The Safe Hiring Blog

Optimizing Employee Selection by Using Online Referencing Tools and Background Checks

Provided by ESR Newsletter and Legal Update.

 

The perennial challenge for employers is how to identify applicants that are the right fit and have the knowledge, skill, and abilities to do the job. In pre-industrial society, the problem was generally solved by either hiring someone that the employer knew, or basing the hiring decision upon a personal recommendation. Another method was using an apprenticeship-type program that gave an employer a great deal of insight into who they were hiring.
 
Although these approaches are still in use today, it is no longer possible to match millions of applicants and jobs based upon the employer having a pre-existing relationship with applicants. Additional approaches such as using the Internet to find good candidates have developed.  Since every time an employer hires a stranger, it is somewhat of a "leap of faith," employers need tools to make good decisions. Employers are seeking ways to determine who the person really is and what the person has done in the past, as predictors of how they will perform. Although past is not always prolog, past performance says a great deal about how a person may be expected to perform in the future. Employers also want a means to "look under the hood" at applicants rather than just accepting them at face value.
 
Every hire represents a significant investment and - at the same time - a significant risk. A bad hire can result in a legal and financial nightmare. Bad hires cost an employer a great deal in terms of time wasted recruiting, hiring and training, and searching for a replacement, not to mention the job not being done. A bad hiring decision can also lead to litigation for negligent hiring, if the new employee turns out to be unfit, dishonest, or dangerous, and someone is harmed. To add insult to injury, when the bad hire is eventually terminated, employers need to deal with the possibility of a wrongful termination lawsuit even if the firing is entirely justified.
 
In order to evaluate the various hiring tools, it is essential to understand that the hiring process occurs on a time line. Each step of the continuum carries its own set of legal implications. Matching your hiring tools to the proper stage of the time line is key to sorting out the best applicants AND to helping prevent a bad hire.
 

The stages and available tools of the hiring process can roughly be divided as follows:

1. Sourcing Stage: This is the process of gathering potential applicants through a variety of means that can include inbound applications from job boards, websites, newspapers, or outbound efforts, such as recruiters seeking passive candidates;
2. Preliminary Screening Stage: In order to narrow down the applicant pool, there is a preliminary screening primarily based upon the applicants' self-stated qualifications, conveyed by the resumes or applications or newer tools such as video websites;
3. Assessment Stage: This stage can include the interviewing process to further narrow down the field of candidates, as well as numerous other assessment tools, ranging from objective testing to references from past employers or supervisors, or various other testing methods;
4. Decision Process Stage: Here, the employer has narrowed the pool to one, two, or three finalists and is moving toward a conditional job offer based upon an internal decision-making process;
5. Background Checking Stage: At this point, either a conditional job offer has been made or is contemplated, and the employer needs to exercise due diligence, typically through a background screening firm, to determine if there is any reason NOT to hire the candidate. The emphasis of a background screening firm at this point is a factual verification of details such as job title and dates;
6. The Post Offer/Pre-Hire Stage: This is where an employer is able for the first time, if they so choose, to address such areas as pre-employment physicals;
7. The Post Hire/On-Boarding Stage: This is where an employer, for example, can complete the form I-9 process.
 
These seven stages illustrate a clear demarcation between efforts pointed at finding someone to hire, and efforts directed at deciding who NOT to hire. This is where evaluation of the pros and cons of the hiring tools comes into play. Background checks, for instance, are of little assistance in stages 1 through 5. That is because a traditional background check is only performed on finalists, where, by definition, an employer has already made a tentative decision to either hire or place that person in the group of finalists. Background checks are used to decide who NOT to hire.
 
Are there other tools available besides background checks for sorting through the pool of applicants? Yes. One of the most interesting new tools is for online automated reference checks and assessments. An example is the offering of Checkster, a company founded by a veteran in the talent management sector. Job candidates select references, such as former supervisors and co-workers, who then get an assessment request emailed to them. It's self-service. Eliminated are the time spent making phone calls and waiting for and tracking responses. The references simply fill out an email questionnaire. The questionnaire itself is a scientifically designed assessment instrument that gives a fresh look at the applicant and contains a number of state-of-the-art validation tools. The results are communicated back to a recruiter or hiring manager in a graphical and intuitive report. Although there are others competing in the same space, Checkster clearly has thought through and designed the process from both the assessment and talent management point of view.
 
