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Using Background Checks to Screen Potential Hires

published May 29, 2006

Nikki LaCrosse
( 15 votes, average: 4 out of 5)
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The first step more and more employers take is to request a thorough background check. What constitutes a background check in the job market today is significantly different from the norm 10 years ago. The basic pre-employment investigation usually includes verification of previous experience, education, and references from former employers. According to Barry Nadell, CEO and founder of InfoLink Screening, false claims of degrees are the number-one misrepresentation his firm finds among people it researches. "Today, it is so easy to get phony diplomas. You find that people lie about that quite a bit. We just call the school."

Hiding a criminal history is also one of the more common things that investigators discover among applicants. According to the 2004 Reference and Background Checking Survey Report by the Society for Human Resource Managers, 80% of all employers conduct criminal background checks on potential employees, and 35% run credit reports. Both numbers are significantly higher than they were a decade ago. A focus for employers is workplace security, and teenage pranks are not likely to hurt the probability of employment. Nadell notes that a record is relevant only "if the person has a conviction, especially if it is job-related or violent."


There are many reasons why employers have started conducting more extensive research into the lives of applicants before they hire them. Hiring experts note that the threat of "negligent hiring" lawsuits plays a key factor. It is only in recent years that a company can be held liable for the actions of an employee if the employer fails to do a background check or heed the findings of one. A landmark case concerning negligent hiring is Ward v. Trusted Health. Trusted Health was sued when it failed to conduct a background check before hiring a man with a violent criminal history. The employee subsequently killed two clients in their home, and the jury awarded the family $26.5 million. Employers around the country took note.

Tena Friery of the Privacy Rights Clearinghouse also points out, "We are now seeing a number of laws that require background checks," especially in healthcare and other consumer-based industries.

Another trend among employers is to hire an outside firm to conduct the background check. Combing through criminal and credit records is a tricky and time-consuming process that many companies have neither the time nor the experience for. Adhering to the legal restrictions on background checks is another big incentive to retain experienced investigators. There are laws governing who can access personal information, how that can be done, and how the information can be used. The Federal Credit Reporting Act (FCRA) defines investigatory options. The name is somewhat of a misnomer because the law addresses all kinds of personal information reports, not just those detailing credit histories. Virtually any kind of investigation is covered, and the rules are rife with exceptions and specific definitions that can leave the inexperienced researcher at risk for violating the law. In addition, individual states have their own regulations about obtaining personal information.

Some investigations employers request are controversial. Many applicants are offended by being asked to sign a waiver that allows a company to check their personal finance histories and medical records or to conduct personal interviews with neighbors and friends. Friery says there isn't much a person can do about it.

"The FCRA allows a company access to a credit check, and there's no standard of relevance included in that law. It doesn't say that the credit check has to relate directly to the job. Rather, employers are able to make non-skills-related determinations based on a credit report by assessing whether the person is responsible in their personal matters and translate that into whether they will be a responsible employee. There are some studies that dispute that, but it is allowed."

The professional companies that conduct background checks are called Consumer Reporting Agencies (CRA). Per Nadell, a CRA is generally defined as "any organization that engages, in whole or in part, in providing information on consumers for a fee and is giving it to third parties." There is no license needed for a CRA designation, so any company wishing to sell information may do so.

Asked about where InfoLink finds the information it turns over to employers, Nadell stresses that it always tries to go to the source. In criminal issues, this means going to court. Even government databases are not reliable. A recent study commissioned by the National Association of Professional Background Screeners (NAPBS) found that the FBI Criminal Database is particularly inaccurate. More than 11% of reports generated missed records, and another 5.5% were attributed to people who had not committed the crime listed. According the head of the study, Professor Craig Winston of Sonoma State, the database is faulty because the FBI data does not have the right indicators to link a file with an investigation.

Another concern is what happens to all of the information after the investigatory company has compiled it. "We hang onto it virtually forever. We keep all records for at least six years," Nagel says. Addressing security concerns, he emphasizes, "As far as data security is concerned, we're very heavy in data security. We have an outside firm that we pay to make sure that it is secure." He also hastens to add that information in their files goes nowhere. "We don't sell our information to anyone. The employer can see it, but no one else can. Some companies sell their data by letting others search the database. We're unusual in that we don't sell our information."

While an applicant should expect a background check prior to a job offer, it is up to each individual to decide what aspects of his/her life he/she is willing to lay open to scrutiny. Regardless of what skeletons are in the closet, Nadell urges people to be forthcoming. "I recommend that everyone always be honest. Dishonesty is the biggest problem." Under the FRCA, an employer must notify a job seeker if something in the background check is preventing a job offer. In most cases, the person has the right to see the information the employer found objectionable.

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