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- EXTRA EDITION
Employers are increasingly being found liable for what’s called “negligent hiring.” Negligent hiring is based on the principle that an employer has a duty to protect its employees and customers from injuries caused by employees who the employer knows, or should know, pose a risk of harm to others. It allows employees and anyone else harmed by the conduct to sue employers for the conduct of other employees.
And don’t think these lawsuits lack teeth. The average damages award for negligent hiring lawsuits just passed $1 million dollars per case. That’s without considering the costs of defending the lawsuit and the accompanying public relations disaster.
Now the bad news. Not only can an employer be sued for not doing a background check, they can also be sued for doing a background check if it’s done improperly.
In the old days, a background check consisted of a couple phone calls to a former employer and a reference check. Modern background checks involve a comprehensive investigation of the applicant’s credit history, referral history, criminal record, and Internet profile.
SO WHAT'S FAIR GAME?With the advent of the Google age, there is almost no limit to the amount of information an employer can seek out for a potential employee. But the law draws some clear limitations on what can be considered valid criteria and what crosses the line into unfair discrimination. Just a couple of examples:
• Credit Reports
Credit reports are emerging as perhaps one of the most essential parts of a modern background check. Credit history says a lot about a person’s personal responsibility, especially with financial matters. Applicants with horrible histories or huge debts may raise a red flag. However, under the Fair Credit Reporting Act, employers are required to obtain an applicant’s written consent before researching a credit report. If that report turns up information that convinces an employer not to hire an applicant, the employer must provide a copy of the report to the applicant and let that person know how the report may be challenged.
• Social Networking Sites
It defies logic why people put certain information about themselves online, but they do. Websites such as MySpace, Facebook, and Twitter often contain tremendous amounts of information about an applicant that they publicize willingly. Often much of that information is not reflected in their resume. These sites are public and free.
• Criminal History
By far the most common part of a background check, employers want to know if an applicant has a past criminal history. Failing to inquire opens the door to negligent hiring lawsuits and potential workplace violence. But at the same time, employers need to carefully consider how to handle knowledge of an applicant’s criminal record.
In 2007, the Equal Employment Opportunity Commission (EEOC) reaffirmed an employer cannot rely solely on an arrest record as justification for not hiring an applicant. But an employer can consider whether the conduct the applicant engaged in makes them unsuitable for the position. The EEOC reasoned that consideration of arrest records alone has a “disparate impact” on certain protected minority groups. That is problematic for employers because conduct that has a disparate impact on a protected group gives rise to Title VII discrimination lawsuits.
In other words, you cannot consider the fact that the person was arrested for theft. But you can consider the fact that the person committed theft when determining whether they are suitable for a position that requires them to handle money. Easy, right?
• Other Types of Background Information
Medical records, bankruptcy history, past worker’s compensation claims, school transcripts, military service record. All are available. But not all are legal to obtain. Medical records, for example, are strictly prohibited under the Americans with Disabilities Act of 1990. The same is true of prior Workmen’s Compensation claims. Employers need to be certain that the information they seek is information they are legally permitted to possess.
SO HOW DO I GET THE INFORMATION I NEED, WITHOUT BEING SUED?1. Develop a Policy.
Haphazard and inconsistent application background checks are a recipe for lawsuits. Employers should draft procedures to ensure that background checks are used consistently and not in a way that opens them up to allegations of discrimination. Adherence to a well-drafted policy and consistency are essential.
2. Document the Process.
Nothing scares away plaintiff’s lawyers like a well prepared paper trail. Documents showing the consistent application of background checks and describing the proper way in which the results were considered in the hiring process is your garlic to the plaintiff attorney’s vampire.
3. Make Sure You Know the Law.
Many states have their own statutes governing when and how background checks may be conducted. Be sure you are familiar with both the federal and state laws in your area. Know what types of background information is strictly off-limits and what can only be used for a limited purpose. Make sure your human resources employees, or whoever is in charge of conducting the background checks, know it too.
4. Don’t Be Afraid to Ask Questions.
This is a complicated and fast changing area of the law. If you don’t know the answer, the worst thing to do is guess. It tends to get expensive.
GOLDEN OPPORTUNITIESIf your company hasn’t conducted a comprehensive review of its policies and procedures for background checks, now is the time. The current economic downturn has made it an employer’s market. Be choosy while you can!
Publication date: 01/19/2009