The end result of using such a tool is that the reference can quickly respond to an email, and time is not wasted on playing phone tag or managing follow-ups. The employer obtains a candid assessment because the person giving the reference is advised that the actual scores are confidential. Through Checkster's processes, the email evaluations provide a scientific assessment of what is "under the candidate's hood," thus increasing the employer's odds of making a job offer to the best candidate.
 
The question has arisen from some hiring managers as to whether services like Checkster can replace the type of employment verifications performed by background firms. The short answer is no. Although services from Checkster and similar firms can be extremely valuable, they are done earlier in the time line of the hiring process. Background checks are done near the end of the time line. Traditional background checks and Checkster-type services can compliment each other, but they serve different purposes. They are different tools for different functions.
 
First, Checkster-type services occur in the talent sourcing and selection stages. Background checks, by comparison, occur only AFTER a tentative decision has been reached. In other words, Checkster-type services are used to decide who to focus on out of a pool of candidates, while a background check seeks to assist an employer in exercising due diligence by examining if there is any reason NOT to hire someone that an employer has potentially targeted for employment. Although a Checkster-type service will obviously also help to eliminate some candidates from consideration in the early stages based upon the results of the third-party reference and assessment provided to employers, there is a fundamental difference between an email-based reference service and the role of a background firm.
 
The whole idea behind due diligence as a legal defense is independent factual verification. For example, background firms do not take the applicant's word for whether the past employer even existed. A background firm will typically independently verify that the past employer existed as well as verify that the phone number is real, independent of what the applicant contends. Even if past references are contacted for evaluation purposes by email, the task of verifying the truthfulness and accuracy of the employment history still requires a screening firm to independently obtain information from past employers.
 
Another advantage to an employer utilizing traditional background checking techniques is that the employer has a powerful argument in front of a jury in the event of a lawsuit for negligent hiring that they excised due diligence. The background firm's efforts to manually verify the existence of a past employer, and then to verify that the applicant in fact worked there, is one of the most important and powerful due diligence tools in the employment process. By knowing where a person had been, an employer is able to eliminate any unexplained gaps in employment, and to also know where to search for potential criminal records. It is a well-known fact among due diligence professionals that verifying where a person has worked is just as important, and in some cases more important, than checking for criminal records. A criminal record can occasionally slip through the cracks, but an unexplained gap in employment creates a red flag that may prompt an employer to do further research.
 
If an employer is sued for negligent hiring, it is also questionable whether an employer can demonstrate due diligence if they let job seekers pick and choose which references were contacted. There is also the possibility of a fake or set-up reference, or an applicant creating a fake identity, and having the bogus ones "verified." Checkster certainly takes steps to minimize the possibility of fraud. However, in the final analysis, there is no substitute for the hard work of manual checks. By manually verifying the existence of past employers, and verifying dates of employment in order to reveal gaps in employment, an employer is taking the final due diligence steps needed before making a hiring decision final.

Employment verifications by a background firm are typically conducted in a call center environment in high volume by callers who are used to verifying factual information about an applicant's employment history. Given the highly sophisticated software and databases, as well as expertise that screening firms bring to the process of manual verification, a substantial number of such checks are completed within three working days.
 
The bottom-line is risk management. Although these email assessment tools are an excellent means of providing an in-depth assessment about a candidate during the decision-making stage, the traditional background check complements them for the final candidates and provides the demonstrable due diligence that can be used as a legal defense if there is a negligent hiring lawsuit and can help uncover fraud or fake references. 

New EEOC Lawsuit for Discrimination Based on Credit Report and Criminal Records

Provided by ESR Newsletter and Legal Update

The Equal Employment Opportunity Commission (EEOC) announced  on October 1, 2009 that they have filed a lawsuit against Freeman, a firm that offers nationwide convention services, on the basis that it used credit reports and criminal records to unfairly discriminate against black, Hispanic and male job applicants. This case has the potential to have a profound impact on the way employers hire in the U.S.
 
According to the EEOC press release, the lawsuit charged that, "This practice has an unlawful discriminatory impact because of race, national origin and sex, and is neither job-related nor justified by business necessity."
 
Even though the use of criminal records and credit history does not directly target people protected by civil rights laws, the argument is that when those criteria were applied to Freeman applicants, the end result was that greater numbers of blacks, Hispanics and males were affected.  This is referred to as a "disparate impact." In other words, by using this information to make hiring decisions, the practical impact was that members of protected groups were unfairly treated and rejected in higher numbers.   
 
