Agenda Employment: Background Checks In Focus

By Merry Meyer Jan 1, 2002
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Thorough screening of recruit can help prevent surprises

Then you look at the person sitting across from you during an employment interview, do you wonder whether the candidate has a criminal background? A drug problem? Has lied about his or her credentials?

That’s more likely than you might think. Between January 1998 and October 2000, American Background Information Services Inc. (ABI), based in Winchester, Va., found undisclosed criminal backgrounds on 12.6 percent of the people it screened.

That number is typical, other experts say. “Ten [percent] to 20 percent of applicants flat out lie,” says Randy Baker, HR manager at Birch Telecomm in Emporia, Kan.

About 8.3 percent of applicants screened have a criminal history, and 23 percent have misrepresented their employment or education credentials, says Blair Cohen, CEO of InfoMart Inc., an employment screening company based in Atlanta.

In some industries, these figures are even higher. Telemarketing applicants have a criminal rate of 30 percent to 40 percent, according to Kit Fremin, owner of Background Check International LLC in Temecula, Calif.

In spite of these startling figures, half of companies are doing their own pre-employment screening, and most are not checking criminal history or credit reports, says Jason B. Morris, president and CEO of Background Information Services Inc. in Cleveland.

More Criminal Checks

But that may be changing after the Sept. 11 terrorist attacks on the World Trade Center and the Pentagon. Employment-screening companies say inquiries about their services are way up, although the increase hasn’t yet translated into more paying clients.

“This has shaken most companies,” says Daniel Paulsen, chief operating officer of the Employment Screening Alliance Group in Clearwater, Fla. “Within days of Sept. 11, we saw a tripling in the number of hits on our web site.” His company also has fielded calls from industries it hadn’t heard from prior to the attacks, including companies that handle or clean up hazardous materials.

Representatives from security guard services, sports complexes and temporary staffing agencies also have shown more interest in screening applicants since the attacks, says Robert Mather, president of Inc. in Redding, Calif.

Under the nation’s heightened security concerns, companies that already were outsourcing background checks are looking to do more extensive searches on new hires or to screen current employees.

One large company wants to do a second check on every employee hired in the past two years for federal criminal history, nationwide wants and warrants, identity verifications and international searches, Cohen says.

Requests for international searches are on the rise, says Kevin McCrann, operations manager at Accurate Information Systems Inc., in Massapequa, N.Y. “The cost of doing international searches is much higher,” he says. While his firm charges $15 per U.S. county for a criminal search, international searches start at $35 and can go as high as $135, he says.

International searches are definitely on the rise, but the problem is that few nations keep as complete records as the United States does, says Gary W. Schneider, ABI executive vice president.

Even in those nations that have the capacity for good recordkeeping, such as Great Britain, tight privacy laws can make finding anything out nearly impossible, says’s Mather

In-House vs. Outsourcing

Many companies that choose to outsource their background screening do so mainly to reduce their liability if a bad hire results in a lawsuit, Paulsen says. But background screening companies claim they can cut costs, considering how much time and resources it takes an HR department to do thorough checks.

For many managers doing the screenings themselves, the decision to do a background check on a new hire usually boils down to whether they have time to make the calls, says Steven James, executive vice president of Background Profiles Inc. in Pleasant Hill, Calif. “Usually they checked past employments. Very seldom did we find they called to check on college degrees,” James says.

There are several obstacles to performing thorough screenings. For example, although much of the criminal history information is public record, accessing it is not simple. A key first step in running a thorough criminal check is a Social Security number trace, which will provide a list of an individual’s previous addresses. Screeners tend to do criminal background searches by county, but criminals don’t usually provide addresses in counties where they have committed crimes.

“One of the biggest challenges with doing a criminal history is knowing where to look,” says Mike Gaul, ABI’s managing director. Once you have an idea where to look from both the application and the Social Security number trace, you can search either by county or by state. But, again, there are complications: Not all counties are automated, and searching their records may require a trip to the county courthouse.

State data are more encompassing, but information may be missing or be less up-to-date than the county information. “The integrity of the data leaves a lot to be desired,” InfoMart’s Cohen says.

Other important checks, depending on the position being filled, include a search for outstanding wants and warrants (both felony and misdemeanor), motor vehicle reports, credit reports, college and professional licensing verifications, and prior employment verifications.

