who conduct background checks on candidates must be careful to comply with a variety of governing laws.  A particularly hot topic in this area is criminal-background checks. Many (if not most) mid- and large-sized businesses in the U.S. are performing background checks, including criminal-history reports, on at least some job candidates.  But criminal histories can be complicated.  The EEOC has quite a bit to say about what you do with the information you receive in response to these requests.  (See How Considering a Candidate's Arrest Records Could Land You In EEOC Jail; Potential Delaware Judge's Criminal Record Raises Questions for State Senate).

One of the EEOC’s concerns is the length of time that has passed since the crime occurred and the sentence imposed. Generally, employers should not consider a criminal histories that are more than 7 years old.  There are, of course, exceptions to this rule. As far as I’m aware, the EEOC’s 7-year rule is not tied to empirical data that supports seven as the magic number. 

But a recent study by Carnegie Mellon provides the science that may be key to answering the question, How long does an individual have to be “clean” before he can be considered “redeemed” for employment purposes. According to the study, 5 years.  The study estimates that, after five years without a run-in with the law, an ex-convict is no more likely to commit another crime than other citizens of the same age.  Most committed new crimes within the first few years after their arrest, perhaps adding legitimacy to the use of criminal records in the first place.  But only a small number of those studied were re-arrested after that 5-year mark.

Many states already have legal limits on the use of criminal histories by employers. Some states prohibit their use altogether. Others require the employer to disclose their request to the candidate prior to receiving the records.  And some impose expiration dates—just in case the EEOC Guidance isn’t persuasive enough.  This study may encourage other states to put limits on the length of time that a criminal history can be considered for the purposes of hiring decisions.

Job applicants lie on their resumes.  They lie a lot.  Some estimates say that as many as 62% of resumes contain embellished education and employment histories.  This is why, as we've posted before, employers must screen applicants.  One recent example of an employee caught with his hand in the cookie jar, so to speak, is Robert Irvine.  The popular host of the Food Network show, "Dinner: Impossible," admitted that he had spiced up his resume when it was discovered that he had not cooked for the Royal Family as he'd represented during the application process.  He was released from his contract and a substitute was hired for the rest of the season. 

Apparently, though, his cooking and his charm were enough to warrant the forgiveness of the TV network.  Irvine is set to return to "Dinner: Impossible" this season.  He's said to be coming back for six new episodes, which will tape in December and January and air in March.  His previous and soon-to-be employer had the following to say about its forgive-and-forget attitude to the resume indiscretion:

[Irvine] has taken responsibility and made a conscious effort to clear the air, rebuild the relationship with Food Network and apologized for the earlier inaccuracies.

Would you be so forgiving?  Would it matter whether the employee was a well-loved celebrity of sorts with big money-making potential?

Employers have used MySpace to screen potential job candidates.  Employers have fired employees for something posted on the employee's Facebook and MySpace pages.  Even the incoming White House administration is requiring applicants to disclose any potentially embarrassing content on social networking sites.  So we've seen the role Facebook and MySpace have played in hiring and firing decisions.  But there is a new use for employers--using Facebook and MySpace in litigation.  Specifically, litigation against former or current employees.   

Dan Schwartz at the CT Employment Law Blog pointed out this new use as described in an article at Law.com entitled "Are Social Networking Sites Discoverable?" The article concludes that the information found on a plaintiff's MySpace or Facebook page is likely discoverable during litigation.  From the article:

Although these sites provide users with a sense of intimacy and community, they also create a potentially permanent record of personal information that becomes a virtual information bonanza about a litigant's private life and state of mind. The converse thus becomes the moral for litigation counsel -- this new generational fount of potentially discoverable information should be high on the list of priorities when evaluating a new matter.

Dan raises a great point--what if the employee's website contains comments that would disprove his claim?  For example, if an employee is claiming national-origin harassment and his co-workers said that there was an environment of friendly, though inappropriate (but not unwelcome), banter between the young males in the department.  The employee claims that he never engaged in this banter but, instead, he was subject to frequent comments so severe that it made his workplace a hostile environment.  So there's the employee's word and the word of his co-workers.  Not much to go on as far as a defense goes. 

But what if the employee's MySpace page was peppered with inappropriate comments of his own?  And what if the comments were exactly the ones identified by the co-workers? 

