Know Before You Hire: 2015 Employment Screening Trends

By Roy Maurer January 27, 2015

Ban-the-box laws, class-action lawsuits, post-hire screening and candidate experience are among the top employment screening trends to follow in 2015, according to industry experts.

“Every employer has the obligation to exercise due diligence in hiring,” said Les Rosen, an attorney and the CEO of Employment Screening Resources, a background screening firm. “Equally critical is making sure that your screening processes are legal and done the correct way,” said Rosen, also the author of The Safe Hiring Manual (Facts on Demand Press, 2012).

Ban the Box Will Go Too Far

Ban-the-box laws, which protect ex-offenders from an early knock-out punch in the hiring process based solely on the early disclosure of a criminal record, will quickly reach a tipping point in 2015, said Rosen.

Ban the box refers to the check box on employment applications asking whether the candidate has ever been convicted of a crime. Ban-the-box laws often require hiring managers to put off asking about a candidate’s criminal history until after an interview has been conducted or a provisional job offer has been extended.

“In the past few years there has been a huge increase in ban-the-box legislation at the state and local level,” said Pamela Q. Devata, a partner in the labor and employment practice group at Seyfarth Shaw. “Given that this trend likely will continue, I believe many employers nationwide will either stop asking about criminal history altogether or ask about it much later in the hiring process.”

It’s important to note that most ban-the-box laws apply only to public employers or government contractors, though that’s not always the case, and private employers need to know whether their state, city or county ban-the-box law applies to them.

It’s apparent that these laws continue to enjoy strong support, said Vu Do, vice president of compliance at PreCheck, a leading background screening provider for the health care industry. But while the laws are aimed at expanding employment opportunities for some, they fail to consider the repercussions for employers that have an obligation to protect their customers and businesses and are still vulnerable to negligent hiring lawsuits, she said.

“For employers that operate nationally or regionally across multiple states, the outcome of trying to navigate the myriad state, county and local ban-the-box laws and their infinite variations is to simply take the most conservative route and voluntarily remove the criminal disclosure question on the employment application altogether,” Do said. Employers will likely end up investing more time and resources in the hiring process as a result of having to consider the applicability of criminal history much later, which is “especially worrisome for health care employers or those in regulated industries where hiring restrictions exist,” she added.

Small businesses incur more hardship said Kim Kline, the owner of Access Profiles, a screening firm focused on the needs of small businesses. “This hits smaller companies especially hard as their resources are more limited.”

Rosen believes the trend will start to hurt those it’s meant to protect. “When these laws go too far, the unintended consequence may well be that such laws actually hurt ex-offenders in the job market and can also hurt individuals who have been left unemployed by the recession,” he said.

“Since a serious barrier has been placed on their ability to obtain or use relevant criminal records, employers may utilize an applicant’s employment history as a leading barometer of safety.”

The idea is that if an applicant has a documented employment history without significant interruptions, then an employer can have some degree of confidence that the person has probably not spent time in prison for a serious matter. “Unfortunately, by forcing employers to rely more heavily on employment history, [ban-the-box] may insidiously discriminate against ex-offenders, and hurt people who have resume gaps for economic reasons,” said Rosen.

FCRA Class-Action Lawsuits Will Continue

Experts predict that class-action lawsuits for Fair Credit Reporting Act (FCRA) violations will increase in 2015. The FCRA is a federal law that regulates background checks for employment and is enforced by the Federal Trade Commission.

Last year saw an increasing number of FCRA class-action lawsuits filed and settled for millions of dollars. FCRA violations can range from not making legally required disclosures to not following proper adverse action procedures.

“Not a month has gone by in over a year when there hasn’t been a major FCRA class action on background checks, and that trend has already continued into January,” said Nick Fishman, executive vice president at EmployeeScreenIQ.

We may see an “explosion” of FCRA class-action suits against employers and background screening firms as plaintiffs’ attorneys become more familiar with the law and the whole area of background checks, said Rosen. The financial recovery can be enormous—up to $1,000 per person in damages.

“Given the large statutory damages at issue, the promise of attorneys’ fees and punitive damages, along with the fact that there is an open question as to whether an individual need be actually harmed to bring an action, these claims will undoubtedly continue,” Devata agreed. Many FCRA claims have nothing to do with a person being harmed, but instead are the result of a mere technicality in the law, she added.

“Both employers and background screening companies will need to be diligent in staying up to date on the latest court rulings and compliance information to avoid being part of this trend,” said Christine Cunneen, CEO of Hire Image, a nationwide background screening, drug testing and verification services company. Cunneen is also the current chair of the National Association of Professional Background Screeners (NAPBS).

