Employee screening today: The information is there, but be careful how you use it

Journal of Healthcare Protection Management, Vol. 18, No. 2, Summer 2002
By Alan Appelbaum

Doing a good job of conducting thorough reference checks and background investigations of job applicants has become increasingly important in healthcare in preventing personnel-related crime and the legal consequences of negligence in hiring people who commit such crimes. However, there are many obstacles to obtaining information on applicants. In this report, we'll explore in depth the current state of background checking as described by an official of a company which provides background checking services, as well as the latest in legal practices from a leading attorney in the field.

Reference checks and calls to former employers barely scratch the surface when it comes to digging for information about a candidate, according to Chuck Rice, senior attorney, Kilpatrick, Stockton, LLP, Atlanta, GA. "A lot of employers, just to protect themselves from any potential claim of defamation or slander by the former employee, will only give out a verification that the person did work for them, the dates of employment, and the job title held. But the law does not exclude former employers from giving more information about an individual. They're free to tell the prospective employer the type of person the employee was, although many choose to provide only neutral information."

YOU DON'T ALWAYS GET THE WHOLE TRUTH

Rice suggests using a third-party provider to avoid some of the pitfalls associated with in house investigations. "Many states have statutes that protect employers from liability surrounding the release of negative information he says.” This was to encourage more freedom of information passing between employers. But I don't know if it has been that successful because employers are still nervous, either because they are reluctant to change their policies, or simply don't know that the laws exist." Rice warns administrators turning to pre employment screening services for information about prospective employees about legal ramifications associated with this approach. "Under the Fair Credit Reporting Act, and a number of similar state laws, employers, before they request a criminal record or other information from a third party, must notify the applicant that they intend to acquire one of these consumer reports. In addition, they must obtain the prospective employee's written permission to do so."

THE IMPORTANCE OF EMPLOYEE PERMISSION

Barry Nadell president and CEO, InfoLink Screening Services, Inc., Chatsworth, CA, agrees that these verification documents are important and says they are often mishandled. "Many companies who contact us, who are currently using the forms of another background screening company, find that they violate federal law, state law, or both. There are sections of the Fair Credit Reporting Act that specify that the disclosure form must be solely of the disclosure. It must say that a report may be requested, and that the individual must authorize the background report.

"For example, I was just faxed a form to review, which did not have wording that would allow continuous checks to be performed. So if a person was up for promotion or transfer to another location, further checks could not be conducted legally. And, unfortunately, if the person refused to sign a new form, the company would have no recourse. They would not be able to terminate the person for not signing the disclosure form. They simply would not be able to do the background check."

An important first step is to have the hospital attorney prepare a legally viable permission form.

WHAT TO CONSIDER WHEN HIRING A NEW EMPLOYEE

According to InfoLink, the following should be considered when hiring new employees:

• Falsified employment applications. With the job market toughening, applicants tend to stretch the truth. Personnel administrators say one out of every four job seekers is falsifying resumes. Some statistics show that close to 40% of applications are falsified.

• Lawsuits. The average jury plaintiff award in employment law cases continues to be in excess of $1,000,000. It is important to note that in 1998 there were 80,625 claims filed with the EEOC. Of these, 19,578 were in California (24%), of which 4,937 were for sexual harassment. Five percent of settlements are for more than $500,000.

• Turnover. The cost of hiring, training, and then terminating one employee can be very expensive. According to a survey, turnover costs a minimum of $10,000, with 20% of respondents indicating costs exceed $20,000.

• Negligent hiring liability. A rental car company recently paid $750,000 to an employee who was raped by another employee. In 1999, Trusted Health was ordered to pay $26.5 million dollars to the family of a murdered patient. Courts throughout the U.S. declared prior to the time the employee is actually hired, the employer should have known of the employee's unfitness and is liable if they did not perform an adequate background investigation.

SOME HIRING RELATED LAWSUITS

According to InfoLink, negligent hiring litigation is also a growing problem. Damages against employers are being awarded where the employer was negligent and failed to perform a reasonable search into the employee's background prior to hiring. Courts have ruled that an employer has a general duty to check criminal records for employees who will have interface with the public, or who could have a foreseeable opportunity to commit a violent crime against someone in the course of their employment. Nadell cites a number of cases related to background checking:

• In its first background check, one employer found the applicant falsified his application and was convicted for possession of drugs.