It's not difficult to imagine this potentially case-changing scenario.  It looks like MySpace and Facebook are here to stay as a tool for employers to learn potentially crucial information about employees--old and new.

Potential job candidates beware: your Facebook page is not off limits.  At least that's the case if you're applying for a job in Presidential-elect Obama's administration.  Candidates for Cabinet and other high-ranking positions must complete a seven-page, 63-item questionnaire, which asks questions about almost every imaginable detail of their personal lives.

Some of the areas on the application include:

• real estate and financial investments;
• involvement in civil or criminal lawsuits;
• immigration of any domestic help they may have hired;
• names and phone numbers of past live-in lovers;
• whether any family member owns a gun; and
• financial and tax information.

One of the more unusual topics on the questionnaire is a real "sign of the times."  Potential candidates must disclose Facebook pages and blogs.  CNN reports that job applicants will need to turn over any and all information that could potentially cause embarrassment to the next administration, including their social networking pages--past or present.

So, will this silence some of the critics who advocate against employers who run Facebook and MySpace searches on candidates?  If it's a suitable background-check method for potential members of the presidential Cabinet and international ambassadors, doesn't it seem like a reasonable idea for potential members of your organization?

For more on this topic, see:

New Study Shows Increase in Online Applicant Screening

Conclusive Proof that Employers Should Screen Applicants with Social Networking Sites

How to Conduct Online Background Searches With Google

Facebook Users Beware: Employers Aren't the Only Ones Who Know How to Google

Top 10 Reasons Why Employers Should Screen Their Applicants

And for employers who are considering the practice of Online Applicant Screening but who don't know where to start, be sure to catch the easy-to-understand video, Video Resources: How to Set Up a Facebook Account for Applicant Screening, available under the Resources > Video Resources tab at the top of the page.

1 in 5 employers use social networking sites to screen prospective employees.  That's according to a new study by Careerbuilder.  34% reported that they rejected candidates based on what they discovered during their online search.  We've written quite a bit about this practice, including what to look for if you do elect to incorporate online background checks into your hiring repertoire.

Here's what other employers have been looking for and, specifically, what will prompt them to reject a candidate:

• 41% - content posted about alcohol or drug use
• 40% - “inappropriate of provocative” pictures
• 29% - candidate appeared to have poor communications skills
• 28% - candidate bad-mouthed their previous company or fellow employee
• 27% - candidate lied about qualifications
• 22% - discriminatory comments related to race, gender, religion, etc.
• 22% - candidate’s screen name was unprofessional
• 21% - candidate was linked to criminal behavior
• 19% - candidate shared confidential information from previous employers

Unlike some bloggers, I am in favor of this practice--so long as it is performed with certain safeguards.  For example, Nick Fishman's concerns about the accuracy in candidate's Facebook or MySpace pages (1) have not materialized to any significant extent that I've seen; and (2) are allayed by simply asking the candidate about whatever it is that the employer found that may acting as a barrier to employment.  Just as with criminal backgrounds, employers should not make a per se decision without first giving the candidate an opportunity to explain the results of the report and any circumstances surrounding the arrest and/or conviction.  The same interactive discussion should occur if an employer finds something on the candidate's social-networking site that gives them concerns. 

One thing that opponents of this practice seem to overlook is that employers have an affirmative duty, legally, and for business reasons, to make the best hiring decisions possible, using all of the information reasonably available to them.  The only real threat of suit here is if the employer does not take the few minutes required to do an internet search on a candidate who, after being hired, commits an act of workplace violence. If the employee's MySpace page was filled with images of violence and words of rage, you can bet your last nickel that the employer will face a negligent hiring lawsuit for hiring the employee without taking the free and quick step of running that internet search. 

For prior posts on this topic, see:

Conclusive Proof that Employers Should Screen Applicants with Social Networking Sites

How to Conduct Online Background Searches With Google

Facebook Users Beware: Employers Aren't the Only Ones Who Know How to Google

Top 10 Reasons Why Employers Should Screen Their Applicants

And for employers who are considering the practice of Online Applicant Screening but who don't know where to start, be sure to catch the easy-to-understand video, Video Resources: How to Set Up a Facebook Account for Applicant Screening, available under the Resources > Video Resources tab at the top of the page.