Employers should be aware that taking an adverse action—terminating an existing employee, rescinding a job offer to an applicant, denying a promotion—based on a consumer report “requires them to engage in a multistep process and requires close consideration of timed requirements,” said Do. “Bottom line, if negative information comes back on a background check, an employer simply can’t just pick up the phone and say ‘You’re not getting the job.’ ” Failing to provide a copy of the consumer report, failing to furnish a copy of the FCRA summary of rights document, and failing to provide the opportunity to dispute a report’s inaccuracies or errors, are common allegations, said Do.

These suits are the most troubling because they are the most avoidable, said Fishman. “These laws aren’t that hard to follow. Employers need to continually audit their processes and make sure that they comply with the law.”

It’s important to train incoming HR staff on the FCRA. “In many cases, with high turnover in HR departments, the sufficient training that was provided when an employer first signs on with a screening firm may not be adequately conveyed to new members. The likelihood that an oversight may result when an undertrained staff member fails to follow protocol then increases,” said Do.

Post-Hire Screening to Protect Against Insider Threats Will Grow

The exposure of government secrets by Edward Snowden, the 2013 Navy Yard shootings in Washington, D.C., and the recent Morgan Stanley hack have increased focus on post-hire insider threats. “Insider threats ranging from embezzlement, fraud, and theft to child molesters and active shooters … come from anyone with access to workplaces including employees, contractors, temporary workers and even ex-spouses,” said Rosen.

Just because an employee met your job requirements at the time of hire doesn’t mean nothing has happened since then that would be of concern, said Fishman.

Identifying and preventing insider threats can require mental health assessments, psychological testing, physical security, supervisor and co-worker training to recognize danger signs, continuous evaluation, information-sharing, and a culture of safety reporting, he added.

“The concern around negligent retention continues to accelerate as a concern for employers,” said Rachel Trindade, vice president of marketing for HireRight. “Particularly with so many organizations whose employees have access to sensitive personal information or physical access to facilities, employers [should] continue to review and reinforce their policies around rescreening.”

HireRight’s 2014 Benchmarking survey showed that 27 percent of employers currently rescreen existing employees. “In some industries, like transportation and health care, rescreening is compulsory, but we continue to see companies look to rescreen employees to help maintain a safe and secure environment, to protect their brand, and to ensure employees moving into new positions are qualified,” said Trindade.

Post-hire due diligence can identify something that may have been missed initially or new threats that often arise due to an individual’s change in circumstances, said NAPBS Executive Director Melissa Sorenson. “Whether due diligence is done pre-employment, post-hire or at both times, of course it is always important to consult with qualified legal counsel to ensure any process is legally compliant,” she said.

Privacy, Data Protection Concerns Will Increase

The increasing availability of data will bring added concerns about privacy and discrimination this year. “This has been a biggie for years and will continue to be, as we continue to see large data breaches in other industries. Both background screeners and employers have a responsibility to take every precaution they can to protect consumer information,” said Fishman.

It is “critical for all organizations that deal with data, and particularly those organizations regularly receiving, transmitting or storing sensitive, personal data like consumer reporting agencies, to evaluate and deploy technology and data security programs that ensure sensitive data is protected and to educate all staff on safe data practices,” said Sorenson.

Using Social Media to Screen Candidates Still Risky

Screening job candidates based on their social network footprint will continue to be a controversial and potentially risky area for employers.

Many companies will add social media investigations to their background screening process to find out more about who they hire, said Cunneen. But beware of potential pitfalls. “There are discrimination, consent, privacy, legal and sometimes moral issues that can arise from using social media to screen applicants or monitor employees, not to mention the inability to verify the accuracy of the information found,” she said.

Employers need to keep in mind that once something is seen, it cannot be unseen, said Kline. “There are many things that may be discovered in a social media check that fall under protected categories, from race, sex, sexual orientation, religion, etc. Even seeing things like organizations the applicant is a member of or a political party they favor can cause bias,” she said.

Improved Candidate Experience Will Gain Prominence

Putting candidates through a poor background screening process can be particularly costly, said Fishman. “For starters, the most desirable candidates may sour on working for you. Referrals may grow few and far between. Your company’s employment brand and marketplace reputation can suffer. And if your background screening process isn’t compliant with applicable state and federal laws, you could even be sued.”

Improving the candidate experience means improving communication, educating applicants on the screening process, and providing tools for applicants that increase their visibility into the process, said Trindade. For example, “many companies now provide applicant-facing tools that guide applicants through screening procedures and provide them with opportunities to help manage the process themselves, as well as communicate directly with both the employer and the screening provider. This helps inform and empower candidates and improves their experience with screening, which could have traditionally been a confusing, black-box kind of experience,” she said.

Roy Maurer is an online editor/manager for SHRM.

Follow him @SHRMRoy

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