How to Make Background Checks Part of Your Hiring Process

How to Make Background Checks Part of Your Hiring Process Anne H. Williams Attorney M. LEE SMITH PUBLISHERS LLC B r e n t w o o d , Te n n e s s e e ...
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How to Make Background Checks Part of Your Hiring Process Anne H. Williams Attorney

M. LEE SMITH PUBLISHERS LLC B r e n t w o o d , Te n n e s s e e

This special report provides practical information concerning the subject matters covered. It is sold with the understanding that neither the publisher nor the writer is rendering legal advice or other professional service. Some of the information provided in this special report contains a broad overview of federal law.The law changes regularly, and the law may vary from state to state and from one locality to another.You should consult a competent attorney in your state if you are in need of specific legal advice concerning any of the subjects addressed in this special report.

© 2003 M. Lee Smith Publishers LLC 5201 Virginia Way P.O. Box 5094 Brentwood,Tennessee 37024-5094

ISBN 0-925773-77-8

All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means without permission in writing from the publisher.

Printed in the United States of America

Contents INTRODUCTION....... 1 1 — BACKGROUND CHECKS....... 3 Why Perform Checks?....... 3 Do You Have a Duty to Check?....... 4 Screening for Illegal Aliens....... 5 Childcare Providers and Schools....... 6 Health Care Providers....... 7 Transportation Safety....... 7 2 — AVOID NEGLIGENCE LIABILITY....... 9 Background on Negligence....... 9 Negligent Hiring....... 10 Negligent Supervision....... 11 3 — OBTAINING AND USING BACKGROUND INFORMATION....... 13 Collecting and Using Information....... 13 Criminal History Records....... 15 Military Records....... 17 Driving Records....... 18 Medical Inquiries and Examinations....... 19 Educational Verification....... 21 Social Security Numbers and Privacy....... 22 4 — USING EMPLOYEE CREDIT REPORTS....... 23 The Fair Credit Reporting Act....... 23 Steps for Complying with the FCRA....... 24 Failure to Comply with the FCRA....... 25

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5 — PROVIDING JOB REFERENCES....... 27 What Are the Risks?....... 27 You’re Not Off the Hook Yet: Duty to Warn....... 29 Minimize the Risks of Giving References....... 30 Reference Immunity....... 31 6 — PERFORMING PRE-HIRE TESTS....... 33 Checks for Substance Abuse....... 33 Honesty and Psychological Profiles....... 35 Skill and Aptitude Tests....... 36 EEOC Selection Guidelines....... 36 7 — BACKGROUND CHECKING TECHNIQUES....... 39 First Things First....... 39 Review Applications and Résumés....... 40 Prepare and Conduct Structured Interviews....... 41 Should Everyone Get the Same Check?....... 41 Conduct Reference Checks....... 41 Personal References....... 43 Certifications and Licenses....... 43 Employment Agencies and Private Investigators....... 43 Investigation Paperwork....... 44 CONCLUSION....... 47 Notes....... 47

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Introduction S

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et’s say that you are the HR manager at a chemical plant. An opening for head chemist has come up, and you have a résumé in front of you from Dr. Henry Jekyll. He has a Ph.D. in chemistry from a top university and worked for your biggest competitor for six years. He is currently unemployed, stating in his cover letter that he had been laid off six months ago.When Dr. Jekyll comes in for an interview you ask what he has been doing for the past six months. He tells you he has been consistently looking for a job, and also experimenting on a chemical formula in his home laboratory.You hire Jekyll on the spot and he starts work the next day.Things run smoothly until a member of the night cleaning staff is found strangled in the lab.A police investigation discovers that Jekyll is the culprit.The family of the housekeeper sues your employer for negligence, and at trial brings forth evidence that shows that Jekyll did indeed work for your competitor, but as a lab assistant, not a chemist; that he was fired after an incident where he claimed to be named Edward Hyde and assaulted his boss; and that during the six months that he was off work he was actually in a mental health facility.The jury gives a big award to the family simply because you failed to adequately check out Jekyll’s background before hiring him. Perhaps the most important step you can take to ensure the safety of your workplace, and limit your liability, is to conduct background checks of all new hires and, if appropriate, on existing employees.The types of information you might verify include visa status for foreign nationals, previous work history (paying particular attention to any gaps in employment), educational background, and any criminal conviction records.Your in-house personnel can perform these checks or you can hire investigators or third-party consumer credit agencies to perform them.