Background checks have been so popular on the Delaware Employment Law Blog that they could almost make up a blog all by themselves.  Lucky for us, we don't have to.  Nick Fishman and his group have the topic of background checks all wrapped up at the EmployeeScreen IQ Blog.  Nick's content is always top-notch but this new endeavor appears to be hard to beat. 

EmployeeScreen IQ Blog has launched the EmployeeScreen University.  As described on the blog, EmployeeScreen Univ. is a "first of its kind interactive, educational Web site for security, risk management and human resource professionals that features regularly updated, free background-screening information; all aimed to help hiring managers make better hiring decisions."  The new site is intended to act as a comprehensive resource for all things related to background checks, references, employee screening, and pre-hire testing. 

Recently, the site has added a few exciting new features, including a Guest Articles section, where you can find articles written from a "unique point of view about background checks and, or other related topics from industry insiders and experts.

Sample of Guest Contributors includes:

• Ron Bower, Vice President and Director of Talent Sourcing at AmTrust Bank on Developing Employee Referral Programs
• Keith Greene, former Vice President of Workforce Readiness at SHRM on developing strong partnerships with background screening organizations
• Michael Sankey, Founder and CEO of BRB Publications on how to search criminal records.

Be sure to bookmark the site for later.  And, in the meantime, you can check out a few of our  most recent posts on background checks and employee screening:

Conclusive Proof that Employers Should Screen Applicants with Social Networking Sites

How to Conduct Online Background Searches With Google

Facebook Users Beware: Employers Aren't the Only Ones Who Know How to Google

Top 10 Reasons Why Employers Should Screen Their Applicants

Facebook, MySpace, and other social networking sites should be used as applicant-screening tools.  And here is conclusive proof--the Burger King-Tub Boy, a/k/a, "Mr. Unstable," Timothy Tackett. 

Tackett, 25, posted a video to his MySpace page, showing him taking a "bath" in the sink.  The sink, though, was in his employer's restaurant at the time he bathed in it.  In the nearly four-minute video, "Mr. Unstable" is seen bathing in a bubble-filled utility sink at the Burger King in Xenia, Ohio, where he had been employed.  Predictably, Tackett and four to five other employees on the midnight shift were terminated days after the video was posted.

So what's the take-away lesson from this unappetizing story? 

First, this is a lesson to our Gen Y friends and coworkers--yes, we mean it when we say that your social-networking escapades are not as private as you think. 

Second, these fiascos not only might prevent you from getting hired but also can get you fired if your employer learns of off-duty conduct that turns its corporate stomach. 

Third, this should serve as a poignant example of why employers must be knowledgeable with Web 2.0.  Your employees are online.  Employers, you need to be online, too. 

{There's no more excuses that you "don't know how" to use the social networking sites.  Just watch the step-by-step video tutorial, How to Set Up a Facebook Account for Applicant Screening}

Employers across the country admit to screening job applicants by checking the candidates' social networking sites, such as Facebook and MySpace. If you want to consider online job applicant screening, though, you'll need an account. Here's a step-by-step on how to create one.

This is the 4th Video in the series.  The first three can be accessed by selecting the "Resources" tab at the top of the page, and then "Video Resources" from the drop down list. 

Earlier posts on using the internet in hiring and recruiting:

• How to Conduct Online Background Searches With Google

• Facebook Users Beware: Employers Aren't the Only Ones Who Know How to Google

• Top 10 Reasons Why Employers Should Screen Their Applicants

Hiring managers have a lot of homework to do. Background and reference checks have become absolutely necessary steps in hiring today for a variety of reasons, which we've previously discussed.  One way many employers are getting the access they need to uncensored information on candidates is with the internet.  Especially where the job pool is largely college graduates, the internet can be a great tool for applicant screening.

But the information superhighway doesn't come with a road map and employers may not know exactly how to navigate the internet when it's being used as a hiring tool.  When William W. Bowser and I spoke about this issue last week in an audioconference, there was a significant amount of interest in a tutorial on the ins and outs of performing background checks online.  We're happy to oblige. 

Here is a run-down of the two of the way you can use Google for doing your own, online investigation of potential candidates.

Google

What:  Google is the most popular search engine in town.  It's actually quite a bit more than that, but you can check out our video tutorials on the other ways to use Google.  But, for this purpose, Google is just about as self-explanatory as they come.