The EEOC has been active in identifying barriers that contribute to discrimination. In 2007, the EEOC launched the "E-RACE" (Eradicating Racism and Colorism from Employment) Initiative. The purpose was to "improve EEOC's efforts to ensure workplaces are free of race and color discrimination.  See www.eeoc.gov/eeoc/initiatives/e-race

The use of credit reports and criminal records being used to deny employment has been a hot-button issue for the EEOC.  The last significant case was El v. Septa, 479 F.3D 232 (3d. Cir. 2007), where a 40 year-old second degree murder conviction was allowed to be used to deny employment.  However, part of the decision was based upon the fact that the applicant that was suing for discrimination did not present any statistical evidence to rebut expert testimony by the employer that even a 40-year-old crime can be relevant. 
 
Since then, a study was conducted by Professor Alfred Blumstein at Carnegie Mellon University that suggested that after a period of as little as five years for some crimes, a person with a criminal record was no more likely to re-offend than a person with no criminal record. Ironically, the same professor was the expert in the El v. Septa matter where a 40-year-old murder was sufficient to deny employment.
 
ESR has written an in-depth analysis of the Blumstein study at:  http://www.esrcheck.com/Blumstein-and-Nakamura-study-on-redemption-in-Criminology.php

 

This case will not likely be finalized anytime soon and could well need to go to higher courts for a final resolution.  However, the case is a stark reminder that employers need to review their hiring practices, to ensure that any pre-employment assessment tool is both a valid predictor of job performance and not discriminatory.
 
In the case of criminal records, Employment Screening Resources (ESR) has long advised employers that they should NOT automatically reject an applicant with a criminal record, but should instead determine if there is a business necessity that precludes hiring.  The EEOC has suggested that employers take into account the nature and gravity of the crime, the nature of the job, and the age of the offense.  Similarly, ESR has also long advised employers that credit reports should be approached with caution, and only used where relevant to the job, such as positions involving access to cash, assets or fiduciary duties. In this case, it would appear that the credit reports were used on a workforce involving laborers and not higher managerial or accounting positions with access to assets or fiduciary obligations.  However, the case still points out the dangers of the use of credit reports.

Why Background Firms should not contact an applicant directly

Some employers or recruiters want background firms to contact an applicant directly if there is a need to obtain additional information or to clarify information from an applicant.  If this has ever crossed your mind as an employer or recruiter, you might want to reconsider. 

Employment Screening Resources(ESR) generally recommends against having background firms getting in the middle of that special relationship between the Recruiter and the Applicant.  It creates confusion, causes delays, and brings a background screening firm into discussions with the applicant – who may not even realize that a third party is involved. 

From many years of experience, ESR knows that background checks actually go much faster where the recruiter exclusively manages the direct applicant relationship and obtains additional information when needed.  

This issue of applicant contact can come up in a number of ways.  

First, if a recruiter is submitting faxed orders instead of using the ESR online solutions, recruiters must understand the process can be delayed if orders are sent that are illegible or incomplete. For example, screening firms often face difficulty in deciphering an applicant’s handwriting as to past employers or a Social Security Number. An eight and a three can easily look alike.  Since a screening firm is not expected to read hieroglyphics or be a “mind reader,” the screening firm has to contact the recruiter to clarify the information. Some screening firms will make their best guess and if they are wrong, the report is delayed even further, proving the old adage that “no good deed goes unpunished.”  Recruiters who review all applications for completeness, legibility and accuracy with the candidates before sending the applications to a screening firm will find their report is completed much faster.

Another example is an incomplete employment verification because the past employer has moved, merged, or gone out of business.  If the recruiter still needs that to be verified, then someone needs to contact the applicant and ask for things such as W-2’s, or names of past supervisors.  There are some recruiters who ask their background firm to do this, even though it is the recruiter that has most knowledge about the applicant and has direct contact.  

There are a number of complications that arise if the screening firm attempts to contact the applicant. 

1.  The applicant does not know the background firm, and is naturally reluctant to supply a Social Security Number or date of birth to a stranger over the phone, or send pay stubs to someone they do not know.  That typically means the applicant will normally call the recruiter first anyway to find out what the situation is all about, which, of course, delays the screening process further. 

2. The background firm often has to engage in phone tag, requiring back and forth before the screening firm can connect with the applicant.  Since the applicant has no relationship with the screening firm, an applicant does not always realize it is important to call back, especially if the applicant is looking at several different job offers.  On the other hand, if a recruiter is in hot pursuit of an applicant, or the applicant is focused on getting the job, it is likely that the recruiter will have a great deal less difficulty getting in touch with him/her to obtain the additional information or clarification. 