Employers need to be aware of when they may have a duty to perform background checks.

This report will discuss some of the reasons why background investigations have become so important to many employers. Hiring productive, honest, and safe employees, without incurring costs associated with hiring the wrong people, makes good business sense without regard to potential legal liability. Employers also need to be aware of when they may have a duty to perform background checks. For instance, all employers are required to screen for illegal aliens.There are special duties when childcare, health care, or transportation safety is involved, among other situations. In addition, a failure to check in some circumstances could create liability for negligent hiring. Checking backgrounds is not always an easy process.There are restrictions placed on employer access to criminal history records, military records, driving records, credit reports, medical data, and educational achievements. In general, federal and state laws seek to balance the interests of employers against those of the applicants.

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H o w t o M a k e B a c k g r o u n d C h e c k s P a r t o f Yo u r H i r i n g P r o c e s s The special problem of how much, if anything, previous employers should tell prospective employers is also explored in this report. Many employers are reluctant to give employee references for fear of being sued for defamation. Many states have passed reference immunity laws in an effort to encourage the exchange of job performance information.We will give you a detailed discussion of how to tailor the job references you give to best protect your company from liability. Many employers use tests, such as those that screen for drug use or psychological problems, as a form of background investigation. We will give you an overview of the legal issues surrounding the use of such tests in your workplace. In addition to reference checking, this report explores how to conduct other aspects of background investigations, starting with the inclusion of certain notices in the application. Other topics include reviewing résumés and applications for potential issues, structuring interviews to obtain worthwhile information, who should be checked for what, using outside employment agencies and investigators, and documentation of the investigation process. With this hands-on guide to performing background checks, you can start your next round of background checks without trepidation.

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Background Checks

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hecking the background of job applicants has become one of the most popular subjects of employment-related state legislation today. Many states authorize or require criminal history checks for workers involved in childcare, teaching, patient care, or other specific responsibilities. A number of states have enacted laws authorizing or requiring drug testing of applicants. In addition, over half the states now offer protection from liability for former employers who provide reference information in good faith.What passage of these laws tells us is that many more businesses now see a need to verify the backgrounds of their prospective hires before making final decisions. Moreover, technology has made personal data much more accessible. Driving records, criminal histories, credit histories, medical information, and educational background are all stored in computers ready for viewing. At the same time, applicants have legal protection against job discrimination, misappropriation of personal data for criminal purposes, and distribution of inaccurate information.

WHY PERFORM CHECKS? There are a number of reasons background checks are an important tool for businesses. Background checks help create a safer and more productive work environment.They ensure that the people you hire “are who they say they are” and that those people offer the basic characteristics you seek in any employee, such as honesty, a proven work ethic, the desired skills, and no record of violence. Moreover, you have a legal duty to provide a safe place in which your employees can perform their work. Failure to investigate the background of applicants (and as appropriate, current employees) could result in the following: 1. Presenting a real and unnecessary threat to employees, customers, and property. The safety and well-being of current employees is potentially compromised when you have no knowledge of an applicant’s background. Many employers have discovered too late that they hired seasoned criminals, including violent offenders and persons with histories of crimes involving theft, embezzlement, or fraud in various forms. Such people are more likely to cause physical harm to your employees or customers as well as pose a greater threat to assets and property. At a minimum, the work history, prior addresses, and references of any prospective employee should be confirmed and any gaps in time explained before making a job offer.The same can be said for criminal