How:  The quintessential websearch tool, just about everyone knows how to search via Google.com.  In short form, all you need to do is direct your web browser to www.google.com.  In the search box, type the name of your candidate.  Run a search for every iteration of the candidate's name.  For example, if you were going to search Bill Bowser, you'd use that version of his name, but also, "William Bowser", "William W. Bowser", and even "Bowser, Esq."  Be sure to use quotation marks to ensure you don't return search results for all websites that include the word "William."

What You'll Find:  Of course, it all depends on the candidate, but Google is likely to turn up more favorable results than unfavorable ones.  Sports achievements commonly show up in a Google search, for example.  For younger candidates, the results are likely to be limited in number and will most often be directly from a local newspaper or school publication.

When to Use It:  If you use it at all, Google is an excellent place to start when searching for public information on candidates.  It's also a good tool for gathering data that the candidate would proudly tell you if given the opportunity. 

Google Blogsearch

What:  Well, since you're reading this via our blog, I'll assume you have a basic understanding of the concept. But for the sake of equality with Nos. 1 and 3, I'll give a little summary.  "Blog" is a combination of the words "Web" and "Log."  Blogs began mostly as personal journals (or logs) maintained by individuals and used as a way to communicate their daily adventures to friends and family.  But, as the phenomenon has caught on, blogs are maintained by an enormous spectrum of individuals and entities for an even larger variety of purposes.  There are enough blogs that your candidates may be bloggers themselves, providing you with direct access to their uncensored opinions and commentary.

How:  The easiest way to search for blogs online is to use Google's blogsearch tool.  Basically, you're just doing a Google search but limiting the results to blog posts.  This can be done either direct from the Google home page by selecting "more" from the list at the top left side of the window, and then by selecting "Blogs" from the drop-down list that appears.  Alternatively, just go directly to http://blogsearch.google.com. 

What You'll Find:  You may find a blog hosted by the candidate, a blog post written by the candidate for someone else's blog, or a blog post about the candidate.  Any of these three are likely to give you meaningful insight into the candidate's personality, opinions, and, if nothing else, their communication skills.  For example, if hiring for a customer-service representative, an employer may have concerns about a candidate who uses an extraordinary amount of profanity throughout his posts.  Another serious red flag is an applicant who uses derogatory terms or expresses anger or hate towards any group.  This behavior should be major concerns to employers who want to avoid liability for discrimination and harassment.  It can also be indicative of violent tendencies.  And, given the fact that nearly $2 million American workers are victims of workplace violence every year, this must be a concern for employers, as well.

Employers use Google, Facebook, and MySpace to conduct informal and unofficial background checks on job applicants.  But what about the employer's online reputation?  Learn how to monitor your online reputation, as well as your business' reputation using Google's free tool, Google Alerts.

http://www.slideboom.com/presentations/15998/Google-Alerts-by-Delaware-Employment-Law-Blog

On Thursday, William W. Bowser and I will present an audioconference on Applicant Screening With Google and MySpace.  We'll talk about whether the internet is a legal and ethical resource for use in the hiring process.  A necessary premise of the discussion, of course, is that applicant screening is a good idea in the first place.  Because, if it's not, we don't need to reach the Google-MySpace debate.  We believe that employers must make efforts to screen candidates before making their final hiring decision.   

1.  Resume Fraud.  An estimated 52% of applicants lie on their resumes.  If you are able to determine which applicants have misstated their credentials, you can eliminate them from the get-go without wasting any more time in the process.

2.  Limited Access to Information.  Employers do not want to provide any more information than what is required and are very hesitant to respond to a reference request.  But, at the same time, former employers often hold the key to the most relevant insight about the candidate.

3.  Background Checks Are Costly.  Many employers use an outside agency to perform background checks on potential employees.  And for good reason.  Background checks are complicated and time-consuming.  But, hiring an outside agency costs money and many small employers either cannot afford or have chosen not to dedicate the necessary resources to performing these checks.

4.  Compliance Issues.  Employers who do use an outside agency face their own set of problems.  The Fair Credit Reporting Act ("FCRA") set standards for employment screening conducted by consumer-reporting agencies and outside companies.  There is a list of compliance requirements triggered by the FCRA, including various disclosures an employer must make before, during, and after the background check has been performed.  The FCRA also carries substantial penalties for non-compliance. 

