Comprehensive
Guide For
Selecting a Background Screening Firm
W.
Barry Nixon, SPHR
PreemploymentDirectory.com
Introduction
The purpose of this
guide is to increase business’ awareness of the essential elements
that should be considered when selecting an outsourced background screening
firm. It is our presumption that every business entity wants to maximize
their return on investment from services procured and more importantly
they want to provide a safe and secure workplace for their employees.
To this end, it is our intent to identify important considerations that
will strengthen the quality of selection of a background screening firm
which ultimately will lead to higher quality employee selection outcomes.
Our focus is on helping businesses to select providers that operate
within compliance with all governing laws, have established business
practices that demonstrate excellence in protecting consumer personal
data based on ‘best practices’ and that adhere to the spirit
of the accreditation standards promulgated by the National Association
of Professional Background Screeners. (NAPBS)
It is also important
to note that our firm, the National Institute for the Prevention of
Workplace Violence, Inc. is not in the business of providing background
checks of any kind so we are an unbiased and objective view of the selection
process. Our business focuses on providing workplace violence prevention
solutions to public and private organizations. And, of course, background
screening is an important element of any effective workplace violence
prevention initiative.
The intent of this
guide is to present the most current information available and to provide
general guidelines that should be considered in selecting a background
screening firm. It is my firm belief that businesses need to consider
the selection of a background screening firm as carefully as selecting
a CPA firm. A good background screening firm can keep you out of trouble,
while one that doesn’t protect applicant or employee data or provide
accurate information can get you into a lot of hot water.
Some Compelling Reasons to Conducting Background Checks
The rapid growth
of the background screening industry is a testimony to the importance
that organizations of all kind have put on the need to check applicants’
backgrounds as part of the employment hiring process. Also, it is evidenced
by statistics that the process of conducting background screening actually
works. The 2005 ADP Screening Index and 2005 InfoLink Screening Services
Annual Screening Statistics reported that approximately 1 out of ten
applicants have a criminal record and 40-60% falsify or exaggerate information
presented on their resume, employment application or CV. The translation
of this means that if you hired ten people this year and did not check
their backgrounds, it is likely that you have at least one person with
a criminal past and 4 to 6 employees on your payroll that do not actually
have the experience, education or credentials upon which you based your
hiring decision .
Some real cases:
- Disgraced former
Radio Shack CEO David Edmondson isn't the only one to lie about college
degrees on his resume; it seems that 14 percent of Americans have
twisted the truth about educational attainment.
- Springfield,
MA Police Department conducted an investigation into a report that
a convicted sex offender was driving a vehicle carrying public school
children for a private transportation company.
- A former employee
of a St. Louis charter school, used about $100,000 of the school’s
money to buy a BMW, fancy clothes, electronics, hotel stays and airline
flights. When he was hired he was on probation for stealing and writing
bad checks.
- A Chief Financial
Officer of a bank stole $150,000 from the bank where he worked to
cover his personal financial problems.
- In a case involving
the healthcare industry, a patient suffering from cerebral palsy was
murdered in his home by a visiting nurse.
Some of the factors
that continue to drive the focus on background screening include the
obvious focus on security resulting from the terrorist attack on the
World Trade Center in New York City to the dramatic rise in workplace
criminal activities such as identity theft, fraud, product and information
theft to other problems such as workplace violence and exposure to negligent
hiring liability.
Employers
are besieged by the advent of these issues and their financial toll:
- Employees are
responsible for approximately 60% of losses due to fraud, information
and property thefts,
- A 2003 KPMG
Forensic Practice Survey of executives at public companies with revenues
of more than $250 million reported that 36% of the companies surveyed
suffered fraud of $1 million or more.
- U.S. organizations
lose an average of 6% of their revenues to all forms of occupational
fraud according to the Association of Certified Fraud Examiners and
the costs of fraud from such things as employee espionage or identity
theft is estimated around $6 billion annually.