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H o w t o M a k e B a c k g r o u n d C h e c k s P a r t o f Yo u r H i r i n g P r o c e s s conviction checks. Although a conviction shouldn’t automatically disqualify someone from all jobs, you should know the applicant’s history before you extend the offer so you can make a reasoned decision about whether and in what capacity to employ him. 2. Exposing the business to liability. Third parties harmed by a violent employee may sue you for negligent hiring and retention or similar legal claims involving personal injury. Co-workers injured by a violent employee may bring workers’ compensation claims.Your general duty to maintain a safe workplace under the federal Occupational Safety and Health Act is another potential source of liability. Health care employers subject to the Occupational Safety and Health Administration’s guidelines concerning prevention and response to workplace threats of violence are at special risk in this regard. 3. Imposing hidden damages on the business and others. Businesses that don’t engage in “best practices” regarding background checks on applicants and employees lose countless dollars each day as a result of dishonest, unreliable, or unqualified employees. Discovering an applicant’s multiple convictions for theft and fraud before she’s hired to handle cash is likely to save you significant time and money down the road. Potential Pitfalls in Performing Background Checks On the other side of the coin, a business that implements background checks must be certain that those investigations are properly conducted or it can face potential legal liability. For example, although you need not perform the same background check on every applicant or employee, any differentiation should be based on legitimate business interests and an investigation policy reasonably calculated to further those interests. You may be held liable for unlawful discrimination, regardless of whether it’s intentional, if your investigation practices result in unequal treatment regarding race, national origin, religion, sex, pregnancy, physical or mental disabilities, or any other legally protected category or activity. Other potential claims include invasion of privacy and defamation. Similarly, when you receive a background report, you should carefully review it and avoid making adverse decisions based on clearly incorrect or inapplicable information.

DO YOU HAVE A DUTY TO CHECK?

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Prior to hiring an employee, it is important to ascertain whether you have a legal duty to obtain a background check on job applicants.This legal duty may be based in federal or state law. For example, federal law requires employers to obtain verification from all new hires of their identity and authorization to work in the United States. Background checks required by law generally apply when special considerations exist relating to the care of others, public safety, or some fiduciary-like relationship. For example, facilities may be required to check the criminal history before

Background Checks hiring persons responsible for the control or supervision of minors.This may include childcare facilities, school districts, school transportation services, or residential facilities for juveniles. Facilities that care for vulnerable or incapacitated adults, such as nursing homes, assisted living centers, home health agencies, and other health care providers, may have to make similar checks. Private security and investigation firms, apartment complexes, law enforcement and criminal justice agencies, other public employers, and gambling or pari-mutuel operations also may be legally obligated to screen potential hires for criminal backgrounds. Many states require a screen for license disqualifications and serious traffic offenses before granting a commercial driver’s license. In addition, employers must check driving records and employment history before hiring a driver to operate a vehicle in interstate commerce. Both federal and state laws may apply to drug testing. Federal Department of Transportation regulations1 require drug testing of job applicants who will drive a truck in interstate commerce, for railroad and airline crews, and for safety-sensitive positions relating to pipelines and nuclear facilities. State law may require drug tests for applicants for public employment or specific positions.

SCREENING FOR ILLEGAL ALIENS All employers in the United States are required by law to check identity and authorization for employment in this country.The Bureau of Citizenship and Immigration Services (BCIS) provides Form I-9 for employers to use in documenting verification of employment eligibility.2 Employers must verify eligibility by examining acceptable documents presented by the individual offered work, and then complete the form. Agricultural associations and farm labor contractors that recruit or refer employees also must complete this paperwork. For most employees, the employer has three business days in which to complete this task. If a person is hired for less than three days, the verification must be completed by the end of the first day on the job. Don’t Discriminate Although employers cannot hire illegal aliens, they also cannot discriminate against individuals on the basis of national origin in matters of recruiting, hiring, referral, or discharge. It is also unlawful to discriminate against United States citizens or nationals, or aliens lawfully admitted into the country, on the basis of citizenship status.These prohibitions apply to anyone employing four or more persons. Consequently, employers cannot avoid the paperwork requirements by refusing to consider for hire anyone perceived possibly to be an alien based on their appearance, name, or accent.

All employers are required by law to check identity and authorization for employment in this country.

The USA Patriot Act The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA Patriot Act) was signed into law by President George W. Bush in the aftermath of the September 11, 2001, terrorist attacks.3

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H o w t o M a k e B a c k g r o u n d C h e c k s P a r t o f Yo u r H i r i n g P r o c e s s While the majority of the new law’s provisions focus on countering terrorism, some of its sections may affect the workplace and your foreign national employees. For example, the Patriot Act: permits the seizure of voice mail messages by law enforcement under a warrant (therefore, you could find your workplace voice mails searched and seized if an employee is under investigation); expands the scope of subpoenas for records of electronic communications; authorizes the FBI to apply for a court order requiring production of certain business records for foreign intelligence and international terrorism investigations; requires the secretary of the Treasury to study a system to better control the use of our financial institutions by foreigners to ensure they provide appropriate, accurate, and verifiable information and to consider establishing a system of identification numbers (similar to a Social Security or tax identification number) for foreigners to use with financial institutions in the United States; and authorizes financial institutions to include suspicions of illegal activity in employment references prepared in accordance with the Federal Deposit Insurance Act and the Bank Secrecy Act at the request of other financial institutions or provided in accordance with the rules of a self-regulatory organization registered with the Securities and Exchange Commission or the Commodities Futures Trading Commission. As a result of this new law, more employers may be expected to assist the FBI in investigating their employees. It’s also possible that illegal aliens may have a more difficult time maintaining accounts in U.S. banks, which might affect their ability to collect employment wages.