5.  Bad Apples Are Expensive.  Hiring is one of the most critical decisions a business will make.  Failure to carefully screen and select applicants can result in employees who are (1) not qualified to perform the work hired to do; (2) whose work habits are not in line with the organization's; (3) whose attitudes and personalities clash with coworkers, (4) hired under false expectations which later turns into poor morale and low productivity.  The U.S. Department of Labor estimates that the average cost of a bad hiring decision can equal 30% of the employee's potential earnings during the first year of employment.  But that estimate is low--many submit that the number is closer to 100% for non-management personnel and 150% to 200% for management. 

6.  Employee Theft.  The U.S. Chamber of Commerce estimates that theft by employees costs American companies $20 to $40 billion per year.  U.S. consumers absorb this cost at the yearly rate of $400 per working adult.  An employee is 15 times more likely than a nonemployee to steal from an employer.

7.  Claims of Negligent Hiring and Retention.  Employers can be sued and held liable if they fail to use reasonable care in the employment-selection process.  "Reasonable care" is dependent on not just whether the employer knew about the candidate's proclivities but also whether the employer should have known.  In short, failure to screen applicants and to use proper care in hiring can result in legal liability.

8.  Workplace Violence.  Some two million American workers are victims of workplace violence each year.  Certainly not every incident of violence could be prevented with applicant screening.  But if pre-employment checks could prevent a potential incident from happening in your workplace, wouldn't it be worth it?

9. Intellectual Property Concerns.  Intellectual-property theft is a very real concern, costing American employers anywhere from $200 million to more than $1.2 trillion annually.  As the workplace becomes more technology-based and employees become more technology-savvy, the risk of stolen trade secrets and other proprietary information will continue to escalate.

10.  Federal Anti-Discrimination Laws.  Of course, this is the biggest fear of most employers--that the person they hire will later "turn" on the company and file suit.  And there is good reason to worry.  Just ask Wal-Mart, which has been hit with several multi-million dollar lawsuits brought by employees in 2008 alone.

Background checks are commonplace today. The law requires them for some employees, such as child-care providers, nurses, bank employees, and teachers. But there are a variety of reasons for employers to perform background checks even when not required by law. The reasons range from avoiding increased insurance costs to preventing a negligent hiring suit to averting workplace theft and violence.  Background checks provide the information needed to effectuate those objectives. But sometimes the information generated by a background check creates more questions than answers. Smart employers ask questions. Here are some answers.*

Stop in the name of lawful hiring, before you break the law
The Equal Employment Opportunity Commission (EEOC) has taken a formal position against the use of arrest records as an absolute bar to employment, and the federal courts have followed. If you want to comply with the EEOC's standards ― and who doesn't? ― don't disqualify candidates who have been arrested. The EEOC has explained that the use of arrest records to disqualify candidates at the outset would disproportionately affect African-American and Hispanic candidates.
That results in unlawful disparate impact discrimination. Unlike disparate treatment discrimination, disparate impact doesn't involve any particular animus by the employer. The policy looks neutral on its face and seems to affect all candidates equally. But the real effect is felt by only a certain protected class. So to avoid facing a disparate impact discrimination suit, don't adopt a policy of refusing to hire an applicant because of an earlier arrest.

Let's be honest, this standard is pretty fair. You may have heard of something called "the presumption of innocence." In our nation's judicial system, we accept that a person who is arrested is presumed innocent until proven guilty.

You've got something to talk about ― an arrest record to figure out
While employers may not rule out every candidate with an arrest record, in most states, including Delaware, there are circumstances under which an arrest record may be considered. If the results of a background check reveal an arrest history, you should follow a specific course of action when considering the information.

As a first step, the EEOC tells employers to provide the candidate with a "meaningful opportunity to explain." In short, that means that you should meet with the candidate, provide him with the information you have received, and give him a chance to provide you with more information that he feels may be relevant in making your decision. The key is not only to let the employee talk, but also for you to actually listen. Hence, the phrase "meaningful opportunity."
The EEOC intends the process to yield meaningful results and, in turn, expects employers to take more than a passive role. If you could likely verify the candidate's explanation with a phone call to his previous employer, the EEOC wants you to do just that. If the circumstances and explanation offered by the potential employee don't allay your concerns, the EEOC still suggests that you proceed with caution before disqualifying him for the job.

