5 Tips to Tighten Your Background Checking Program

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Over the course of the last decade, employment background checking has grown to be a generally standard practice for nearly all large and mid-size companies and many small businesses.

Recently, however, especially amid high unemployment and a competitive job market, new government legislation and regulations have emerged that have introduced new complexities and implications into the process. As a result, employers are striving to balance between addressing the risks of a bad hire, workplace safety and security liabilities, and negligent hiring lawsuits, against the risk of discrimination claims and non-compliance.

The primary issues generating increasing government scrutiny are around the use of criminal and credit checks for employment related decisions and their potential implications under Equal Employment Opportunity Commission (EEOC) policies.

Many companies, for example, have policies prohibiting the hiring of candidates who have been convicted of felonies, and in recent years, an individual’s credit history is now being used more frequently in hiring decisions. The EEOC under Title VII guidelines has taken a keen interest in background screening as it relates to the potential disparate impact on applicants that fall into one of the areas with protected class status, such as race and national origin.

For criminal checks, this translates into a closer review of studies of time-based recidivism rates of crimes, trying to ensure a crime’s applicability to the duties of a specific job or classification of jobs, and the application of fair and consistent employment screening policies in hiring practices across all protected classes.

Likewise, because of the racially and socioeconomically correlated disparities in credit histories, the EEOC has indicated that credit-based background checks may also have a disparate discriminatory impact. Some states, such as Oregon have already passed new laws that prohibit the use of credit background information in a hiring decision except in very rare and clearly defined circumstances.

Between 2003 and 2006 the number of background check discrimination charges filed with the EEOC increased four times and the number continues to rise. Within today’s economic environment, hiring discrimination claims are increasing and are being stringently reviewed.

This leaves employers in a crunch as they must demonstrate their hiring practices are not discriminatory, while also maintaining a safe secure workplace to avoid risks of a rising number of negligent hiring lawsuits. In a negligent hiring and retention suit, employers must prove they exercised reasonable care to identify any potential indications that might have disqualified the person as unfit for a particular position.

Legislative decisions and EEOC policy guidelines are still in progress, and in the meantime, organizations must walk a fine line to mitigate discrimination risks, while also avoiding negligent hiring liability and bad hires. This balance is especially difficult since the controlling legal standards are not static but continue to evolve through legislative decisions and agency guidance. Here are some tips for balancing the tightrope that exists in today’s environment:

  1. Designate a subject matter expert to manage the screening process. The person must be extremely knowledgeable about the Fair Credit Reporting Act (FCRA) guidelines that govern employment screening, work closely with management, human resources and the screening provider, and take ownership of the background checking process and policies.
  2. Evaluate background screening program procedures – Be sure that all unique requirements for background screening are met, including the need for separate authorization and disclosure forms allowing applicants to consent to background checks.
  3. Identify all legal constraints, including Title VII, state legislation governing screening procedures and the federal regulations under the FCRA. Employers must understand the regulations to ensure that they do not ask for legally prohibited information and potentially open themselves to liability.
  4. Clearly define appropriate screening requirements for different positions. Blanket organization-wide screening policies are being challenged legislatively and legally. It’s critical that companies evaluate the specific screening guidelines and criteria for each position, role and department and apply them consistently according to company policy.For example, it may be determined that checking a candidate’s credit history may only be appropriate for employees managing company finances or having access to company cash. Other verification requirements may vary depending on whether the employee will be driving or working with sensitive populations such as children or the elderly.By maintaining specific policies for each position and applying them consistently, organizations can better demonstrate compliance with EEOC regulations and negligent hiring requirements.
  5. Be diligent in managing all documentation and disclosures to ensure they are obtained appropriately, stored securely and regularly reviewed to ensure they are kept up to date.

It’s critical that organizations build sophisticated background screening and adjudication policies and procedures both to ensure a safe workplace and to be sure that the best candidates are hired for key positions, while allowing for flexibility and fairness in hiring to avoid any unintended discrimination claims of company hiring practices.

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HireRight is a leading provider of on-demand employment background checks, drug and health screening, and electronic Form I-9 and E-Verify solutions that help employers automate, manage and control background screening and related programs.

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The HireRight Blog is provided for informational purposes only. It is not intended to be comprehensive, and is not a substitute for and should not be construed as legal advice. HireRight does not warrant any statements in the HireRight Blog. Any statutes or laws cited herein should be read in their entirety. You should direct to your own experienced legal counsel questions involving your organization’s compliance with or interpretation or application of laws or regulations and any additional legal requirements that may apply.