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The Value and Importance of Background Checks

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Imagine a headline that reads, “Jury awards millions against {YOUR BUSINESS} for sexual battery.” If you are in the consumer retail or service industry, such a headline would, at a minimum, be devastating to your business, and could potentially be the death knell for your company. Just such a headline appeared in the Tampa Bay Times in October 2014, “Pasco jury awards $47.4M in massage sexual battery case.”

How do you avoid such a headline? By learning the value and importance of conducting background checks on your applicants and new hires. In the case reflected in the noted headline, the employer was found to be negligent, in part, because it failed to conduct a background check on the employee who committed the acts, and it was discovered the employee had been fired by three previous employers. Failure to conduct a proper background check when hiring an employee exposes your business to a number of risks including:

  • hiring unqualified individuals,
  • experiencing employee theft or embezzlement,
  • exposing current employees to potential workplace violence incidents,
  • negligent hiring, retention, and supervision claims, and
  • statutory licensing violations (depending on your industry).

Conducting proper background checks reduces your exposure to these liability risks.

Background checks may include a variety of types of verifications and inquiries including:

  • Qualification and credential verifications including employment history verification, transcript/degree verification, and licensing/certification verification;
  • Criminal and civil court records including criminal conviction records and civil liability matters;
  • Financial and credit records including credit history, bankruptcy records, tax records, motor vehicle/driving records and UCC filings;
  • Character records including personal or professional references;
  • Worker’s compensation and fitness-for-duty related medical records; and
  • Military records.

In considering the scope of background checks to conduct, an employer must understand the limitations and restrictions on the types of information about which it is making inquiry and the notices/disclosures it is required to give to applicants and employees. Certain medical information and credit history information can only be sought after notice is given to the applicant and appropriate authorization is obtained to inquire into those records. In addition, the scope of the background check may be limited to only that information that is deemed job-related. Certain occupations, due to the relative risk to the employer, may lend themselves to particular background check requirements, e.g. caregiver occupations and abuse registry inquiries, or financial occupations and financial and credit check inquiries. Asking for certain records that are either unrelated to the job or asking for the information at the wrong time in the hiring and selection process could mean that the employer runs afoul of the Fair Credit Reporting Act, the American’s with Disabilities Act, or even Title VII of the Civil Rights Act.

Another aspect to the background check process is whether or not an employer can or should be using social media sites as part of the hiring, screening and selection process. The National Labor Relations Board has taken the position that certain employer policies regarding social media are overbroad because they violate certain “protected concerted activities” under Section 7 of the National Labor Relations Act (NLRA). With regard to social media, Employers should avoid making any hiring or other employment decision based on any “protected concerted activity” discovered through the use of social media or based on any protected class affiliation that is revealed through social media so as not to violate the NLRA. In addition, employers should avoid seeking access to password protected social media accounts that are not generally available to the public.

Although many aspects of a background check can be completed by the employer, there are a number of service providers available to assist employers in timely and thoroughly completing background checks. If you are currently conducting background checks, it is recommended that you periodically review your practices to be sure they comply with current notice, disclosure and use requirements – the laws regarding privacy are constantly changing. If you are not already conducting background checks, it is recommended that you evaluate doing so. Investing in appropriate background check practices will help your business reduce its exposure to employer liabilities including employee theft/embezzlement, negligent hiring and retention claims, and workplace violence issues.