Delaware Employment Law Blog

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

FaceBook, MySpace, and other social network sites, have multiple uses. Of course, the traditional idea is that members gather to meet new people and share experiences.  As most recruiting and hiring managers are well aware, these websites can provide substantial insight into the personality and personal lives of job applicants. 

The value in this hiring strategy is subject to debate.  William W. Bowser and I will be debating it ourselves in greater detail tomorrow in our audioconference, Click Here for Lawsuit: Applicant Screening With Google and MySpace.  Employers must balance the need to make crucial hiring decisions with the privacy demands of Gen Y.  The arguments against using the internet's resources as the basis for employment decisions are shrinking, though.  And, if the trends continue, employers who do not utilize the web in hiring may find that they're alone in that decision. 

A survey released yesterday reports that the use of social networking has just begun to get off the ground outside America.  In North America last year, the number of users increased by 9% compared to an increase of 25% worldwide. 

Social networking has seen growth not only in the number of members, but also in the number of ways it has been put to use.  For example, the National Law Journal's article, Social Networking Sites Help Vet Jurors.  The article details how many lawyers now incorporate a Facebook-MySpace background-style check into their jury selections.  The information that is available online about potential and seated jurors can be invaluable in selecting jurors, striking potential jurors, and even in crafting opening and closing arguments that will hit home for the jury-audience.

What is remarkable about this trend is the revelations that often come with the discovery of an individual's FaceBook or MySpace page. Over and over, when social networking is used as a means to find out the "real" personality, behavior, and preferences of others, whether it be a job candidate or a potential juror, the "real" version is drastically different from the version presented to the searching party. 

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.

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.

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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.