<font color=blue>INDUSTRY BUZZ</font> Seven Reasons You Should be Conducting Background Checks

The hiring process, including interviewing and screening applicants, enables employers to create an efficient yet diverse workforce. The more proactive a company is during these initial employment steps, the greater overall workforce productivity will be and the lower the possibility of future employment litigation.

Most companies provide applicants with standard employment applications, review resumes and conduct interviews. Many even use recruiters and have personnel trained in conducting pre-employment interviews. Unfortunately, many firms rely on inadequate practices for background screening of potential employees. While many employers do feel they are covered by existing practices, a false sense of security causes them to make common mistakes that can leave them exposed to costly litigation:

Relying on the applicant
While an applicant may not outright lie, he or she may omit important information about his or her background. Unless specific, direct questions are asked on the application and in interviews, applicants may feel vague answers or omissions are acceptable. Other candidates are simply desperate enough for a job that they have no ethical misgivings about misrepresenting the truth. Relying on the applicant to provide comprehensive, accurate information may leave a potential employer with half-truths or even lies.

Relying on the recruiter
Because recruiters perform a number of valuable services, it’s easy for an employer to step away from its responsibilities in the hiring process and let the recruiter do the work. But, ultimately, recruiters are in the business of placement, not research. While they may perform some vetting activities (such as confirming academic degrees or past employment), recruiters don’t offer comprehensive background checks that can insulate your business from potential liability.

Relying on the consensus of interviewers
It’s common practice to think that a hiring decision can be made when a candidate looks good on paper, interviews well, and is viewed as “a good person” by the interviewing team. While a personality “fit” does matter, remember that every hire is an important decision that could eventually impact your entire operation. The team of interviewers can confirm that the applicant has the appropriate skills and traits for the position, but a comprehensive background check offers a critical “second” to the nomination for the job.

Any Company Could be at Risk
The statistics overwhelmingly demonstrate that any company could be at risk, and case law combined with jury awards support the argument that an employer simply cannot afford to turn a blind eye.

• Research conducted by the Society for Human Resource Management shows that 50 percent of all resumes and applications contain fabrications.
• The U.S. Department of Commerce estimates that employee theft causes 33 percent of all business failures.
• According to Bureau of Justice statistics, workplace violence accounts for 18 percent of all violent crimes.

Under the legal doctrine of negligent hiring or retention, an employer has the duty to protect its employees, clients and the public from injuries caused by employees whom the employer knows or “should have known” pose a risk of harm to others. Likewise, an employer may “be held liable for failing to investigate,” discharge or reassign an employee.

Overall, 66 percent of negligent hiring trial cases result in jury awards averaging $600,000 in damages. And, the Workplace Violence Research Institute reports that the average jury award for civil suits on behalf of the injured is $3 million.

Employers Who Screen Reap Many Benefits
Beyond the many negative reasons to screen potential employees, employers with comprehensive background screening programs also reap many benefits.

1. Compliance with federal requirements
The Department of Transportation (DOT) oversees drug and alcohol testing programs on mandated employees. The DOT requires employers to conduct a pre-employment drug test and obtain a two-year drug/alcohol test history. Additional regulations set forth by the DOT require employers to monitor their employees on an ongoing basis. DOT employers who fail to conduct this screening are subject to penalty fines. While a variety of factors are considered when fines are assessed, record-keeping fines can begin at $500 per day, and the fine for knowingly falsifying records can be $5,000.

2. Better attendance and lower turnover
Employers who conduct thorough background screening, including reference checking, experience better employee attendance rates and lower turnover. In addition, employers may see reduced healthcare and workers’ compensation costs.

While costs associated with healthcare, job-related accidents and workers’ compensation may seem unrelated to background screening, there is a correlation. Hiring the best overall employees makes a difference in terms of attitude, safety and performance. When a drug-free workplace program is also in place, employers experience even greater cost savings.

Employers should conduct a post-conditional job offer workers’ compensation search on applicants for jobs that require manual labor, standing for long periods of time or performing other duties that can lead to stress injuries such as chronic back pain. Unfortunately, fraud associated with workers’ compensation claims, especially in regards to back and other chronic pain that is difficult to measure, is well-documented. Employers who search workers’ compensation records take an important step toward protecting themselves from professional claimants.

3. Less employee theft
Overall, employers who conduct background screening experience fewer incidents of employee theft, fraud, embezzlement and shrinkage. Screening may reveal past theft or other criminal behavior, possibly preventing a bad hire, but also having a solid background screening program sends a message to potential employees. It demonstrates that an employer is concerned about who has access to financial or material assets and that the company will take appropriate action if necessary.

4. Fewer incidents of litigation
Background screening enables an employer not to hire a potentially bad employee, reducing the risk of accidents, criminal activity and violence—all of which may result in litigation. While no screening program can completely eliminate the possibility of a lawsuit, a company with a comprehensive screening program in place will have documentation to demonstrate that it took reasonable measures to investigate the employee’s background pre-hire. Consequently, exposure to a courtroom trial, bad publicity and hefty penalties is greatly reduced.

5. Better productivity
The more an employer does to evaluate applicants—whether through interviews, reference checking or background screening—the better its overall workforce will be. And, the stronger the employee pool, the better a company’s overall productivity and performance will be.

6. More qualified employees
When a company screens its applicants, the company is more likely to find qualified employees for its open positions. Employment, education and professional verifications are just the beginning when determining whether an applicant will appropriately fit your needs. In addition, protect everyone you employ by checking criminal histories of applicants. The comfort of knowing the most recent hire does not have a violent past can help build morale among a company’s personnel.

7. Confirm an applicant is who he or she claims
In today’s society where identity theft is a common problem, employers want to ensure a potential employee is who they claim. Confirm an applicant’s social security number by running a check on whether or not the number is valid. In addition, a critical post-hire check is the I-9 verification which must be conducted within three days of an employee starting his or her job. This search allows an employer to know whether or not a person can legitimately work in the United States.

Conducting background checks is a practice that employers of all sizes should make standard operating procedure for all new hires. The proactive approach provides employers with comfort in knowing risks associated with making bad hiring decisions are limited. In addition, other employees can find reassurance in knowing the person working next to them is less likely to cause harm to other people or the company.

USIS offers employment screening, drug testing and background investigations in North America.