The Green Screen

By Sarah Fister Gale

Aug. 28, 2015

When it comes to background screening, employers today face dueling challenges: They want to add speed and efficiency to this often cumbersome process but are worried about their ability to adhere to compliance rules, especially when hiring in multiple states or countries.
In response, leading background-screening providers in this $2 billion-a-year industry are automating their processes and streamlining information-gathering steps while making sure their in-house experts stay abreast of changes in national and global regulations.
Compliance continues to be top-of-mind for employers, said Nick Fishman, executive vice president and chief marketing officer for EmployeeScreenIQ, a background-screening vendor based in Cleveland. In its annual survey, more than half (51 percent) reported that compliance was their biggest challenge. “It surpassed every other response by a wide margin,” he said, noting the next biggest concern — using the most comprehensive criminal record search — was only cited by 14 percent of respondents.

Background Check Blunders 

Nothing is more American than the ideal that hard work will get you a house, car and comfortable life for your spouse and 2.5 children. But for a third of all Americans, hard work is only half the battle.
The FBI reports there are approximately 80 million individuals in its master criminal database. What’s more, nearly half of African-American men have been arrested by the age of 23. 
Employment law is beginning to catch up with the criminalization of America in order to address hiring practices that exclude applicants and employees with criminal background blemishes. When navigating the tempestuous waters of criminal background checks, employers should be aware of these background check blunders. 
Many employers desirous of conducting criminal background checks hire third parties to perform this task. Unfortunately, employers must beware of the Fair Credit Reporting Act, or FCRA, a federal statute requiring that employers provide specific types of notice before and after using a third party to conduct a criminal or credit background check. 
Specifically, under the FCRA, employers must: notify applicants before even starting the background check that a third party will be evaluating their background histories; provide applicants a copy of the background check report and an opportunity to challenge its findings after the background check is complete, but before an employment decision is made; and give applicants or employees notice of the final decision and the basis of that decision. The FCRA should be consulted for the specific wording required for each type of notice and additional requirements. 
Also keep in mind that there is a current wave of ban-the-box laws being enacted in states and municipalities across the country. Ban-the-box laws forbid employers from asking about criminal information prior to giving applicants a “conditional” offer of employment. The laws are intended to end the once common practice of automatically rejecting qualified candidates with criminal histories without providing an opportunity to explain the circumstances of the incident. 
Initially, ban-the-box laws applied only to public employers. But there are now an increasing number of jurisdictions applying ban-the-box laws to private employers, including Baltimore, Chicago, New York, San Francisco, Seattle and Washington, D.C., as well as several states. Companies doing business across several cities or states should be especially careful, as their practice might invoke several of these laws. Best practices dictate that employers comply with the ban-the-box framework as if there is a valid law in their respective locale.  
Even after carefully navigating the procedural pitfalls, employers must continue to be vigilant when making adverse employment decisions based on criminal history. Many states and local governments have laws prohibiting employers from using the fact of an arrest alone as a basis for not hiring or firing someone.
Rachel L. Schaller and Daniel R. Saeedi are lawyers in the Chicago office of Taft, Stettinius and Hollister. To comment email 

Employers screen candidates to avoid bringing liars, cheaters and felons into the organization, but if they don’t adhere to stringent — and often shifting — compliance laws, they can open themselves up to additional legal woes. “Compliance can be very confusing for employers,” said Christine Cunneen, CEO of Hire Image, a national background-screening firm based in Johnston, Rhode Island, and a member of the board of directors for the National Association of Professional Background Screeners. “We are definitely seeing more legal restrictions around what information employers are allowed to have access to and when,” she said.
The most notable restriction stems from the ban-the-box movement, which requires employers in a growing number of states and municipalities to delay criminal background checks until after a job offer has been made. Because there is no federal law governing this process, employers and screeners need to track current laws where they operate.
They also need to understand the parameters of these laws, Fishman said. If a potential employer finds a discrepancy that would prevent employment, the law requires them to send two letters: one letting the candidate know what they found so they have a chance to dispute it and a second confirming that the finding will prevent them from being hired. Yet in a recent survey conducted by EmployeeScreenIQ, only 42 percent of companies said they send both letters, and 35 percent don’t send any. 
“These employers aren’t going out of their way to violate the law,” Fishman said. “Rather, it’s a lack of education about what’s required and why.”
Regardless of their reasons, when companies don’t comply with this rule, they are violating a basic principle of the Fair Credit Reporting Act, or FCRA, which puts them at risk for class-action lawsuits, which aren’t cheap. The average lawsuit during the past 12 months cost employers $3.1 million.
And these lawsuits are likely to increase in size and scope, Cunneen said. “With no monetary cap on settlements, we expect the number of claims and lawsuits to grow as plaintiffs’ attorneys see an opportunity to score large payouts.”
Ban the box isn’t the only compliance issue affecting the screening industry. Cunneen also expects rules around using social media in the screening process to continue to evolve as more companies use social media in the hiring process. “There are discrimination, consent, privacy, legal and sometimes moral issues that can arise from using social media to screen applicants,” she said. 
As employers expand their hiring network to include international contractors and employees, compliance only gets more complicated. Every country has a different set of rules about screening and a different process for finding that information, said Matthew Glasner, managing director of the South Asia Pacific office of First Advantage, a global background screening provider. In Singapore, for example, you are not allowed to run a criminal background check. In Thailand, criminal checks can be run through the courts or the police. “The courts are quicker, but they only provide about 60 percent coverage,” he said. 
Ultimately, the best defense is making sure you work with a provider that understands the intricacies of the markets being targeted. Most employers rely on screeners to filter out any information that could potentially break U.S. Equal Employment Opportunity Commission rules, which means they have to be confident their screeners have the best processes in place. Having a reliable screener is vital, because if rules are broken, the vendor isn’t going to be held accountable, Cunneen said. 
“The employer is responsible for following the law, so it behooves them to do their due diligence,” she said.
Background checking companies also report seeing growing revenue streams from companies in the peer-to-peer, or so-called sharing economy, where individuals provide rides, labor or home rentals. “These exchanges are all based on trust,” said Dave Dickerson, CEO of Accurate Background. “If you are getting into someone’s car, you want to be sure that person has been through a background check.”
Even though these work relationships are more nebulous than a traditional full-time employee or even a contractor, the Federal Trade Commission has suggested that under the FCRA, an employment relationship could be defined broadly enough to include sharing economy jobs as contractor services, Cunneen said. This suggests that it is within the legal rights of sharing-economy companies, like Airbnb Inc., Task Rabbit Inc. and Uber Technologies Inc., to perform screenings as part of their contractor relationships. 
While this may add time and cost to their contractor onboarding process, it may also be good for business. According to a 2015 consumer survey from market research firm from First Advantage on the sharing economy, 86 percent of consumers said they were more likely to use a business if the people involved passed a background check.