3.  The third issue is tracking.  The screening firm needs to track the status of the additional calls to the applicants and to deal with multiple applicants instead of a single point of contact.  Recruiters presumably already have an ATS or some other system to keep tabs on the progress of each job and each finalist (since typically only a finalist is getting screened).  

4.  The last and most important issue is when a screening firm calls the applicant, an applicant may now believe that the background firm is somehow involved in the hiring decision.  There have been applicants who have wanted to continue selling themselves to a background firm’s clerical employee, whose only mission was to obtain some missing information and who knows nothing about the job.   Or, if the applicant somehow feels that background employee did not give them the attention he or she deserved, the applicant may be left with a negative impression of the potential employer or complain about the contact.   

For these reasons, many background firms typically prefer not to get themselves in the middle of the relationship between the recruiter and the applicant.

ESR Blog – The latest on Employment Screening Background Checks

Employment Screening Background Checks Annual Criminal Statistics

Various organizations publish their annual criminal “hit rates,” showing how many applicants subject to background screening had criminal records or other discrepancies. On one hand, these figures are extremely valuable because they confirm an already compelling case that background checks are critical for any employer that wants to exercise due diligence and protect its workforce and the public. In fact, as Employment Screening Resources has been advising employers for sometime, without a system of pre-employment screening, it is a virtual statistical certainty that an employer will hire someone with a serious issue that has the potential to create a legal and financial nightmare or cause workplace violence.

On the other hand, as with all statistics, these yearly reports need to be taken with a grain of salt. First, not all criminal records come as a surprise to employers. Given the number of Americans with some sort of criminal records, many employers are still willing to hire someone for an appropriate position, providing the applicant was not dishonest in the application. In fact, certain industries by nature of their workforce are more likely to draw upon a pool of potential applicants that may tend to have higher levels of past criminal conduct. Examples might be construction or firms that provide employment for entry level workers.

A statistic that would be very interesting but much harder to obtain is how many criminal records were discovered where the applicant was dishonest about past conduct. Of course, that gets complicated by the fact that an applicant may have been genuinely confused about what is or is not reportable on an application.

A related issue is that not all criminal records have the same impact. A criminal record for underage drinking is not in the same league as a conviction for armed robbery.

In reviewing these types of statistics, employers also need to keep in mind that not all of the criminal records located are job related. Employers should NOT automatically deny employment to an applicant with a criminal record unless there is a business justification that takes into account the nature and gravity of the crime, the nature of the job and the age of the crime. As noted in a recent blog on this site, the EEOC takes the position that the overuse of criminal records without a business justification can create a disparate impact, and therefore can be discriminatory. See: http://www.esrcheck.com/wordpress/1057/new-eeoc-lawsuit-for-discrimination-based-on-credit-report-and-criminal-records

Finally, it is difficult to draw firm conclusions from the statistics without knowing the search methodology. Depending on how the searches were conducted, it is entirely possible in fact that such annual statistics may even understate the number of criminal records applicants had. The most accurate criminal record searches are done by accessing information directly from the county courthouse level, either by physically going the court, or by use of the court computer system that is the functional equivalent of going to the courthouse. That is the method used by Employment Screening Resources. Databases on the other hand, although much wider in scope, are not nearly as accurate, do not have all courts or jurisdiction, may not be updated, or may not contain sufficient identifiers.  To the extent any searching was done by the use o

via www.esrcheck.com

Employment at Will and Probationary Periods

Article from the ESR Newsletter and Legal Update

A critical issue for employers is the nature of the employee-employer relationship. Employers typically hire on an "at will" basis, meaning there is no employment contract and either side can terminate the relationship. Of course, nothing is that simple. Employers are normally advised to be very clear in all stages of the recruiting, interviewing, and hiring procedures that no promises or contracts are made, either expressed or implied, that modify the at-will arrangement. Again, nothing is that smooth. An applicant may argue that, by certain employer's actions or deeds, there is an implied promise of future employment that can only be terminated "for cause" as opposed to "at will." Examples of instances where an employee may argue they are no longer "at will" are listed below.

�Language in an interview that says "if a person does well, the company will take care of them," or other similar promise of special treatment on the part of the employer.

�Language in the employee manual that creates a "probationary period." The implication is that if a person passes the probationary period, they have vested or obtained a more secure status and there must be "good cause" to terminate rather than a right to terminate "at will."

�Employee manual language that sets out a series of progressive disciplinary steps where an employee has a chance to improve performance. The implication is if they meet the standards, then the person is no longer "at will." Employers could add language that restates that nothing in the progressive discipline system modifies the at-will nature of employment, but it still can create issues.

