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Background checks can save trouble: but they come with some added costs and care requirements.

As any business owner knows, risk is an inherent part of any hiring decision.

Background checks can help protect employers from negligent hiring, but they also add cost to the hiring process, and present the problem of having to protect the data collected. Other headaches include figuring out whether they need to be done for every employee or just some of them, and what information to include in the report. Lastly, employers also must deal with legal requirements.

Credit checks vs. background checks

Attorney Gil Sparks of Ogden Murphy Wallace, PLLC, told the Apple Valley Human Resources Association at his annual employment law update in December that new legislation protects job applicants from unwarranted credit checks by employers.

Employers can no longer procure a consumer credit report for employment purposes unless: 1) the credit information is substantially related to the individual's current or potential job, or 2) it is required by law.

Credit information is a requirement for employment at many banks, and certainly they have a reason to do them. Annie Horey, human resources director of Cashmere Valley Bank, said the bank places a lot of emphasis on credit checks in the hiring process.

"We do credit reports on everybody. We have reason to do them--irresponsible credit could lead to irresponsible handling of cash, or irresponsible financial decisions," Horey said. "Our employees need to be able to demonstrate good financial responsibility."

Handling other people's cash is a good example where a credit check on an applicant is warranted. An escrow agent is an example where a credit check is required by law. If your employees don't fall into one of those two categories, a background check may be your better option.

Why do a background check?

Usually a background check is done to ascertain a person's criminal history, not check their credit handling ability.

"There are certain situations where legally the employer must do a background check," Sparks said. "Individuals with unsupervised access to minor children, and those dealing with the developmentally disabled, or financially vulnerable adults are three such cases in which the employer is required by law to check. Typically, volunteers will be checked as well as employees."

Sparks also mentioned that people practicing medicine are subject to a background check as part of the hiring process, due to the privileged and personal nature of their work.

He noted that most employers typically do not run background checks unless they want to screen for something specific.

But does an employer need a specific reason to check an applicants background? How about to protect themselves?

Sparks said precedence does exist to suggest that running a background check may protect the employer.

"There is a legal theory in the state of Washington called negligent hiring which says that if you hire somebody and they go out and hurt somebody, and you did not check their background, then the employer could be held liable," Sparks said.

He cited a legal case in the late '70s or '80s involving a rock concert in the Tacoma Dome where one of the security personnel raped a concert goer.

"When the company went back and checked his history there were gaps in his employment and he'd been previously responsible for the same type of offenses. The court ruled that the sponsors should have done a better job checking his background," Sparks said.

So many employers, to make sure they aren't hiring anybody who would harm another person or a customer, will routinely do the background checks to protect themselves and show due diligence. But for many other reasons employers may wish to check, such as to verify the identity of the applicant, something that is becoming more necessary as Homeland Security considers implementing Social Security no-match rules.

Reagan Smith, the new executive director of human resources at the Wenatchee Valley College, said that given today's identity theft environment, her departments does run background checks to verify the applicant's identity.

"We run a background check to verify that people are who they say they are. We have to keep our students safe, and identity theft is part of that concern. If we find that the applicant has falsified their application, that would eliminate them from the position" Smith said.

Other reasons you might choose to use background checks could include protecting other employees, concerns about terrorism, ensuring protection of company data, and scrutiny of one's top executives in the post-Enron business climate. Those can be compelling reasons to have your applicant sign an authorization form, and for you to pay the extra expense to get the data.

Additional costs and concerns

In this state, the Washington State Patrol is responsible for maintaining the repository for fingerprint-based criminal history record information, or CHRI. Different levels of reports are available, ranging from $10 to $35. Some take 24 to 48 hours to complete, so the employer should make adequate time for the process. Reports are available both online and by mail. Click on "crime awareness" at www. for information.

Hundreds of other online companies also offer criminal background checks, such as Bellevue-based Intelius. Fees vary for one-time use versus ongoing account set-up.

Once you've spent around $30 and are reasonably assured that the applicant is who they say they are, and that they don't have an extensive criminal background that causes you concern, what, exactly, do you do with the information you paid for?

It becomes just one part of the total profile of that applicant, suggests Alan Patterson, personnel director for the Wenatchee Valley Medical Center.

He said his department routinely runs background checks, as well as taking the time to contact previous employers to check past performance. All of the information gathered is considered in the final hiring decision, he said, not just the background check.

"The interview, the application and audits of previous employers all come together into a total profile, and from that we assess the risk of hiring them. We also compare them to the other applicants. More times than not a person is passed over because we felt the other person is a better fit over all. An out and out rejection as a result of a background check is very rare. Usually the whole record is questionable," Patterson said.

Protecting the data collected is also a concern after you've used the data.

Sandra Smeller, city of Wenatchee human resource director, said the city does background checks for all employees and the information gathered depends on the specific position. But for all applicants, privacy comes into play.

"Whatever information we get, we have to protect. The only information we would give out about the background check is whether they passed or not," Smeller said.

Her office, which uses Intelius for some checks, said that many of the reporting agencies have strict rules on what you must do to protect the data. Be sure you understand the process and have all of the required safeguards in place before you start ordering them, she cautioned.

In closing, if you decide to run background checks on applicants or employees in your business, you could be doing yourself a favor, regardless of the cost. However, don't run the risk of running afoul of the law. Check with your local human resources association, or seek legal advice if you have questions about what data you can collect, and how to best protect it.
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Title Annotation:TOOL BOX
Author:Davis, Yvette
Publication:Wenatchee Business Journal
Geographic Code:1USA
Date:Feb 1, 2008
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