What's an arrest record got to do with it?
Next you should consider whether the circumstances of the arrest are "job-related." The usual response from employers is "How can an arrest not be related to the job?" Certainly there is an element of truth to that question. But in reality, and especially in the world of the EEOC, it doesn't represent the whole truth. To accept that all persons with an arrest record are unfit to hold a job would be a quick return to disparate impact discrimination ― do not pass "Go," do not collect $200.

So when is an arrest history truly "job-related"? The EEOC gives us three things to consider: (1) the nature and gravity of the offense, (2) the time that has passed since it occurred, and (3) the nature of the job sought. Certainly, some jobs will necessarily require a higher standard, and more candidates may be excluded as a result. Law enforcement or other safety-sensitive positions, jobs that give the employee easy access to the possessions of others, and any position that imposes a responsibility on the employer for the safety or well-being of others are three common examples.
Although this may seem like a difficult question, it can be easier to answer if you ask the inverse ― when is a candidate's arrest history not related to his ability to succeed in the available job? A person applying to be a pharmaceutical sales representative is unlikely to be disqualified because he was once arrested for spray painting a vacant building. Graffiti skills aren't related to the medical knowledge and self-starter personality trait needed in the sales position. And the arrest seems even more irrelevant if it occurred when the applicant, who is now in his 40s, was a teenager.

You've been hit by . . . a smooth criminal
But there are situations that tread a bit closer to the line. For example, would a previous arrest for making terrorist-like threats be related to the skills required of executive assistant? Any crime that involves violence or the potential for violence will require closer attention than, for example, a crime limited to property damage.

This may be where the "meaningful opportunity" saves the day. If you told the candidate that the results of her background check included the arrest, could she offer you any reasonable explanation that would render the arrest unrelated to the job? Maybe she could.
Maybe she would explain that the arrest had occurred when she tried to intervene in a domestic dispute in a neighboring apartment. Once the smoke cleared, she was released and no charges were pressed. And let us suppose that she offered you the name of the arresting officer, who verified her story. You just might end up hiring a new executive assistant, arrest record and all.

Also see: The EEOC published an informal discussion letter in March on the use of conviction records in hiring.

*originally published in the Delaware Employment Law Letter by M. Lee Smith Publishers, reprinted here with permission.

Delaware Governor Ruth Ann Minner's recent judicial nomination triggered an avalanche of employment-law issues.  The man she'd nominated as a Delaware Family Court Commissioner was convicted of selling cocaine to an undercover officer when he was 17 years old. Since then, he'd led an honorable life, going to college, then law school, and, most recently, holding the position of deputy counsel to the Governor. But the state legislators raised questions about whether his criminal record prevented him from sitting on the bench.

The Governor asked the Delaware Supreme Court to issue an opinion answering this question.  The current law states that persons cannot hold state office if convicted of an "infamous crime."  The term has never been defined. 

The state Supreme Court held that the offense, which was committed as a juvenile, should be treated as a "civil delinquency, not [a] crime at all," and certainly not as an "infamous crime."

The juvenile conviction was pardoned in 1999 shortly before he was admitted to practice law in Delaware and New Jersey.  Since then, he has worked as a deputy attorney general and a defender prior to working as legal counsel for the Governor.   His community contributions include being a member of the Metropolitan Wilmington Urban League, and serving in positions on the Delaware Law Related Education Center and the Delaware State Bar Association's Committee on Professional Ethics.

This story serves as an excellent example of the seriousness with which employers should consider an applicant's criminal history.  Employers who do conduct background checks that include criminal records should not presume that a conviction is an automatic bar to employment.  In accordance with EEOC Guidelines, the candidate should be given a full and fair opportunity to explain the conditions of the crime and conviction, as well as how he or she has contributed to the community and society at large as factors for employment. 

See full coverage of this story by Esteban Parra at the Wilmington News Journal's website.

Another important source of information is the EEOC's Fact Sheet on Employment Tests and Screening, which addresses Criminal Background Checks.

Would you hire an applicant with a poor credit history?  And what if you hired a candidate who became an all-star employee who, you later learn, has a credit score of 550?  Would that make you think less of her as an employee?  Would you question her judgment or consider her high-risk?  Good Morning America asked all of these questions earlier this week.  And, according to the responses they received, credit history and credit ratings may have a greater impact on a person's ability to find work than you'd think. 