�A listing of actions or omissions that are grounds for discipline or termination. The argument is if one of these enumerated acts or omissions is not committed, then the employer needs cause to terminate.

�When an employee has been with the employer for a period of time and has received promotions, regular pay increases and good performance reviews, the employee can argue he or she is no longer at will.

Along with appropriate statements in the application, the employee manual is also a critical tool to reinforce the "at will" nature of employment. 

It is also necessary to insure that everyone with hiring responsibilities is trained not to make statements that imply a commitment beyond "at will." There are also other exceptions to the "at will" status, such as civil service employment, collective bargaining agreements, or public policy exceptions to "at will" status.

From the perspective of a Safe Hiring Program, maintaining the "at will" relationship can be vital to an employer in the event issues arise related to workplace violence or misconduct, or it is later discovered the employee made material misstatements or omissions during the hiring process. Even though an employer may have grounds to terminate based upon the misconduct or misrepresentation, the "at will" status will assist the employer's position.

(Excerpt from The Safe Hiring Manual, chapter 18 on "Important 'After Hire' Issues.")  See Safe Hiring Manual

Are Business Connection Sites More Accurate than Resumes?

Article from the ESR Newsletter and Legal Update

Recently, at a software conference for major online business connecting services, apparently the suggestion was made that profiles maintained by a candidate on such an online business service are more accurate than the resume maintained by the same candidate.

Looking at business connection sites during the recruiting or selection stage can certainly be another tool for HR or recruiting to try to differentiate a large group of candidates and whittle it down to a smaller group. Even then, there are significant issues to keep in mind, such as the potential for discrimination.

However, in terms of accuracy, keep in mind that if a person lies on a social networking site, there is no direct consequences. These sites do not contain a comment area where others can disagree, or warn employers that qualifications are overstated. In addition, colleagues may not even know that an applicant has lied. If an applicant has listed a certificate or educational accomplishment that is not true, exactly how are colleagues suppose to know that, much less bring it to anyone's attention. There certainly would be no mention made of past criminal records or civil suits for things such as harassment or trade secret theft.  Those things are usually not going to be volunteered on a business connection site.

In addition, the suggestion without metrics that people do not lie on a social network site because others will view it will not likely be much of a defense in court if a firm hires a fibber, and it turns out a background check costing a few dollars would have revealed it.

The bottom line: To a certain extent, using these sites may be helpful in deciding who to hire, but it does not replace the employer's due diligence obligations.  The fact remains that there is nothing as effective as actual verification of a candidate's claimed experience. The Internet may provide tools for sourcing candidates, but it simply does not provide due diligence.

For more information on the use of social network sites and employment, see ESR Social Networking Blog Entry

The Rush to Source Candidates from Internet and Social Networking Sites - Let's Slow Down and Think About This for a Minute

Article from the ESR Newsletter and Legal Update

No discussion on recruiting these days is complete without an analysis of how the Internet is used for sourcing candidates.  From social networking sites such as MySpace or Facebook, to blogs, Twittering, online videos, and business connection sites such as LinkedIn or Plaxo, recruiters have become focused with laser-like intensity on how to make use of these sites.

What is sometimes overlooked in the rush to use the Internet to recruit is the one question that needs to be asked first: What are the legal risks in using the Internet for recruiting, and how do we manage those risks?

First, allegations of discrimination is one critical area where employers and recruiters can find themselves in hot water when utilizing social networking sites such as MySpace and Facebook (sometime shortened to "MyBook").  Recruiters may be accused of disregarding candidates who are members of protected classes by passing over the online profiles of people based on prohibited criteria such as race, creed, color, nationality, sex, religious affiliation, marital status, or medical condition. All of those are things that may be revealed by a Facebook or MySpace search.  There may even be photos showing a physical condition that is protected by the Americans with Disabilities Act (ADA) or showing someone wearing garb suggesting their religious affiliation or national origin. This issue is sometimes referred to as "Too Much Information" or TMI.

The problem is that once a recruiter is aware that an individual is a member of a protected group, it is difficult to claim that the recruiter can "un-ring the bell" and forget he or she ever saw it. It could be argued that if a passive candidate is passed over because of discriminatory criteria revealed on a social network site, they can be harmed, since they did not even know they were disregarded and are none the wiser. The problem with that approach is three-fold.  First, discrimination and civil rights laws would likely still apply, even in recruiting passive candidates. Secondly, there are few secrets in the world. If a firm is using discriminatory criteria, a member of the recruiting team who feels uncomfortable about such a practice may well say something - either publicly on the web, or within the organization. Third, it can be argued that discriminatory criteria were being used if it turns out that the entire workforce happens to be homogeneous and does not include members of protected classes.