• "We were referred to a hotel by the Los Angeles Police Department because they were finding that lock boxes, which guests put their valuables in, were being broken into at night. Consequently they gave us a list of people to check, we called them the next day, and told them a particular employee was not going to be at work that day . . . we learned he was defending himself in court on a burglary charge elsewhere."

• A guard service was found guilty for inadequately checking a guard's references when the guard helped steal from their client. The charge negligent hiring as they failed to investigate, and the employee had a criminal record. The damages paid were over $300,000.

• A hospital in a very good part of town identified, in its first month of doing background searches, four felons that they would have hired. Another firm had no idea eight felons were among its employees; and two were on trial. In purchasing a company, the labor attorney recommended a background search on all employees before the deal was closed. The search revealed eight percent of the workforce were using falsified social security numbers.

• An employee, who had previously been convicted of passing bad checks, forged signatures on sales contracts. The court judged his employer negligent and awarded $175,000.

• An appellate court awarded $4 million to a woman who was raped by an employee. His employment application indicated no criminal convictions, when in reality he had some.

• After driving for a company for only a week, an employee was involved in a traffic accident. The jury learned that the company never saw the employee's driving record which had five traffic tickets within 18 months. They awarded the injured party $550,000.

WHAT A BACKGROUND CHECKING FIRM CAN FIND OUT

InfoLink has a service to request a social security trace or credit history, whereby the applicant's social security number is automatically checked for validation prior to search. "You immediately know if the number is invalid, and if valid, the year and state it was issued in. If the number is invalid or the social security number was issued 20 years before the applicant was born, for example, you may wish to clear up the issue before proceeding with your search." Other searches include:

• Criminal background search. InfoLink performs hand searches of current records directly at the local, county, superior, and municipal court. Criminal searches are available nationwide, as well as in Canada and United States territories. Researchers access the most current up to date information available and provide a criminal conviction history from the date of disposition, parole, or release from imprisonment based on applicable state law. They recommend a criminal search of all counties of residence and AKA's that are identified in a social security trace or credit history.

• Motor vehicle information. "While some companies believe motor vehicle information should be used only if an applicant will be driving a company car, we believe the information exposes important character issues. In addition, crimes are not isolated to where a person lives or works. By searching an applicant's motor vehicle information, we learn about suspended licenses, driving under the influence, possession of drugs, failures to appear in court, and arrest warrants."

• Prior employee tracking. A free search of InfoLink inquiries by other clients is available to identify past employers that may have been intentionally left off of applicants' employment applications.

• Employment verification. "Dates of employment, position titles, and degrees earned are the most frequent things we see applicants lie about. InfoLink standard Employment Verification reports the employer's name and confirms the applicant's title, dates of employment, whether they're eligible for rehire, and asks for additional comments. Upon request, the company will also ask for the person's salary history. InfoLink also offers an Employment Verification "Plus" package that, in addition to the questions above, asks the interviewee to rate their past employee on the following attributes on a scale of one to five: 1) initiative and drive, 2) follow through, 3) analytical ability, 4) organization skills, 5) adaptability to changes or breaks in routine, and 6) work ethic.

• Employment/personal reference interview. The company offers three types of reference interviews: professional, management, and executive. The professional interview reference includes questions that bear on applicant's professionalism, work ethic, and adaptability. The management interview includes the entire professional interview plus questions that focus on applicant's management capabilities. The executive interview includes the management interview, adds questions that focus on applicant's executive management skills and capabilities, and also allows clients to add three of their own questions to customize the interview for the position or industry.

• Education verification. This reports the applicant's dates of attendance, graduation date, and degree earned. Some educational institutions will also report GPA.

• Credit Information (PEER Report). This information includes name, current address with two previous addresses, social security number, phone, current employer, up to three previous employers, and aliases. A complete credit summary file also includes public records (i.e., liens, judgments, etc.), collection accounts, current or previous delinquent accounts, types of credit, and total indebtedness. It also displays a profile (i.e., account charged off, repossessed, etc.), and alerts any confirmed or suspected fraud activity. This credit report is designed for employment purposes, so it does not place an inquiry on an applicant's report.

• Released inmate search. This is a statewide search of all prison records, updated 48 hours after paroled. It reveals if subject served time in state prison for a felony conviction, provides his/her release date, and sometimes a picture ID, as well as current warrant information for parole violations.

• Sexual offender/child molester registry search. This searches databases of registered sex offenders per Megan's Law. In California, for example, there are 67,000 registered sex offenders, including 37,500 registered child molesters.