- The number of
workplace violence homicides have actually decreased over the last
several years, however, horrific incidents continue to happen and
cause tremendous suffering and financial burden on employers. Researchers
from the National Institute for Occupational Safety & Health (NIOSH)
estimate that the average cost of a workplace homicide is $800,000.
- Negligent hiring
lawsuits that result in a jury trail have an average cost of over
3 million dollars to employers that lose and cases settled prior to
trial are running around a half million dollars.
Employers
have responded by conducting background screenings at an unprecedented
level. The Society for Human Resource Management’s (SHRM)
2004 Survey on Reference Checking indicated that over 80% of business
that responded to their survey were conducting some form of background
checks and the PreemploymentDirectory.com’s 2005 Employer
Background Screening Practices Survey (see
http://www.workplaceviolence911.com/docs/03_2006_results.pdf)
produced a similar result with 82% of respondents indicating they
conduct screenings.
Another factor
that is encouraging the increase in background screening is technological
developments with the Internet and software that is facilitating
the integration of background screening with enterprise human
resource information systems. Through Information
Dash Boards, employers are able to access all the information
that is relevant to making hiring decisions from one place and
one source versus the old process of having to go to multiple
sources and data feeds. The process is getting simpler and more
efficient. |
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In addition, with
biometric advances we are getting to the point where we will be able
to identify individuals with a higher degree of certainty by cross referencing
multiple physical attributes like fingerprints and iris scans which
will help significantly reduce troublesome situations caused by false
negatives or mistaken identity.
The
next frontier that both employers and background screening firms
must face is addressing privacy issues and data protection. After
the ‘year of the data breach’ which 2005 has become
known as, the industry is facing new data protection and privacy
legislation and must exert much more due diligence in addressing
this very important issue. Nuala O’Connor Kelly, chief privacy
leader at General Electric articulates the issue best when she said,
“A breach of employee data could be as damaging to a company’s
reputation as a consumer data breach, she says. "Privacy is
to the information age what the environment was to the industrial
age,"2 O’Connor Kelly says. |
"Privacy
is to the information age
what the environment was to the
industrial age" |
Accordingly, we
believe that the trend towards background screening will continue well
into the future as security concerns continue to be at the forefront
as organizations continue to focus on avoiding costs associated with
making poor hiring decisions.
About Us:
The National Institute for the Prevention of Workplace Violence,
Inc. – A professional consulting firm that provides training,
consulting, research, publications and services to assist public and
private organizations to create violence free workplaces, establish
programs that prevent workplace violence and how to address incidents
should one occur. Our services include the award winning web site www.Workplaceviolence911.com
that is widely recognized as the most comprehensive source of information
on workplace violence on the Internet and www.PreemploymentDirectory.com
our online Background Screening Directory is the largest listing of
background screening companies on the internet for employers to find
employment screening firms. We also offer numerous booklets on workplace
violence related issues and the Ultimate Workplace Violence
Prevention Policy Maker Software which allows a firm to create
a comprehensive workplace violence prevention policy in about an hour.
Website
– www.Workplaceviolence911.com
Booklets:
- Zero Tolerance
is Not Enough: How to Make Violence Prevention Really Works
- The Complete
Hiring Guide to Screen for Violent Prone Individuals
- Common Factors
to Violent Prone Organizations
- The Financial
Impact of Workplace Violence
Software:
The Ultimate Workplace Violence Prevention Policy Maker software
Background Screening Directory
PreemploymentDirectory.com
helps employers meet the critical need they have to know whom they are
hiring and who is on their payroll. The Background Screening Directory
is the largest and most comprehensive web based directory of background
screening firms designed for employers to quickly and easily find a
company to meet their screening needs. The Directory consists of several
sections to guide employers quickly to the company that will serve them
best:
1. U. S. Domestic Section (firms are listed by their location, State
by State)
2. International Section (firms that conduct background screening internationally)
3. Vendor Showcase (firms that provide services to the background screening
industry presented by sub-categories like court searchers, software
providers, etc.