Of course, the analysis is complicated by the fact that the aggrieved individual may have placed the information on the web themselves. However, it would be challenging to suggest that a person somehow consented to discrimination by placing material on the web that was then used illegally by recruiters. Until courts rule on these issues, employers can only try to apply established legal concepts to their online recruiting efforts.

The issue for employers and recruiters is how to protect themselves from allegations of discrimination if no further action is taken after the recruiter discovers on the Internet that a person is a member of a protected class.  For employers that want to use social network sites to screen a current candidate, the safest path for the use of social network sites is to obtain consent, and only search once there has been a conditional job offer.  This helps ensure that impermissible information is not considered before the employer evaluates an applicant using permissible tools, such as interviews, job-related employment tests, references from supervisors, and a background check.  At that point, the reason for searching social networking sites would be to ensure that there is nothing that would eliminate the person for employment, such as saying nasty things about your firm, or if the applicant engaged in behavior that would damage the company, hurt business interests, or be inconsistent with business needs.

For sourcers and recruiters who are looking for passive candidates, however, that approach does not apply. By definition, the recruiter does not have consent, since sourcing is at the start of the hiring process. Employers and recruiters in the sourcing stage may want to consider some of the following:

1. Ensure each position has a detailed job description written for that specific position that clearly lays out the essential functions of the job and the knowledge, skills and abilities (KSA) required for the position.
2. Have a clear internal policy that internet sourcing is NOT being used in violation of federal and state discrimination laws and that only factors that are a valid predictor of job performance will be considered, taking into account the job description and the KSA require for the job.
3. Have documented training on legal recruiting techniques.  The training should include clear information on what would constitute a discriminatory practice.
4. Have a clear procedure that outlines key words, criteria, and methodology for sourcing, so recruiters can demonstrate that they are searching for objective requirements to be considered as part of the pool.  Even better is if the criteria being used can be measured or have a metric attached.
5. If someone meets the objective requirements but is not placed in the pool of potential candidates for other reasons, a recruiter may want to note why the exception is being made.  For example, if the social networking website demonstrated behavior inconsistent with business interests, that should be noted.

Another issue is whether the websites utilized are authentic. Social network sites need to be taken with a grain of salt.  Employers need to be careful that the site they are looking at actually refers to the applicant.  Many Americans have "online computer twins" - people with similar names.  Another problem is "cyber slamming," online smearing usually done anonymously, such as derogatory comments on websites or even setting up a fake website that does not truly belong to your applicant.  Yet another issue is whether the statements made are even true and credible, keeping in mind that the idea behind these sites is "friends talking to friends," and users of these sites have been known to embellish.  
A problem yet to be fully explored by the courts is privacy.  Contrary to popular opinion everything online is not necessarily fair game.  Certainly if a person has not adjusted the privacy setting so that his or her social network site is easily available from an Internet search, that person may have a more difficult time arguing that there is a reasonable expectation of privacy.  However, the terms of use for many social network sites prohibit commercial use and many users literally believe that their social network site is exactly that - a place to freely socialize.  The argument would be that in their circles, it is the community norm, and a generally accepted attitude, that MySpace or Facebook pages are off limits to unwelcome intruders, even if the door is left wide open.
Until the courts sort this out, one thing does seem fairly certain - if an employer uses subterfuge to gain access, such as by creating a fake online identity just to penetrate a social network site, then the privacy line has probably been crossed.  Of course, if using a screening firm to search the Internet, the federal Fair Credit Reporting Act (FCRA) would apply.

The bottom line as always when using the Internet for employment related matters: Proceed With Caution.  There has yet to be clear law or court cases that set forth how to proceed in this area. In the meantime, employers and recruiters may want to approach the Internet with some caution before assuming that everything is fair game in the pursuit of passive candidates.

