HIRING DECISIONS MUST BE MADE WITH CONFIDENCE
Every employer fears unknowingly hiring the wrong applicant. There are things that can be done to reduce this risk, provided an effective background screening action plan is prepared. The operative words are “due diligence”, and the purpose of this white paper is to help the reader identify the necessary elements to structure an effective background screening program in order to mitigate the risk when hiring.
Employers are legally required to exercise good judgment in the hiring process. While there may be many other reasons, the chief reason is negligent hiring - which statistics show is the cause for approximately a third of all business failures and certainly contributory to a preponderance of lawsuits nationwide today. Negligent hiring is a cause of action in tort law that arises where one party is held liable for negligence because they placed another party in a position of authority or responsibility, and an injury resulted because of this placement. Negligent hiring is generally found where the employee who actually caused the injury had a reputation record that showed his/her propensity to misuse the kind of authority given by the employer, and this record would have been easily discoverable by that employer had a diligent search been conducted.
The preventive measure for negligent hiring is to perform a background check on all potential employees, and if an adverse assessment is found to deny employment. Simply defined, background checks are the process of looking up official and commercial records in order to determine a person’s eligibility to he hired. This certainly will not guarantee the employer will not be held liable, but it will show that the employer used a diligent search to screen potential errant applicants from the workplace. Best screening practices require that an employer protect the company, the employees of the company, the premises, as well as the visitors, consumers and customers that visit the premises
This doctrine of negligent hiring is not recognized by every state, and standards for determining liability may vary. Although there is no defined list of jobs for which thorough background checks are required, as a general rule the greater the interface with co-workers, customers and the general public that the position requires, the greater the obligation on the employer to conduct appropriate background checks. Additionally, the prudent employer will conduct comprehensive background checks when hiring for positions of special trust, such as counselors, caregivers, security personnel, etc.
Many companies screen every applicant using the same background check methodology. The scope of the background check should reflect the specifics of the position being applied for, and need not necessarily be uniform. For example, if a position involves access to people’s homes or property, or sensitive information, the employer should conduct a criminal records check. If a position involves driving a vehicle, motor vehicle department records should be searched. On the other hand, if the position requires little contact with a customer or the public and does not involve sensitive information, although a background check is still advised in order to be able to show due diligence in the hiring process, a rigorous background check is probably not necessary. Once again, the key words are “due diligence”!
The background screening process must be handled with expertise, and the company the employer performs the background screen through must have customized solutions that combine comprehensive up-to-date information with sophisticated technology to help the employer make informed hiring decisions. The background screening steps used to determine a person’s eligibility to be hired are absolutely critical, and they must be in place and uniformly followed for each and every applicant (for that particular position).
Determinations must to be made as to the scope of the background check. As a minimum, considerations should be given to verify the applicant’s name, uncover aliases or AKA’s, and verify his/her current address, prior address history and social security number accuracy. Basic considerations should include a National Criminal Check, National Sex Offender Check as well as a Credit Report. Additional considerations may be some special requirements such as a Motor Vehicle Records Check, Employment Verification and Education Verification. Also, considerations may include periodic Drug or Alcohol Screens. In accordance with federal law foreign worker’s employment must be verified through DHS via the Social Security Administration and Immigration & Customs Enforcement, and many states have made this mandatory with severe penalties imposed including loss of licensure to conduct business. Each step in the screening process must be carefully considered, and an experienced background-screening provider that has all the solutions to an employer’s background screening needs is paramount!
Common sense dictates that some form or procedure should be followed in the background screening process, and be the same for each applicant being considered no matter if it is an entry-level applicant, a mid-level or management applicant, or an executive placement. Additionally, due diligence examinations should be performed on all vendors, venture capital companies, banking and investment firms and anyone the company intends to engage, lease to or do business with, including all appointive and contracted positions within (and to) the firm.
Carefully review the candidate’s application. During the interview process, ask the candidate to explain any gaps in employment, or between education and employment. Obviously, there is nothing wrong with the existence of a gap in and of itself, but the lack of a reasonable explanation could signal the need for further investigation. Perform your due diligence, which should include thorough pre-employment reference checks. Almost all employers ask for references but many don't bother to check them. Always check as many employment references as possible before hiring an applicant. Verify all employment and educational claims, and then document all reference and background checks in the company's file including attempts to contact references that did not respond. Be consistent. Even the most thoughtfully conceived procedures would not protect the employer that fails to use them consistently. Even in the face of pressure to fill a position as quickly as possible, do not cut the process short. Any time or costs saved will be more than lost in defending a negligent hiring lawsuit.
Additionally, some state or federal regulations may mandate the contents of the form or procedure. For example a transportation company may be required to adhere to specific federal requirements, or a health services firm may be required to follow specific state requirements. State and federal laws vary as to the information that an employer is permitted (and required) to collect, so be sure to verify the allowable procedures in your specific location/geographical area.
THE DUE DILIGENCE STANDARD: Depending on the particular responsibilities and trust placed upon an employee, there is a correlation to the diligence required in attempting to investigate the individual’s background before hiring. An employer’s obligation to its employees and third parties for negligent hiring will depend upon whether that employer acted as a reasonable and prudent employer would in hiring such employees.
Reasonable Investigation Duty: The employer has a duty to make a reasonable investigation of an applicant's fitness before hiring. The extent of the duty may vary with the circumstances. The employer can be held liable if: (1) - a background check was not performed, or (2) - an employee was hired that the employer should have known (through proper checking) was incompetent or unfit. As a rule the employer cannot check arrest records, only conviction records. Even then, the conviction generally has to bear some relationship to the job in order to constitute a sufficient reason not to hire.
While state and federal standards differ, the key to determining liability is usually whether the employer could have foreseen the event; specifically, whether the employee had a history or propensity for harmful behavior and, most importantly, whether the employer knew or should have known of the employee’s propensities. Ordinarily, an employer’s reasonable efforts to perform a background screen to check and consider a prospective employee’s background will generally satisfy the legal requirements and eliminate the risk of liability on the employer’s part.
The information contained within this article is not legal advice, and was researched and written by a background-screening expert - an investigator that has performed thousands of background investigations of every conceivable nature in both the public and private sectors for over thirty years. While it is believed this information is generally accurate, it is recommended that the advice of competent legal counsel be sought before implementing any background-screening program.
By Bodo E. Cook, Vice-President, Stealth Partner’s, Inc.