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The perils of preemployment screening.

Employers naturally want to hire only those applicants who will work to help the company achieve its goals, but even in today's competitive job market bad hires are a common problem. As a result, managers often turn to outside screening companies for help. Asking for assistance, however, could mean asking for trouble, if employers fail to screen the screeners.

The following hard facts of today's hiring environment have led many businesses to look for outside hiring help, resulting in an explosion in the number of businesses offering screening services:

Job candidate deception. Several studies indicate that application and resume fraud, including false or exaggerated educational claims, are at all-time highs. Those applicants with serious flaws in their work history or with criminal histories often look for ways to cover them up.

The need to cut losses. Especially in hard economic times, employers cannot afford the losses that result from poor hiring decisions. Higher turnover rates, internal theft, insurance claims, loss of trade secrets, and losses due to employee-related litigation can sharply increase as a result of incomplete or ineffective screening.

Traditional screening pitfalls. A job application, resume, and interview are not enough. Using these tools effectively can screen out many people, but those best at deceiving also make the best first impressions. Even calling the applicant's previous employers is usually not worth the time. Scared of a defamation lawsuit, many employers will not oblige the prospective employer with useful information.

Court decisions. The courts are increasingly upholding the Negligent Hiring and Retention doctrine. They are taking the position that the employer should make every effort to ensure that the employee selection process is a reasoned and useful exercise--not a process that culminates in an "intuitive guess." Many employers have learned the hard way about the liability they incur when putting an unknown entity in contact with the public.

Using these facts as marketing tools, the screening companies sell themselves as fulfilling a vital role--providing employers with access to information on a potential employee within a reasonably short time. They promote their products based on two premises:

* A thorough evaluation and background check on a potential employee is a must.

* Their company can do it better than the employer.

The first premise is true. The second, however, is questionable.

It sounds simple. A company can save money by not having to use its own people to obtain information. By getting the data quickly, one employer can hire the right person before another employer does. Turnover rates decrease, production increases, and the possibility of big losses due to an employee's actions are diminished.

These are laudable goals; however, employers should know who it is that will be influencing their hiring decisions--and the risks involved. While screening services highlight the many ways they can help employers, the potential for harm is there as well.

It may be something as minor as contacting an applicant's current employer when specifically asked not to. The error could also be more serious. One screening company reported that an applicant was a convicted felon. The company later recanted the report, stating that the applicant's date of birth differed from the felon's.

Another screening company interviewed many former Pan American employees for positions with another airline. The interviews resulted in more than 100 discrimination complaints. Applicants charged that the service asked questions about marital status, sexual orientation, views on abortion and birth control, and HIV status.

Before trusting such a service, employers need to perform their own investigation. The questions that need to be asked should go well beyond fees and turnaround times.

* How long has the company been around? An employer should look for experienced personnel, preferably with backgrounds in human resources, criminal justice, or industrial psychology.

* What is the range of services? An employer may not use every product, but when comparing companies, it may be useful to know what is available for possible use in the future.

* Where does the service get its information? The screening service should be able to guarantee that the information is obtained legally and to clearly explain the legal limits on the use of the information in various states.

* What other companies are using the service, and how many of them can be called for a reference?

* What are the internal policies to ensure accurate information?

* What is the company's litigation history?

All these questions should be answered satisfactorily. An on-site visit might also be appropriate. The employer should ask to see an example report, or better yet, ask to have the service do a trial report before signing up.

The screening service should recognize that employers know best about what conventional screening practices work most effectively for them and where additional information may be helpful. Preemployment screening is not a one-size-fits-all proposition. A screening company should be able to act as a staffing consultant, qualified to discuss what additional information may be accessible and useful in determining which candidate is most qualified for a position.

The service should learn something about the employer. What are some of the characteristics that the successful people within the employer's company have in common? The screening service should ask for job descriptions and some of the specific demands of each position that an employee will be expected to meet. Knowing the functions of the position and what the employer is looking for in an applicant should enable the screening service to avoid asking irrelevant questions.

Information regulations. Some services may suggest obtaining personal credit reports, which may not be legal or relevant to the position. Federal and some state regulations govern the employer's use of consumer credit reports. Under the Fair Credit Reporting Act, all employers have an obligation to notify an applicant when he or she has been denied employment partly or entirely because of the applicant's credit.

Some states have their own laws regarding the use of credit reports for employment purposes. For example, California employers should know that they cannot obtain an applicant's credit report without first notifying the applicant or getting his or her written authorization. The applicant must have the opportunity to mark a box indicating that he or she would like a copy of the same credit report that the employer receives and at the same time.

Screening companies that provide information such as this without regard to state laws are inviting trouble for themselves and their clients. The laws regarding access to consumer credit reports are often debated in federal and state legislatures, and the screening service should make employers aware of any changes.

The Americans with Disabilities Act (ADA) has brought into question the idea of having an outside agency conduct employment reference checks. The ADA has forced employers to review job application forms and interview questions carefully to ensure that persons with disabilities are not discriminated against.

Some employers may not realize that if they use a screening service, both the employer and the service may be held liable for any violation of ADA requirements. Such a service would be an agent for the employer. The employer is responsible for the actions of its agents, and it may not do anything through a contractual relationship that it is not allowed to do directly.

The Technical Assistance Manual on the Employment Provisions (Title 1) of the ADA suggests that the employer inform an agency used to recruit or screen its applicants of the mutual obligation to comply with ADA requirements. Furthermore, if the employer has a contract with the agency, the employer may wish to include a provision stating that the agency will conduct its activities in compliance with the ADA.

Among many other things, compliance with the ADA means not making any inquiries of an applicant concerning history of illness, injuries, worker compensation claims, hospitalizations, treatments by psychiatrists or psychologists, treatments for alcoholism or drug addiction, or use of prescribed drugs. Since most employment discrimination against people with disabilities is unintentional, the assistance manual suggests all interviewers be informed about the ADA requirements.

Large companies may be able to devote resources to preemployment screening without the assistance of an outside service. If the minimum screening objectives cannot be met internally within a required time frame, however, outside help must be sought. Once having passed the employer's careful examination, the preemployment information service should be looked at as a viable resource to help achieve the employer's hiring goals.

John P. Beaudette is vice president of Employment Screening Services Inc. in Spokane, WA.
COPYRIGHT 1992 American Society for Industrial Security
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Author:Beaudette, John P.
Publication:Security Management
Date:Nov 1, 1992
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