For more information on due diligence in hiring, contact Jared Callahan at ESR at 415-898-0044 or jcallahan@ESRcheck.com
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New Study on Impact of Past Criminal Record on New Employment Creates More Questions than it Answers

A new study just released by researchers from Carnegie Mellon University has attempted to devise a model to quantify the relevance of a criminal record for employment on the basis that the importance of a past criminal record recedes over time when a person is not re-arrested. The study looks to develop a methodology to measure how much time must pass before an applicant with a criminal record is no greater risk than an applicant without a criminal record. (Blumstein, Nakamura, “Redemption in the Presence of Widespread Criminal Background Checks,” Criminology, Volume 47, Number 2 (2009))

The study, based upon limited data just from the state of New York, found that with time, a person with a criminal record was no greater threat than persons without a criminal record. It suggested that depending upon the offenses included in the study and the age at which the offenses were committed, that after approximately 4½ to 8 years without further arrests, an offender had a minimal risk of re-offending. Of course, the more violent the offense, the longer the time would be required before a person could be considered “redeemed.” Serious crimes such as murder, rape, or child molestation were not part of this particular study, but presumably more serious crimes would have a different result.

Although there is a temptation for the press to take “sound bites” from the findings, it is abundantly clear even from the authors of the study themselves that this is only a beginning. The authors were clear that much more study was needed and that there are substantial issues still to be addressed. The authors’ characterization that the study represents a “significant step forward in an area where so little is known empirically” is well-taken.

The study does not have nearly enough data to reach conclusions from which policy recommendations can be effectively made, has not been reviewed critically by other professionals, and most importantly has a number of drawbacks that can affect its reliability. Many of these limitations were acknowledged by the authors.  There are also unstated assumptions in the study that would certainly skew any results.

For a more in-depth analysis of why this study cannot be the basis to make policy changes, see a more complete analysis by ESR at: http://www.esrcheck.com/Blumstein-and-Nakamura-study-on-redemption-in-Criminology.php

 

Hawaii Latest State to Put Limits on Use of Credit Reports

Over the Governor’s veto, the Hawaiian legislature passed a new law effective July 1, 2009 that put limits on the use of employment credit history or credit reports unless it “directly related to a bona fide occupations qualification,” or falls under another exception.

The bill amends the Hawaiian Fair Employment Practices Act by making it an unlawful discriminatory practice for any employer to refuse to hire or employ, continue employment or to bar or discharge from employment, or otherwise to discriminate against any individual in compensation or in the terms, conditions, or privileges of employment of any individual because of the individual's credit history or credit report, unless the information in the individual's credit history or credit report directly relates to a bona fide occupational qualification. Hawaii Revised Statues Sec. 378-2(8).

The new law also indicates that in terms of hiring in the first place, the employer can only inquire into the credit history or credit report on a prospective employee only after there has been a conditional job offer, and only if the information is directly related to a bona fide occupational qualification.

The law makes exceptions for employers that are expressly permitted to inquire into credit history or a credit report by federal or state law, financial institutions that are insured by a federal agency or to managerial or supervisory employees. The law sets out a specific definition of what constitutes a “Managerial” or “Supervisory” employee.

The Governor’s strong veto message (http://www.capitol.hawaii.gov/session2009/Bills/GM813_.pdf ) argued that employers should not be subject to, “another restriction on employers that could impact their ability to protect the safety and financial security of their workplaces.” The Governor indicated that credit reports can have value in particular situations and that Congress has regulated the use of credit reports in the Fair Credit Reporting Act (FCRA).

For a copy and history of the new law, see: http://www.capitol.hawaii.gov/session2009/lists/measure_indiv.aspx?billtype=HB&billnumber=31

It should be noted that even without the new law, an employer that obtains a credit report for employment does NOT obtain a credit score or FICO number. A credit score is not part of an employment credit report since it is not a valid predictor of job performance. However, as noted in an article in USA Today where ESR President Lester Rosen was quoted, credit reports have been strongly criticized for preventing some consumers from obtaining employment. http://www.usatoday.com/news/washington/2009-02-12-creditcheckinside_N.htm

The California legislature, in fact, passed a law in 2008 that would have severely restricted employment credit reports, but it was vetoed by the Governor and did not become law. The new Hawaii law is similar to a restriction passed in the State of Washington in 2007, that required a credit report to be substantially job-related and for the employer's reasons for the use of such information to be disclosed to the consumer in writing. http://www.esrcheck.com/newsletter/archives/June_2007.php#T2

It is likely that more states will be reviewing the use of credit reports and employment in the future.

A Tale of Two References-One Makes You Liable for Damages and the Other Does Not

In a 2008 federal appeals case, two past medical employers gave past employment information for the same anesthesiologist. After the anesthesiologist, Dr. Robert Berry, moved on to yet another hospital, he botched a routine 15 minute procedure, leaving a patient in a permanent vegetative state due to Berry’s own addiction to drugs.

