|By Tom R. Arterburn,
September 3, 2010
Conducting thorough reference checks and background investigations of
job applicants is crucial to preventing personnel-related crime.
"It's particularly important for officials in the hotel industry to
screen employees for every hotel job," says Chuck Rice, senior attorney,
Kilpatrick, Stockton, LLC, Atlanta, GA, "because they have such close contact
with guests and the public. Many of them also have access to the
personal property of hotel guests. Therefore, obviously, you don't
want to hire people with a history of thefts or violent crime."
Experts in the field of pre-employment screening say reference checks
and calls to former employers barely scratch the surface, when it comes
to digging for information about a candidate. "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 doesn't 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
According to the web site of InfoLink, Chatsworth, CA, (www.infolinkscreening.com)--a
national pre-employment screening company, the following issues should
be considered when hiring new employees:
Falsified employment applications. With the job market toughening,
applicant's tend to stretch the truth. Personnel administrators say one
out of every four job seekers is a resume faker. Statistics reveal that
near 40% of applications are falsified.
Employee theft. The U.S. Chamber of Commerce figures dishonesty costs 1%-2%
of gross sales. It is estimated that 30% of business failures are directly
related to employee theft.
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. 5% 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 rent-a-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.
If these points are not thoroughly considered and addressed, the
results can be problematic, as evidenced by these hiring-related cases
Narcotics. In its first background check, one hotel found the applicant
falsified his application and was convicted for possession of drugs.
Internal theft. "We were referred to a hotel by the Los Angeles Police
Department, says Barry Nadell, president and CEO, InfoLink Screening Services,
Inc., “because they were finding that the lock boxes, that 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."
Contract services. 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.
Unqualified applicants. Another hospital was found negligent in hiring
a kidney transplant coordinator who was unskilled in reading medical charts
and a patient was given a transplant of a cancerous kidney, which resulted
in his death.
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 8% 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
After driving for a telephone company for only a week, an employee was
involved in a traffic accident. The jury learned that the company never
saw the employee's driver's record which had five traffic tickets within
18 months. They awarded the injured party $550,000.
"One of the services we provide to our clients is a "hit ratio analysis,"
and it should shock you to know that some ratios are in the 20-25% range...
this is the proportion of potential employees who have criminal convictions,"
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.
Today's litigious society has created an environment which requires
management to be armed with numerous tools. Many employers currently spend
little time verifying the accuracy of employment applications; and, although
they would like to adequately screen applicants, the cost to do so has,
in the past, been financially prohibitive.
InfoLink also has a web 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. 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.”
InfoLink acquires its information from a variety of strategies, including:
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. Using InfoLink's network of 4,000 researchers, they 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. Applicants tend to stretch the truth, they
say. Statistics reveal that nearly 40% of employment applications are falsified.
"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. InfoLink offers three types
of reference Interviews: professional, management and executive.
The professional interview reference includes questions that bear on applicants'
professionalism, work ethic, and adaptability. The management interview
includes the entire professional interview plus questions that focus on
applicants' management capabilities. The executive interview includes the
management interview, adds questions that focus on applicants' executive
management skills and capabilities, and also allows clients to add 3 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 applicants' reports.
Released inmate search, which 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 I.D., as well as current warrant information for parole violations.
Sexual offender/child molester registry search, which 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
Workers' Compensation history. This is a post-offer search available
in most states that identifies workers compensation claims against applicants'
past employers. The history will report the last 5 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 workers compensation claims at past employers, they often intentionally
leave them off their employment applications
Criminal Federal District Court search by district for Federal convictions
which provides criminal history for the date of disposition, parole or
release from imprisonment.
State repository criminal search, which 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 - also required under FCRA §606(d)(3).
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 as the cases are for less than $25,000."
Liens & 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 show the candidate's branch of service,
and current status.
Medicare/Medicaid fraud report through the Office of 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.
InfoLink does not use online or CD-ROM databases, which may be out of date
and inaccurate. They say 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 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, and 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."
Searches like (1) Criminal History, (2) Motor Vehicle Report, and (3)
Social Security Verification as a package are only $24.80 plus court and
DMV fees, and volume discounts are available. Additional searches are from
only $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.
InfoLink also uses the latest online technology available. 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
InfoLink subscribers typically experience savings due to the reduction
in workload associated with applicant interviewing and reference checking.
They say applicants' 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. In addition, receiving a negative report prior to spending time
calling references allows InfoLink subscribers to become more efficient
Rice suggests using a third-party provider like InfoLink can help 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."
In this age of data bases and transfer of electronic data, many hoteliers
are turning to pre-employment screening services for information about
prospective employees. But many of them are unaware of the legal
ramifications associated with this short cut.
"Under the Fair Credit Reporting Act, and a number of similar state
laws," explains Rice, 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."
Nadell 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."
Hoteliers have probably noticed the television commercials: a
personal injury attorney sympathetically reaching out to victims of malpractice,
work-related accidents, etc. And Nadell says attorneys have a new
line on litigants--victims of unfair hiring practices. He points
to an advertisement recently published in USA Today--donning bold type
and a toll-free number, with the headline "DISCRIMINATION AT WORK... call
for free consultation."
"Many of the attorneys are realizing that there is money to be made
in defending consumers against violation of federal and state [employment]
laws, and it is much easier than ambulance chasing."
What's more, hoteliers 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 not 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. For instance, looking
into the credit of a receptionist, who cannot affect you financially, is
almost an invasion of their privacy."
Tom R. Arterburn is an independent journalist and director of The
Resume Institute, a job-search firm focused on the hotel industry.