Background Checks: The New Burden of Proof

Lack of Standardization

The lack of standardization in how background checks are conducted has bred misinformation about how quality should be measured. The FedEx case has the potential to clear up confusion by ushering in legal standards for what constitutes a proper background check. In the meantime, understanding the complexities of criminal records research will enable companies to evaluate their current methodology. In addition, having a different vendor re-run the names of employees can help companies evaluate the effectiveness of their current provider's solutions. The mindset of many executives ' 'If I don't know about it, I can't be liable for it' ' will no longer suffice.

Companies can use the following misperceptions to evaluate their provider and to level the playing field for minimizing the risk of negligent hiring lawsuits.

Common Misperceptions

All Providers Draw from the Same Well of Data

Background check data is not created equal. Accurate knowledge of the applicant's address history stretching back at least 7 years is critical for generating correct results. Current and past addresses provide the strategic roadmap for an effective employee-screening program. How-ever, not all providers sell the same directions. The process of compiling a complete address history requires cross-referencing multiple data sources and personal identifiers, but most providers have contracts with a sole credit bureau. As a result, false positives and negligent negatives leave employers in the dark or lead to litigation.

State Criminal Registries Are Robust

Many employers assume statewide criminal registries are comprehensive. But, criminal courts assume defendants are innocent until proven guilty. Therefore, counties only report information to the States if the case has reached a conclusion. Compounding the problem, many counties are not required to report information and participation is spotty. At any given time, over 50% of the potential criminal offenses are absent from the list.

The FBI's Database Is Foolproof

While the FBI's database, also known as the National Crime Information Center (NCIC), is one of the best singular sources of criminal data, it is expensive, latent and fraught with missing and inaccurate information. This is a known problem. In fact, Verified Person has identified that up to 14% of criminal records are missed when using this source alone. In a test to evaluate the accuracy of the NCIC, Verified Person re-screened 53,000 individuals previously screened by the FBI who were working for two of the nation's largest airports. Verified Person found 504 crimes. While 20 had occurred post-hire, 267 were never surfaced and 217 were not properly interpreted. For example, rank-and-file workers who were responsible for analyzing the results believed probation meant the potential hire was found innocent. Using the FBI database in conjunction with a commercial provider is recommended.

Searching the County of Residence Is Sufficient

To rein in costs, many companies do not cast a wide enough net for criminal records and only search the county of residence, which is risky because 40% of crimes are committed in surrounding counties. Seeking the most efficient and reliable method for retrieval will reduce costs and free funds to canvass the surrounding counties.

National Means Complete

Many providers claim to have undergone the painstaking process of creating a nationwide digital criminal file. However, the diligence taken by every provider may not be comparable. In fact, the variance in true coverage from one provider to another can be as high as 30%.

Temporary Staffing Employees Are Automatically Vetted

A Nokesville, VA, woman who had her Social Security Number stolen from the billing department at the Prince William County Hospital by a temporary worker who had recently been released from prison, has filed over $60 million in lawsuits against the hospital, a temp agency and several credit companies. The temp provider says, as most do, that it only researches criminal records upon the client's request

Once a Law-abiding Citizen, Always a Law-abiding Citizen

On average, one to two of every 1000 employees acquire a criminal record post-hire every year. Industries like health care, financial services and transportation face hefty fines and lengthy litigation if they hire or retain the wrong person. Consistent scans for criminal records that raise red flags can help companies maintain consistent compliance. Policies, consent forms and narrow searches that zero in on the offenses that threaten the safety of employees or the compliance of the organization are the key to conducting ongoing screening with a clear conscience.

FCRA

The Fair Credit Reporting Act (FCRA, 15 U.S.C. 1681 et seq.), as amended by the Fair and Accurate Credit Transaction Act of 2003 (FACTA), specifically provides for corporations to investigate any noncompliance with pre-existing employer policies and procedures, or with federal, state, or local laws or regulations.

Conclusion

A confluence of factors ' the growing availability of online data, increased demand for cost-effective background checks, and identity theft concerns ' have sparked renewed interest in the industry and inspired inventive solutions to age-old problems that have stifled innovation for decades. Now, frustrating false positives and negatives, sluggishness, and inefficiencies that spike costs can be minimized. Understanding the limits and advancements of the industry will help
companies mitigate risk of litigation.

Ted Moise is the CEO of Verified Person, provider of employee screening and identity verification services. Moise can be reached at [email protected]. Steven T. Sledzik is a partner with the Scarsdale and New York City law firm of Jones Garneau, LLP, and practices in the area of employment law. He can be reached at [email protected].

Negligent hiring cases typically turn on whether a background check that was forgone would have helped to reveal an employee's propensity to erupt in violence or commit fraud. But a new burden of proof may be on the horizon.

In 2005, a lawsuit was filed that alleges that Federal Express (FedEx) failed to ferret out a sex offender who molested a boy he met at work. FedEx claims his criminal record was clean. The boy's attorney, Neal Rogan, said: 'That person is either lying or Federal Express is wildly incompetent in how they do background checks.'

