A HIRING DILEMMA: Pre-Employment Background Checks.

Courts have long held that companies have a duty and a responsibility to establish and maintain, a safe and secure work environment for their employees. They must also provide a safe and secure business environment for their customers and clients. And that means more than just eliminating physical hazards such as wet and slippery floors. It also means hiring the right people. It is a simple fact that a good employee makes a company money. A bad one can cost a fortune.

One of the most egregious and costly ways the wrong employee can cost a company money is if the employer does not conduct a reasonable background check on the individual, and then that person, while engaged in company business, or on company property, commits an act or crime that causes another person--a fellow employee, a client or a customer-injury or harm.

One example is if an employee, driving a company vehicle, causes a motor vehicle accident that injures or kills another person. Let's say the employee is found to have been driving under the influence of alcohol or drugs at the time of the accident. Further, it is discovered that the employee has several previous arrests and convictions for the same offense. Arrests and convictions that could have been discovered if a proper background check had been conducted prior to hiring.

Next, let's say one employee assaults and deliberately harms or injures a fellow employee while one or both of them are on duty, or on company property. After the assault, it is discovered that the perpetrator has a criminal history that includes assaults and similar incidents. Again, information that would have been available if a proper background check had been performed.

Employers Held Liable for Employees

In such cases, courts have held that employers can be guilty of negligent hiring practices and therefore liable if they do not conduct reasonable and prudent background checks on prospective new employees.

"In our society today, employer liability is increasing, making it vital that they make informed hiring decisions," says Bill Holmes, manager/investigator for H.I.R.E (Hiring Information Resource Exchange) of Alaska, an Anchorage company with nationwide ties that specializes in background investigations.

"In any liability lawsuit of this nature, the plaintiff's attorney will always go for the deepest pocket. And that's usually the company the defendant works for," says Holmes. "Since these costs come right off the bottom line, larger companies usually do some kind of background check on all prospective employees. Sometimes they have their own people on staff who do these things. Other companies, and that's by far most of them, out-source the work to an independent investigator."

Losing such a liability lawsuit can be very expensive. To a small business it can be devastating, experts agree. However, small businesses are the most vulnerable. Partly because it is the small business owner who often must hire a new employee in a hurry, without the benefit of a proper background check.

Costs Small Compared to Consequences

Small businesses also have limited financial resources and often think they cannot afford to do background checks, or they try to do them in-house by calling one or two of the applicant's previous employers and hoping that will suffice.

"Employers who do their own background checks really have to know what they are doing," says Holmes, "or they could miss a lot of important information by not asking the right questions, or by not knowing where to look for certain kinds of information.

"Privacy and consumer protection laws are also very strict when it comes to what kind of information is available on someone today," Holmes continues. "They are also strict as to what you can do with that information, and how you use it. So you really have to be careful that you don't violate any consumer protection laws."

A good pre-employment background investigation usually includes a credit history check. Credit checks are often a good way to evaluate a person's character, reliability, honesty and integrity.

The collecting, disseminating and use of such information is, however, strictly controlled by the Fair Credit Reporting Act (FCRA), Public Law 91-508. A company or person receiving such information must abide by these strict rules or face serious legal sanction.

For example, Section 604 (f) of the FCRA prohibits any person from obtaining a credit report from a credit reporting agency unless the person has certified to the credit reporting agency (by a general or specific certification, as appropriate) the permissible purpose(s) for which the report is being obtained and has certified that the report will not be used for any other purpose.

Mark Allen, an investigator for Quantum Investigative Group says, "Anyone requesting information for employment purposes from a credit reporting agency, a state or federal agency, or from a previous employer, should first obtain a comprehensive and legally sound release of information authorization, signed and dated by the prospective employee. A copy of that form should then accompany all requests for information."

Covering all the Bases

A good background check should contain, at the very least, Allen says, certain basic information such as (for the Anchorage area): Social Security number verification; State of Alaska (or out of state) Motor Vehicle Driving Record; State of Alaska, Third Judicial District (Anchorage area) criminal records search; and a United States Court, District of Alaska statewide criminal records search.

"A Social Security number verification, for example, can sometimes reveal whether or not the applicants are really who they claim to be," Allen explains. "And a driving record can be a good indicator as to a person's responsibility, integrity and ability to follow the rules. Criminal records checks are also valuable for the same reasons."

While extensive background investigations can be expensive at $500 or more per person, some good basic checks can be done for a lot less-usually around $100 according to most agencies contacted. Bill Holmes says that H.I.R.E. of Alaska has no initiation fee, no monthly minimum usage, and no monthly maintenance fee.

Besides a basic package, most private investigative agencies can check criminal records from all 50 states, as well as verify education and personal and professional references.

"We do criminal records searches in person or by letter directly to the courthouse, rather than by computer database," says Holmes. "That way we ensure that our information is complete, accurate and as up-to-date as possible."

Most agencies contacted say that local inquiries are usually returned to the employer within 48 hours. Out-of-town criminal history and reference checks can take anywhere from three days to three weeks, depending on the state, and on the method of obtaining the information.

Most enlightened employers now agree that background checks are a necessary and vital part of doing business. And most make an honest effort to perform these checks, or see to it that they are done. To do otherwise, they say, is both foolish and unwise in to day's litigious times.