Thursday, June 16, 2005

Background Screening Debunked!

Today, screening your employees properly is a necessary cost of doing business. Thirty, perhaps even twenty years ago there was a mystique surrounding the process and private investigators often charged exorbitant fees to check employee backgrounds. Then, the fees charged often reflected the time a P.I. spent driving to the county courthouse, schmoozing a court clerk, paying other P.I.’s to obtain out-of-state records, or simply sitting at the local donut shop. Private investigators often alluded to confidential contacts at the police department or other nebulous sources for information in order to maintain the mystique surrounding what they did. In reality, they were accessing what amounted to be public records. Notwithstanding, clients, many of whom had initially been stung by a dishonest employee, were willing to pay the $200 - $400 dollars a P.I. would charge for the service. Competition was negligible and agencies were all too happy to collect the fees. Screening employees was not an industry standard practice thirty years ago and only a very few employers could afford the cost.

Thankfully, the era of the $300 dollar background check is long gone. Today, most employers understand that background checking entails accessing public information. With the onset of computers, obtaining criminal history and other necessary employment information is inexpensive compared to thirty, twenty, or even ten years ago. The industry is extremely competitive which has contributed to the lowering of prices. Today, screening employees is standard throughout all industry sectors and mandated in many sectors by regulation or legal climate. Ironically, employers today are faced with more perplexing issues than the potential to overpay for background searches. Government regulation and technology have combined to confound what should be a simple process. Add to this the fact that a material segment of the employment screening industry flourishes by overtly or tacitly deceiving their clients about what they are doing and a haziness reminiscent of that which permeated the industry thirty years ago emerges again.

Much of the industry operates on the principle that “an educated consumer is our best customer”. But a growing segment appears to adhere to the “don’t ask, don’t tell” rule. Potential clients interested in conducting employment searches for the first time might get the impression that the industry is simply and clearly divided between agencies that charge cheap prices for their services and those that needlessly charge more. The unfortunate perception, and one perpetuated by some in the industry, is that technology has driven down the cost of accessing and delivering background screening information to the client, and that this accounts for the $5.00 background checks now available on the Internet and elsewhere. This is the dangerous half-truth that many agencies exploit, that serves to confuse the public, and that places many employers and their customers at risk.

Clearly, a large part of the problem lies with the business community which does not fully understand the background screening process. Many business consumers are attracted only by price but clearly do not understand what their $5.00 is purchasing. Our client list is filled with businesses that have thrown money away on $5.00 background checks only to find that they hired an employee with a serious record that a true background check would have uncovered. They fell victim to the database search.

In many respects conducting a true background check is the same now as it was thirty years ago. Public (source) records must be searched just like the “private eye” once did. Today, screening firms use a nationwide network of “runners” who spend their entire day searching court house records. Where allowed, agencies go on-line with the court system to access the same records available to the clerk of courts. On-line court access, SSL protected client input / retrieval systems, HR record interfaces and other technology innovations have served to reduce the costs and turnaround time associated with doing real court record checks. Generally, records are searched and located at the county level. Where a quality statewide repository exists, an agency can check all counties in the state for one moderate fee. Searches are conducted in venues uncovered by a social security number trace and in those identified on the employment application. The cost of a search will necessarily vary by person depending upon where the applicant has lived or worked. In most cases a client should expect to pay from $25. - $50. for a criminal record search that covers the necessary venues. Additional costs would apply if credit or other special reports are needed. Maiden names and aliases must be checked separately as most courts do not cross reference by other names used. If a screening agency is charging substantially more than these prices for criminal history reports, a flag should be raised. Flags should also be raised if the prices are substantially less.