Are Credit Checks Really Being Used to Weed Out Potential Employees?

You bet.  Credit history is a standard part of many background checks, along with motor vehicle data, and drug testing.  Why?  Well, for some, there is no reason why.

Often, I'll review an employee handbook and come across boilerplate language providing for far-reaching background checks.  When I ask the employer what they're seeking to gain with this knowledge, it's very common for them not to have an answer.  They may have wanted to institute a pre-employment drug-testing policy and, when they located a vendor to handle the testing, for an additional small fee, the same vendor would also do background checks.

So, what the heck; a bargain is a hard thing to pass up.  And that's how their background-check policy came to be.

Why Employers Should Ditch the Credit Check

Putting aside the relatively low costs that could be saved, there are a number of reasons why credit checks aren't necessarily the best idea for your organization.  But here are two that come to mind immediately:  The FACT Act and the EEOC.

The Fair and Accurate Credit Transactions Act (also known as "FACTA"), was an amendment to the Fair Credit Reporting Act (FCRA), passed in 2003, primarily to help consumers fight the growing crime of identity theft.  Accuracy, privacy, limits on information sharing, and consumer rights to disclosure are all key elements of FACTA.

And, with FACTA, what you don't know can hurt you.  Employers are bound by a very detailed list of requirements when using credit checks as part of the hiring process.  For example, there are specific disclosures that must be made before and after the credit check is performed.  There are even rules on how an employer must go about destroying related documents.  And, no, these rules are not satisfied by tossing the records in the trash can.

The EEOC has long-maintained that criminal histories can be reviewed as part of the hiring process but cannot be a per se bar to employment.  Instead, if a background check reveals a criminal record, employers must engage in a "meaningful discussion" with the candidate and provide him or her with an opportunity to explain the circumstances of the instances involved and how he or she has changed, etc.

The same is true for credit checks. To avoid a claim of disparate impact, employers who do perform credit checks should remember that a negative credit history should not be an automatic bar to employment. Instead, they should give the potential hire a meaningful opportunity to explain the circumstances of the debt and how he or she has gone about making changes towards a more fiscally responsible future.

Then consider this explanation, coupled with how important or relevant credit might be to the specific job for which he or she has applied.  Weigh all of this before concluding that the credit history has a negative impact on the candidate's ability to perform the duties of the position.

Why Employers Should Keep Doing Credit Checks

Legal liability is real.  Negligent hiring lawsuits are very real.  An employer can be held liable for negligently hiring an employee the employer should have known was likely to violate the rights of another.  For example, if your organization employs technicians who drive from job site to job site, you really must do a motor vehicle's check.  If a technician gets into an accident because of reckless driving and seriously wounds or kills another driver, you may be held liable for his conduct if he'd been involved in numerous instances of reckless driving, which you did not know because you didn't do a background check.

The same idea applies in the context of credit checks. If you hire an employee who, it turns out, was embezzling company funds to finance a gambling habit, you may be on the hook if her actions caused harm to customers who, for example, bounced checks because of the embezzlement.  Had you done a credit check, it would have shown that, right before being hired, she had an erratic payment history, tending to show fiscal instability.  If an employee's actions hurt someone, the employer may be liable. The threat of liability gives employers reason to be cautious in checking an applicant's past. A bad decision can wreck havoc on a company's budget and reputation as well as ruin the career of the hiring official. Employers no longer feel secure in relying on their instinct as a basis to hire.

Start with honesty.  Studies estimate that anywhere from 30% to as much as 60% of employees lie on their job applications.  (This gives me an excellent opportunity to advocate, again, for the importance of having every employee fill out a job application).  Think of credit and background checks as a little test to see whether your candidates fit within that group. 

The law might require it.  For certain positions, federal and state laws require employers to complete certain background checks on employees after extending a contingent job offer.  FDIC-regulated banks, for example, have to comply with an extensive set of regulations during their hiring process.

My final piece of advice is this: 

Try to remember that the cobbler's children have no shoes. The reality is that, just because an employee can't manage her own credit does not mean that she can't manage yours.  Often, people who are very devoted to their work let their personal lives go untended.  So do not assume that a bad credit score equals a poor performance rating.

