Importance of Pre-Employment Screening and Background Checks
This week’s email addresses pre-employment screening and background checks. There are a lot of stats out there about the importance of verifying applicant information and performing background checks, and here are just a few:
33% - 55% of candidates provide false or misleading information on their resumes
39% of all background checks include “red flags” or “issues”
10% of county criminal record checks include flags
9% - 16% of education verifications include flags
23% - 33% of employment verifications include flags (including false dates of employment)
44% of driving records include flags
Don’t assume you’ll get a “clear” report just because you found the candidate earnest and engaging. Consider what you may be facing if information is not verified:
waste of time, money, and effort recruiting candidates unsuitable for the position
hiring candidates who underperform due to exaggerated skill levels
added stress to other members of the workforce and supervisors forced to pick up the slack
lower workplace morale
physical threat to property, co-workers, clients, customers (workplace violence accounts for 18% of all violent crime)
confidential company information shared with personnel with questionable ethics
company may become vulnerable to theft, fraud, and other criminal activity (the typical organization loses 5% of its annual revenue to occupational fraud; and beyond that, by some estimates up to 30% of small business failures are due to employee theft)
legal issues may arise, costing the company valuable time and resources while threatening the integrity of the brand
added expense (the replacement cost of a bad hire may be up to three times the annual salary of the job/position in question)
If you have recognized this already, you are in good company: only 14% of companies do not research candidates for criminal records. That stated, Pennsylvania, New Jersey, and Delaware employers must abide by the FCRA (Federal Fair Credit Reporting Act). Here are ten steps that must be taken to maintain compliance:
Make sure that you are treating everyone equally. You may not perform a background check on applicants for reasons that include a person's race, national origin, color, gender, religion, disability, genetic information, age, or other protected class. For example, asking only people of a certain national origin about their financial histories or criminal records is evidence of discrimination. Note the consequences: the average settlement of a negligent hiring lawsuit is nearly $1 million, and employers have lost more than 79% of such cases.
Provide written disclosure in a stand-alone format (not part of another document) to the applicant before performing a background check or submitting personal information to a CRA (Credit Reporting Agency). The applicant must understand that the results will be a contributing factor in the hiring decision.
Obtain written authorization from the applicant.
Provide applicant information to the CRA.
Background check is performed by the CRA, which may include (as relevant to the position): a credit/financial history and criminal records check. Other checks include: references, work history, education, driving history, and use of social media.
Report is provided to employer. Employer reviews the background check, looking for red flags/issues that may adversely impact the employment decision. If the background check is clear, no further action is necessary to remain in compliance with the FCRA.
If there is something questionable in the report that may result in the candidate’s contingent offer of employment being withdrawn, the candidate must be notified in writing, provided with a copy of the background report (which provides the name, address, and phone number of the CRA), and provided with a copy of the “A Summary of Your Rights under the Fair Credit Reporting Act.” This is referred to as the Pre-Adverse Action Notice.
The employer should give the candidate adequate time (typically five days) to review the report and explain any findings that are in dispute before taking any adverse action. Note that the national criminal history database may have up to a 41% error rate, according to some statistics.
If there are any reported items in dispute, the company should re-investigate.
If there are no disputed items and adverse action is taken, the final decision should be sent to the candidate in writing. This is referred to as the Final Adverse Action Notice.
All records (including application forms, regardless of whether the applicant was hired) must be maintained for one year after the records were created or after a personnel action was taken, whichever is longer (for some entities, such as educational institutions, the requirement is extended to two years). Once these recordkeeping requirements are satisfied, the background check reports should be properly, securely, and permanently disposed of.
While there are more specifics that a Human Resources professional is aware of and will follow to maintain compliance, we hope the above provides you with a general outline.