The new hospital and its insurance company settled with the victim and in turn sued the previous two medical organizations for misrepresentations in the past employment information given to the new hospital. The allegation was based upon misrepresentations since the new hospital claimed it hired Berry because the defendants did not give accurate information by withholding information about misconduct and drug use.

The first defendant was a medical group that was fully aware that Berry had a drug abuse issue. After giving Berry a second chance, Berry continued to misuse drugs. Berry was terminated for that reason.

 Against that backdrop, when asked for a recommendation by the new hospital, members of the medical group made statements suggesting Berry was an excellent clinician, would be an asset to any anesthesia service and that he was recommended highly as an anesthesiologist.

 The second medical provider was a hospital where Berry had practiced. Instead of saying anything positive or negative, the hospital simply provided dates of employment and occupation. However, the hospital also claimed the reason it did not go into detail was that “there was a large volume of inquiries.” Even though the hospital gave in-depth recommendations to 13 other physicians, it appeared that the hospital did not want to say anything about Dr. Berry.

 The first hospital failed to disclose that Berry had on-duty drug use, and that his undocumented and suspicious withdrawal of Demerol had “violated the standard of care,” or provide other negative information.

 In the decision, the appeals court had no difficulty finding that the medical group was clearly liable, under the theory that once a party volunteers information, it has a duty of care to insure the information is correct. Otherwise, it amounts to a misrepresentation by material omission. The court clarified that a party does not incur liability every time it casually makes an incorrect statement. However, the court noted that:

 “But if an employer makes a misleading statement in a referral letter about the performance of its former employees, the former employer may be liable for its statements if the facts and circumstances warrant. Here, defendants (medical group) were recommending an anesthesiologist, who had the lives of patients in his hands every day. Policy considerations dictate that the defendants had a duty to avoid misrepresentations in their referral letters if they mislead plaintiffs into thinking that Dr. Berry was an “excellent” anesthesiologist, where they had information that he was a drug addict.”

 The situation with the first hospital, however, was more complicated. The first hospital knew that Berry was a potential danger, but yet chose to say nothing, hiding behind a claim that they were too busy to provide more details.

 The Court noted that it found no Louisiana case, or cases outside of Louisiana, that imposed a requirement that a past employer reveal negative past information, absent a situation where the past employer made some sort of affirmative misrepresentation. In other words, the first hospital did not have a legal duty to voluntarily step up and give negative information, as long as it limited its report to just factual employment data such as dates and job title.

 The court noted that,

 “And although the (first hospital) might have had an ethical obligation to disclose their knowledge of Dr. Berry’s drug problems, they were also rightly concerned about a possible defamation claim if they communicated negative information about Dr. Berry.”

 The Court noted that if such an obligation were imposed upon employers, there would not only be privacy concerns, but it would create a burden if employers had to investigate each time if negative matters about a past employee was the type that had to be disclosed. The bottom line: if an employer limits itself to just dates of employment and job title, it has no obligation to warn of future dangerousness, provided the employer did not falsely mislead the new employer.

 That is why so many employers choose to not say anything either way. However, contacting past employers is still one of the most vital aspects of due diligence. It can be as important as doing criminal checks. Some employers make a costly mistake by not checking past employment because of the issues raised in this case and the expectation that past employers will not give any information but dates of employment and job title.

 That is why so many employers choose to not say anything either way. A practice has developed essentially that if you do not have something good to say, then don't say anything at all. 

However, contacting past employers is still one of the most vital aspects of due diligence. It can be as important as doing criminal checks. Employers make a costly mistake by not checking past employment because of the issues raised in this case and the expectation that past employers will not give any information but dates of employment and job title.

 Just documenting the fact that an effort was made will demonstrate due diligence. Verification of dates of employment and job titles are also critical because an employer must be concerned about unexplained gaps in the employment history.  Although there can be many reasons for a gap in employment, if an applicant cannot account for the past seven to ten years, that can be a red flag.

 It is also critical to know where a person has been because of the way criminal records are maintained in the United States. Contrary to popular belief, there is not a national criminal database available to most private employers. Searches must be conducted at each relevant courthouse, and there are over 10,000 courthouses in America. However, if an employer knows where an applicant has been as a result of past employment checks, it increases the accuracy of a criminal search, and decreases the possibility that an applicant has served time for a serious offense.

 The case is Kadlec Medical vs. Lakeview, 527 F.3d 412 (5th Cir. 2008)

For a copy of the case, contact Jared Callahan at jcallahan@esrcheck.com or by phone at 415-898-0044.