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Employers may be expected to assist the FBI in investigating their employees.

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CHILDCARE PROVIDERS AND SCHOOLS

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The National Child Protection Act4 requires states to submit information on crimes involving child abuse to a national database. It also requires states to require nationwide criminal background checks for childcare providers and their employees. In addition, it provides minimum standards for conducting those checks. The federal law broadly authorizes investigations by any childcare or childcare placement service, as well as by businesses or organizations that license or certify others to provide childcare, for any person who may have unsupervised access to children. Many states require these screens for at least some childcare activities. However, the laws vary widely regarding scope of coverage. States may require checks to determine whether a childcare provider, including an owner, operator, employee, or volunteer, has been convicted of a crime that bears on their fitness to care for children. Consistent with job discrimination laws, the authorized checks cover only specific types of crimes. State laws generally confine the release of information to crimes involving sexual offenses, child abuse, drugs, or violence.

Background Checks Federal Investigation Standards for Childcare and Schools Before an entity can request a check, the employee must provide a set of fingerprints and a signed statement that — Contains their name, address, and date of birth on a valid identification document; Declares that they have not been convicted of a crime, or if convicted, describes the crime and particulars of the conviction; Notifies the provider that a check may be requested; Notifies the provider that, prior to completion of the check, the entity may choose to deny unsupervised access to a child; and Notifies the provider of the right to obtain a copy of the check and to challenge its accuracy before a final determination is made by the state agency conducting the check. The federal law provides that entities or employers are not liable for damages solely because they fail to conduct a criminal background check on a provider. However, the law leaves open the possibility that an employer could be liable for negligent hiring if it failed to request a criminal records check or failed to check references, verify licenses, or implement other screening procedures. State agencies also are not liable for failing to take any adverse action against a provider who was the subject of a background check.

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HEALTH CARE PROVIDERS Facilities that provide health care or residential services to vulnerable adults also may be required or authorized to request criminal background investigations. These requirements are not as detailed as those for childcare. Be sure and check your state laws to make certain you are in compliance.

TRANSPORTATION SAFETY Employers should check applicants’ driving records if their job duties will include operating a motor vehicle. Federal law requires employers to conduct such checks before allowing someone to drive a truck in interstate commerce.Your state law may also require an employer to confirm that drivers have the appropriate licenses for their activities and that those licenses are current. A check for DUI convictions and other serious traffic offenses also may be necessary. A general criminal history investigation may also be advisable in view of a driver’s public contact, responsibility for cargo and passengers, and lack of direct supervision while on the road. Preemployment drug tests may be required by federal or state law. Federal regulations require tests for interstate truck drivers, railroad crews, and airline crews.

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About the Author

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nne H. Williams is an attorney editor in the Editorial Department of M. Lee Smith Publishers LLC. She has written and edited employee benefit and employment law newsletters, HR Frontline, and HR Executive Special Reports. She is the author of the HR Executive Special Reports: The H in OSHA Stands for Health, Workplace Harassment Trail Guide, FMLA Leave: A Walk Through the Legal Labyrinth,Ten Commandments for Avoiding Religious Harassment and Discrimination Claims, How to Avoid the HR Hazards of Your Electronic Workplace, ADA from A to Z, How to Manage Your Aging Workforce, and How to Discipline & Document Employee Behavior. Prior to joining the company, Ms.Williams practiced law in Chicago, Illinois, for five years. Before coming to Tennessee, Ms.Williams served as an Assistant Attorney General in Illinois where she practiced employment discrimination defense law in the Government Representation Bureau. Prior to that she practiced law at Dowd, Bloch and Bennett in Chicago where her primary area of practice was labor union representation and employment law. Ms.Williams graduated from DePaul University College of Law in Chicago, Illinois, after obtaining her undergraduate degree in English Literature from DePauw University in Greencastle, Indiana.

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