Faster and Friendlier

From a recruiting process standpoint, employers are pushing vendors to make the screening process faster, easier and less painful for recruits. “Even though 90 percent of candidates don’t have an issue, this is still a stressful process, especially if they don’t hear anything right away,” Dickerson said.

It’s also frustrating for the employer, especially when they are hiring people nationally, said Craig Kwasniewski, human resources director at Strang Corp., a food service and hospitality company based in Cleveland. He said that some states, such as Michigan and Pennsylvania, require multiple waivers and extra steps to complete criminal background checks, which can add days to the recruiting process and increase the risk that the company might lose a good candidate to another company. “It means I have to go back to the boss and explain why it’s worth the extra time to complete the check,” he said.
The rising competition for top talent will only increase these pressures. According to HireRight Inc.’s “2015 Employee Screening Benchmark Report,” the biggest screening challenge for respondents (40 percent) is reducing time to hire, followed closely by improving overall screening efficiency (32 percent).
To ease these stresses, vendors are implementing a variety of technologies and processes to add efficiency without compromising integrity. 
Companies like Accurate Background Inc. have begun working directly with recruits to gather information pertinent to the screen rather than requiring the information be funneled through the employer. “It ensures the candidate knows where they are in the process and speeds up information-gathering,” Dickerson said. It also takes the onus off the employer to capture and transmit the information back and forth.
Vendors are also digitizing their front-end data-gathering with apps to automate information uploading and virtual signatures to eliminate paper. And on the back end, they are building interfaces with courthouse databases to speed access to information, and integrating their technology with applicant tracking systems to make the screening information easier for clients to integrate into their recruiting process. “It’s about making the whole process faster and simpler to manage,” Glasner said.
It’s why the industry has been slow to take advantage of historical screening data to create benchmark reports and analytics tools to predict which candidate profiles are more likely to have red flags. “Our obligation with each check is that the information lives and dies with that individual request,” EmployeeScreenIQ’s Fishman said. “We wouldn’t want to aggregate that data for other purposes.”
However, Glasner imagines such trend data and analytics could be a possibility in the future. “It’s not something we are doing, but it is something clients are asking for,” he said. “They want greater insight, and I think there is a lot we could do to add value without leveraging personal data.”
While employers want a faster, more efficient process, they are cognizant of the balance between speed and diligence. To cut time and costs, some vendors rely on databases for all of their screenings, which is definitely quicker, but may not be as thorough as a visit to the local courthouse. “Even if you use databases for initial screening, you still have to vet the information if you want to be certain it is accurate,” Dickerson said. 
Live verifications is a key criteria for many HR leaders choosing background check vendors, including Strang’s Kwasniewski. “Companies that just use databases make me nervous, because I don’t know how often they are updating them,” he said. “I’d rather wait 48 hours to get the most accurate report.”
And he’ll never abandon the screening process to speed hiring, though he was tempted once. In his previous job at a news media company, one of his biggest advertisers asked if the company would hire his nephew for an entry-level job as a personal favor. “If we had gone on his recommendation, we would have hired him,” Kwasniewski said. But the company had a background check process, he added, so it ran the nephew through the system — and found that he had an outstanding warrant for rape. “We didn’t hire him,” he said, noting the client never mentioned it again.
Kwasniewski went on to teach a course on HR ethics, where he often tells that story. “It’s a great lesson on why it’s so important to be consistent in your background checks,” he said. “At the end of the day, we stuck to our process, and I’m very glad we did.”
Sarah Fister Gale is a writer in Chicago.

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