Related Resources

See GMA's original story, How Bad Credit Can Affect Job Prospects, by Tory Johnson.

And HR Hero has helpful resources on FACTA, as well.

John Phillips will be co-presenting a webinar on this very issue on July 17, Background Checks: Follow the Rules, Know the Risks, Reap the Rewards.

Delaware employers are immune from being sued for providing (honest) information to a reference request. The State law gives employers extra incentive to actually respond to such checks with more than name, rank, and serial number. And that's a good thing.

Reference checks are an essential hiring tool for most employers. Hiring managers often complain about the lack of disclosure they receive in response to their reference requests. And it's estimated that up to one-third of all resumes contain inaccurate information. One British organization has found their own solution to often-restricted access to information about job applicants.

.

In Britain, an employer association has taken some creative steps to address what most be some serious headaches in the reference-check system. The organization is creating a National Staff Dismissal Register that will consist of an encrypted list of high-risk employees, identifying employees who were discharged for dishonesty or for damaging their employer’s property, for example.

Member companies will be able to search the list by name, address, birth date, previous employer and national insurance number. The list is expected to be usable by the end of the month.

Employee and human rights organization advocates worry that employees may find themselves unable to obtain work because, unbeknownst to them, they are on the list because of false accusations or errors, with no way to be certain and no appeal. Employers, on the other hand, look forward to the possibility of reducing losses due to employee theft and negligence.

If they were in Delaware, of course, they might find that such extremes are unnecessary. The full text of the Delaware statute (19 Del. C. Sec. 709) is available on the State of Delaware's website.

[H/T: Workplace Prof Blog]

More at BBC News

The parents in the group might need to sit down for this story. . .

In a bizarre and frightening incident, a middle school girls’ softball coach at the Seaford School District apparently injected one of the girls on his team with an adrenaline-filled Epi Pen--not to save her life by combating an allergic reaction—but apparently in retaliation for lackadaisical play on the field.

The girl’s family is now suing the school district for failing to properly and thoroughly verify the coach’s background.

Hiring is one of the most important decisions any employer can make. A failure to carefully screen employees can not only result in adding underperformers to your workforce, it can result in exposure to theft, violence, and legal liability.

This recent incident in Seaford underscores the importance of a thorough and productive background check. But how do you get real, useful information in a world where many employers are advised to divulge only “name, rank, and serial number” of their former employees?

Tips for Conducting An Effective Background Check:

1. Get a release - the best way is to reduce the fear of a lawsuit. Get a release of liability from the applicant whose references you are checking, and provide it to the employer. Common sense dictates that the chance of a lawsuit will be substantially reduced when the potential plaintiff has already authorized the release and discussion of employment-related information.

2. Inform of Delaware’s reference check law - you should also tell your contacts about Delaware's reference check law, which gives former, current, and prospective employers immunity from a lawsuit for providing references in "good faith." Better yet, give them a copy of the law to review and provide to their legal counsel.

3. Say the password - most experienced HR professionals you contact will be just as frustrated as you are about the inability to get information about prospective employees. As a result, you might want to give them the opportunity to help you out and still sleep at night. Try asking whether the applicant is "eligible for rehire." A negative answer might be just what you need to steer clear of an individual.

4. Find a secret source - another way to get information is to go directly to the applicant's supervisor. That person will have the most information and will be more likely to provide it than the HR department. Of course, you want to prevent such a maneuver against your company, so make sure you constantly remind your own supervisors about your policies on background checks and that all inquiries should go through HR.

5. Go public - your high-school principal was right when he warned you that your youthful transgressions would be "on your permanent record." Criminal arrest and conviction records are a matter of public record. They are not only public but also easy to get, at least for offenses committed in Delaware. A visit to the prothonotary (clerk) in the state courthouse located in Wilmington, Dover, or Georgetown can get you free access to an applicant's arrest and conviction record free of charge.

6. Visit cyberspace - another source of information is the Internet. Search engines like Google can scour the Internet for websites, newspaper articles, and postings by applicants. Similar checks on social networking sites like MySpace and Facebook can provide useful information as well. Use of such searches is becoming common. A 2006 survey by CareerBuilder.com indicated that 26 percent of hiring managers have used the Internet to collect information on applicants. Half of those managers said they had accessed personal information on social networking sites.