• Worker's compensation history. This is a search available in most states that identifies worker's compensation claims against applicant's past employers. The history will report the last five events and include case numbers, locations, case status, dates of injury, body parts injured, type of injury, and all party information including lien claimants. When applicants have filed worker's compensation claims at past employers, they often intentionally leave them off their employment applications.

• Criminal Federal District Court search. This is done by district for federal convictions which provides criminal history for the date of disposition, parole, or release from imprisonment.

• State repository criminal search. This looks for criminal convictions; however, records are not considered accurate or up to date and should not replace county searches. If a "hit" occurs, InfoLink. requires a search of county records.

• Civil search County Superior Court. It searches by plaintiff, defendant, attorney, or case number of Superior Court filings of $25,000 or greater. "We can also search civil municipal court records, but do not recommend the search for cases less than $25,000."

• Liens and judgments, which shows notices of default, county and state tax liens, and unlawful detainers.

• Professional license verifications, which ensure the validity and current status of a professional license.

• Military service verification, which shows the candidate's branch of service and current status.

• Medicare/Medicaid fraud report through the Office of the Inspector general, which searches health facilities in the National Practitioner Data Bank, cumulative sanction reports, and reveals debarred contractors from the General Services Administration.

• Prior employer drug/alcohol test results. "We check with past employers to obtain information as to whether applicant 1) took a drug test, 2) failed any drug test, or 3) refused any drug test." Pursuant to 49 C.F.R., previous employers must provide information on past employees' drug and alcohol tests within the two previous years. Information will provide dates of confirmed positive tests for drugs, confirmed alcohol test results of 0.04% or greater, and refusal to take a controlled substance test within the past two years.

SEARCH COSTS AND DELIVERY

Searches like criminal history, motor vehicle report, and social security verification as a package are $24.80 plus court and DMV fees, and volume discounts are available, the company says. Additional searches are from $3.00 to $32.50 depending on the search required. Information is provided normally within 24 to 72 hours except for some out of town courts or educational institutions.

Using the Internet and a password, clients may request background searches, view reports in progress, view completed reports, print reports anytime, or store reports on the company's secure server for later instant retrieval; all with no software required. Using the "work in progress" section, clients always know the status of a report and can use any portion of a report to make a hiring decision. You receive an e-mail upon the completion of the background screening report or the receipt of the results of a drug test. For on-line clients, some reports are completed within one hour of their request.

Subscribers can experience savings due to the reduction in workload associated with applicant interviewing and reference checking. They say applicant's knowledge that a criminal, social security, and motor vehicle investigation will be performed acts as a deterrent even at the application stage, thus, human resources professionals save time and money by not having to interview applicants who don't complete the application process.

WATCH OUT FOR: STORED DATA

InfoLink does not use online or CD ROM databases, which may be out-of-date and inaccurate. The Federal Trade Commission, in a staff opinion letter, wrote "an employment screening service that uses 'stored data' [which may be as much as 90 days old] does not comply with the Fair Credit Reporting Act Section 613(2)." Therefore, if a court is backed up, causing a delay in acquiring a final report the company can use a state registry (if available) to provide partial information while waiting for the county criminal court record.

"We go to the courts, with lists of names, twice a day," says Nadell. "Turnaround time is critical for our clients. Some people think you can get this information from a database or the Internet, but that information is not accurate. You have to physically go to the courts and pull these records, and that is what we do ... all over the country. In fact, there have been many lawsuits for providing inaccurate information. If I tell a client a particular candidate was convicted of a crime, and they have actually had that [conviction] expunged or the case dismissed, that is a lawsuit waiting to happen."

ALSO WATCH OUT FOR: CRIMINAL OR CREDIT 'DISCRIMINATION'

Employers in some states need to pay attention to their unique situations. "Finding that someone has a criminal record is not necessarily a reason for disqualifying them from employment," says Rice. "The criminal record information has to relate to the job if you are going to disqualify someone on the basis of it. In some states, there are even statutes that say an employer may not consider some types of criminal convictions at all. This is because there is a higher proportion of minorities who get convicted of crimes than non minorities, and you can end up with a race or national origin discrimination claim. In California, for example, you cannot even ask about certain criminal convictions, such as marijuana offenses. Therefore, if you ask a third party to gather information from California, you need to tell them you do no want any information about these statutes."

Another problem to avoid is inappropriately acquiring credit information about a candidate, adds Nadell. "Credit reports should only be accessed if the [candidate] can affect you financially."