The FedEx case originating in Connecticut, Doe et al v. Federal Express Corporation et al, is likely to be the first that focuses on how, not if, criminal records are searched. If so, conducting a cursory scan in order to keep costs down and then claiming compliance will be riskier than ever. In addition, not understanding the nuances of the backend processes of background checks can leave employers in the dark and lead to expensive litigation. For instance, relying on state registries created under Megan's Law to screen employees and contractors for sexual offenses prior to hire is like expecting 100% of candidates to come clean on their job application. Under current laws, sex offenders are required to notify the chief of police, sheriff or campus police when relocating. But, not surprisingly, non-compliance is high ' in some states, studies have shown that up to 40% of sex offenders are missing. Compounding the problem, states differ in how they define sex crimes. As a result, non-compliant sex offenders can crisscross the country underneath the radar screen while States operate in silos without sharing information and responsibility.

Lack of Standardization

The lack of standardization in how background checks are conducted has bred misinformation about how quality should be measured. The FedEx case has the potential to clear up confusion by ushering in legal standards for what constitutes a proper background check. In the meantime, understanding the complexities of criminal records research will enable companies to evaluate their current methodology. In addition, having a different vendor re-run the names of employees can help companies evaluate the effectiveness of their current provider's solutions. The mindset of many executives ' 'If I don't know about it, I can't be liable for it' ' will no longer suffice.

Companies can use the following misperceptions to evaluate their provider and to level the playing field for minimizing the risk of negligent hiring lawsuits.

Common Misperceptions

All Providers Draw from the Same Well of Data

Background check data is not created equal. Accurate knowledge of the applicant's address history stretching back at least 7 years is critical for generating correct results. Current and past addresses provide the strategic roadmap for an effective employee-screening program. How-ever, not all providers sell the same directions. The process of compiling a complete address history requires cross-referencing multiple data sources and personal identifiers, but most providers have contracts with a sole credit bureau. As a result, false positives and negligent negatives leave employers in the dark or lead to litigation.

State Criminal Registries Are Robust

Many employers assume statewide criminal registries are comprehensive. But, criminal courts assume defendants are innocent until proven guilty. Therefore, counties only report information to the States if the case has reached a conclusion. Compounding the problem, many counties are not required to report information and participation is spotty. At any given time, over 50% of the potential criminal offenses are absent from the list.

The FBI's Database Is Foolproof

While the FBI's database, also known as the National Crime Information Center (NCIC), is one of the best singular sources of criminal data, it is expensive, latent and fraught with missing and inaccurate information. This is a known problem. In fact, Verified Person has identified that up to 14% of criminal records are missed when using this source alone. In a test to evaluate the accuracy of the NCIC, Verified Person re-screened 53,000 individuals previously screened by the FBI who were working for two of the nation's largest airports. Verified Person found 504 crimes. While 20 had occurred post-hire, 267 were never surfaced and 217 were not properly interpreted. For example, rank-and-file workers who were responsible for analyzing the results believed probation meant the potential hire was found innocent. Using the FBI database in conjunction with a commercial provider is recommended.

Searching the County of Residence Is Sufficient

To rein in costs, many companies do not cast a wide enough net for criminal records and only search the county of residence, which is risky because 40% of crimes are committed in surrounding counties. Seeking the most efficient and reliable method for retrieval will reduce costs and free funds to canvass the surrounding counties.

National Means Complete

Many providers claim to have undergone the painstaking process of creating a nationwide digital criminal file. However, the diligence taken by every provider may not be comparable. In fact, the variance in true coverage from one provider to another can be as high as 30%.

Temporary Staffing Employees Are Automatically Vetted

A Nokesville, VA, woman who had her Social Security Number stolen from the billing department at the Prince William County Hospital by a temporary worker who had recently been released from prison, has filed over $60 million in lawsuits against the hospital, a temp agency and several credit companies. The temp provider says, as most do, that it only researches criminal records upon the client's request

Once a Law-abiding Citizen, Always a Law-abiding Citizen

On average, one to two of every 1000 employees acquire a criminal record post-hire every year. Industries like health care, financial services and transportation face hefty fines and lengthy litigation if they hire or retain the wrong person. Consistent scans for criminal records that raise red flags can help companies maintain consistent compliance. Policies, consent forms and narrow searches that zero in on the offenses that threaten the safety of employees or the compliance of the organization are the key to conducting ongoing screening with a clear conscience.

FCRA

The Fair Credit Reporting Act (FCRA, 15 U.S.C. 1681 et seq.), as amended by the Fair and Accurate Credit Transaction Act of 2003 (FACTA), specifically provides for corporations to investigate any noncompliance with pre-existing employer policies and procedures, or with federal, state, or local laws or regulations.

Conclusion

A confluence of factors ' the growing availability of online data, increased demand for cost-effective background checks, and identity theft concerns ' have sparked renewed interest in the industry and inspired inventive solutions to age-old problems that have stifled innovation for decades. Now, frustrating false positives and negatives, sluggishness, and inefficiencies that spike costs can be minimized. Understanding the limits and advancements of the industry will help
companies mitigate risk of litigation.

Ted Moise is the CEO of Verified Person, provider of employee screening and identity verification services. Moise can be reached at [email protected]. Steven T. Sledzik is a partner with the Scarsdale and New York City law firm of Jones Garneau, LLP, and practices in the area of employment law. He can be reached at [email protected].