What gives then with the $5.00 (or $7.95, or $10.00) background checks? These are database searches, not true public record searches. Database records are purchased from the originating government source, reformatted and resold to the end user. Databases are proprietary to the reseller because they are no longer under the control of the originating public agency. Although they are cheap, they pose many problems for the employer and public safety. Database searches lack the integrity of public record searches since they are updated only periodically, which places them at odds with federal regulations governing consumer reporting agencies. The federal government requires that all “hits” originating from a database search be verified by a real court record search before the results can be used in the employment decision. Large database resellers were reluctant to inform their clients of this requirement since it appeared to defeat the purpose of their product. Many resellers have recently taken action to inform their clients of this requirement after severe security breaches on the part of two major re-sellers drew attention to control and compliance within the industry. Another flaw - databases generally contain less information than the original court record because resellers download fewer data fields to their systems in order to save money. This creates an additional and serious data integrity issue. Last, because updates are periodic (sometimes yearly), end users are obligated to re-screen applicants again after they are hired in order to capture records that failed to hit the database originally.

Here are some actual examples of how clients have poured their company’s money down the drain on database searches:

  • A school district hired a janitor with a record of child molestation after he was cleared using a database search. The database used did not include the county in which the conviction occurred

  • A retailer hired a finance executive with a history of embezzlement after he was cleared using a database search. Because the database had not been updated in the county in which the record occurred for the prior 6 month period, the record was missed.

  • A small manufacturing firm used a nationwide database to screen its employees. The firm, which had two U.S. locations, hired employees who were primarily local to the plant locations. Unfortunately, the re-seller failed to inform the firm that the database did not include records from either of the states in which the plants were located. As a result, employees with dishonest pasts were hired at both locations.

Resellers often present their “instant” database searches as the product of the latest in innovation and technology. However, quick and inexpensive access to information that is less that 50% accurate at best, and the use of which is encumbered by increased federal regulation, is not a viable risk management tool. While $5.00 background checks may impress your company’s budget director, they will not impress the legal department or company president who must disburse a large settlement fee. This article is not written for the HR executive who has made the decision to use databases with a full knowledge of what they are (or are not) getting. It is written for the executive who is faced with making a choice between background screening service providers and who may not fully understand the difference between a $5.00 background check and a $25.00 background check. It is written to help educate the business community and to give decision makers the edge over those in the industry who operate under the “don’t ask, don’t tell” principle. It is written to help protect employers, employees, students, customers, and others from unfortunate hiring decisions. Following are questions to ask when selecting a background screening service provider:

o When you call will you be able to speak to a qualified professional who is knowledgeable about employment screening law as opposed to a salesperson whose sole responsibility is to sell data?

o How long has the agency been in business?

o Are you getting real courthouse searches or databases?

o If the agency offers “statewide searches” do these searches access the official state repository and does the state require counties to report to the repository?

o Are you getting both felony and misdemeanor records when you request a search?

o Will the agency provide you with client references of companies similar to yours?

o Is the agency knowledgeable about the FCRA and can they assist you with compliance?

o Is the agency licensed (where required) and insured?

o Is your agency able to help you construct an employment screening policy?

o Does your agency understand what a due-diligence search is and are they able to help you in developing a due-diligence search program for each level of employee in your organization?

Employers can screen out applicants who have been dishonest on their applications even before the criminal background check has been requested – and should. Search the index of this Blog for the article entitled, “Take a Course in Defensive Hiring”. Here you will find all you will need to know to do a diligent job of flushing out resume and application fraud. From there, let you background screening agency do its job. Standards and best practices have developed in the industry that together dictate what is involved in doing a due-diligence search. Industry and legal experts agree that criminal history database searches do not meet due-diligence standards. The notion that “doing something is better than doing nothing at all” may have made partial sense ten years ago, but provides no solace today. Having an inadequate or flawed program, when faced with a negligent hiring suit, will likely result in a larger settlement than if there was no program in place at all. Bottom line, select a screening firm that has the expertise necessary to assist you in developing a due-diligence program – and stick to it. Today, the greater risk is in paying too little for your background check. The old adage “if it’s too good to be true, then it probably is” is more true today than ever before!


At 1:01 AM, Blogger TS said...

This comment has been removed by a blog administrator.

At 4:12 PM, Anonymous Criminal Background Check said...

The other thing to consider when background checking is checking what people have been up to online. Employers are now starting to scour perspective employees Social Networking sites such as Facebook, and MySpace to see what they are up to in their own time. Let alone their political views. Cheers.


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