ASI Business Solutions, a computer software company in King of Prussia, Pa., outsources searches of criminal histories, motor vehicle reports, education credentials and three previous employers for all new hires, says HR manager Donna Polier. The company adds a full credit report search for individuals applying for management positions, she says.

ViaSat, a satellite communications company and government contractor in Carlsbad, Calif., does extensive background checks on both permanent and temporary employees. “We’ve always outsourced, but it’s expensive [because] they charge per state. So if a candidate has moved around, it can cost up to $300,” says Cathy Akin, vice president of HR. ViaSat would prefer to handle the employment and education verifications in-house, if they had the staff to do so, she says. “These are relatively easy things to do.”

Birch Telecomm’s Baker thinks he could do a more thorough job of calling previous employers himself, although he says he is comfortable with the company’s employment screening vendor. The vendor usually calls only the HR department and never speaks with the candidate’s previous manager, he says.

Ryan’s Family Steak Houses Inc., based in Greer, S.C., has done background checks on its managers for many years but only began running background checks on hourly team members three years ago, says Eddie Tallon, director of internal audit and security. “There was not an incident. We are a very proactive company in the security arena and felt as though this would be another way to provide a safe and secure environment for our customers and team members,” he says.

Ryan’s hires a vendor to do Social Security number traces and criminal background checks on all employees, as well as credit checks on cashiers and managers, Tallon says.

Choosing a Vendor

“We tell employers to expect a three- to five-day turnaround, although we are averaging 2.9 to 3.1 days right now,” says Doug Young, director of sales at Kroll Background America in New York. Most background screening firms cited similar turnaround times and said increased business has not changed their response times.

Fast results are no substitute for accuracy.  

“Our biggest issue is maintaining the quality of the background checks faced with the need for speed,” says Bob Brand, director of corporate security at Cox Enterprises Inc., a global media company based in Atlanta. Cox uses one outside vendor for 14,000 background checks annually. A four-person in-house security department monitors the quality of the background checks and gives legal advice to the company’s field HR departments about using the data provided.

HR managers sometimes try to cut corners, as do vendors, Brand says. For example, Cox requires criminal searches that include surrounding counties as well as the county in which the person lived. But HR managers may try to limit the search to get faster results, Brand says. To prevent such shortcuts, the security department systematically looks at the data the vendor returns to ensure that quality is maintained on both sides, he says.

Price also can be a misleading indicator. Average background checks can cost from $35 to $50 for a regular employee and from $150 to $200 for a more senior employee, depending on how many counties need to be checked. Yet some screening firms may quote prices 20 percent to 30 percent lower, says Schneider, adding that in many cases, these firms are relying on databases alone as their research tool.

How the screening firm acquires its criminal history information is important too. There are three main methods for getting this data, and many firms use a combination of the three: using their own in-house researchers, contracting local court retrieval service companies to go to the courts for them and doing database searches.

“It’s important for the HR industry to ferret out those who use databases,” says Schneider. If a screening firm is relying on third-party databases to conduct criminal history record checks, employers should ask if the court sanctions the database and how often the material is updated, he says.

Some of the firms that rely on databases merely buy a copy of a court database and then access that one copy for up to six months without updating, Schneider adds.

Using a local court retrieval service can slow the process and introduce inaccuracies because the information is going through more hands, says Mather. But with more than 3,000 counties in the United States, only the largest background screening firms can rely exclusively on their own personnel for checking criminal histories.

And make sure the company is well insured, says Jackie Kohn, vice president of Graymark Security Group in Fort Lauderdale, Fla. Companies want to be able to push the liability onto their vendor if a negligent hiring suit emerges, and that makes insurance an important component.

An employee-screening firm also should be well versed on the Federal Credit Reporting Act (FCRA), says McCrann. The FCRA governs how credit information can be used. For instance, the act mandates that anyone using credit information to deny an individual employment must tell the individual why they have been denied the job and show them the credit report. The FCRA also limits the use of personal bankruptcy information to 10 years and tax liens to seven years.

A full-service screening firm will consult with the HR department to ensure HR knows how to legally use the different types of information supplied, says ABI’s Schneider.

After doing a thorough check on a prospective screening firm, including a check on the firm’s references and by asking pertinent questions, send the vendor a few test checks. “Send the company a name that you know has a criminal record and see if they come back with a record or a ‘no hit,’” McCrann recommends.

Merry Mayer is a Chicago-based freelance writer who specializes in business, government and technology. 

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