4. Alphabetical listing
The Directory has over 1,000 firms listed and is continuously growing.
It is a comprehensive tool to support your workplace security effort
to provide a safe workplace for employees.
Website: PreemploymentDirectory.com
These are some of the key factors that firms should consider in selecting
a background screening firm:
1. Does the
vendor provide ‘Full Service’ background screening services
that will meet your business and hiring needs? At minimum, these services
should include the following:
- Verification
of identity
- State,
County and multi-juridictions (national*)
Criminal and civil background check including
current warrants as well as felonies and
misdemeanors, when available
- Reference
check and previous work history
- Verification
of education and professional license
records
- Motor
Vehicle records
- Sexual
offender search
- Terrorist
search
- Credit
history
- Other
searches as deemed necessary
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*
Note: Currently no one database exists that stores complete up to date
records for all County, State and Local criminal records
2. Does the vendor have the capability to collect direct information
from court houses in jurisdictions appropriate to meet your needs?
3. Can the vendor meet your required turnaround time for each type of
background check you will require?
4. Does the vendor use a variety of methods for meeting your order and
reporting needs including Internet
based
tool with 24 X 7 access from any computer device at anytime from anywhere
as well as fax, e-mail, interactive voice response, and electronic file
transfer?
5. Verify that in providing educational verification that the vendor
also provides college and university accreditation status, legitamcy
of the institution as a degree granting entity and for foreign institutions
equivalency information to US institutions.
6.
Verify that the vendor is certified in states that require Background
Screening firms to be certified or require a Private Investigator
license.
7. Does the vendor have a clearly demonstrated process in place
to fully explain limitations of national or multi-jurisdiction
databases to clients and have a written procedure in place for
how criminal hits received from such sources will be re-verified?
8. Require
the vendor to certify their compliance with all applicable federal,
state and local privacy,
EEO/discrimination, consumer reporting, data destruction and other
governing laws and has written procedures in place to ensure that
all information sent to client will comply with the law, e.g.,
arrest records, sealed or expundged records, etc.? In addition,
does the vendor provide all necessary FCRA forms, procedures and
training in how to appropriately use, as needed? |
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9. Does the vendor
have a written policy and procedure that clearly articulates their process
that will be used when a criminal hit is reported? At minimum this should
include who will report it, how it will be reported, specific information
that will be included, process for re-verifying information, etc.
10. Does the vendor have a written policy and procedure in place to
avoid contacting a current employer if the applicant has requested that
they not do so?
11. Does the vendor certify that all staff, regular, part-time and temporary,
have been criminally screened at time of hire and ongoing checks are
made to ensure employees continue to have acceptable work backgrounds.
This should be a contractual agreement that is part of the service delivey
contract?
12.
Does the vendor certify that all employees of the vendor and their
sub-contractors that are involved in processing or who will have
access to personal identifiable information sign a confidentially
and non-disclosure agreement that meets your company requirements?
This should include language that addresses new hires and employees
leaving the firm. Have your legal counsel review the agreements.
13. Does the vendor have a written policy and procedure that details
how they investigate and certify that all
their sub-contractors are bona fide businesses involved in the
legitimate processing of personal identifiable information for
a permissible purpose as defined by FCRA? Also, does the vendor’s
policy address that personal identifiable information will only
be provided to an authorized respresentatives of your firm. |
Image reprinted
with permission from Aish HaTorah's award-winning website, Aish.com |
14. Require the
vendor to fully disclose previous litigation involving data breaches
within the last five years and any that occur while the contract is
in place. Make
sure this language is built into your contractual agreement.
15.
Does the vendor have the capability to interface and/or integrate
their database with the your HR and/or Employment information
system(s) to allow information to seamlessly flow in and out of
your organization’s HR system. The desired result is to
have the ability to go to one place to retrieve screening information
along with other employment related information in one report
that faciliates hiring decision making.
16. With the advent of artificial intelligence and smart programming
systems, predetermined hiring criteria can be programmed into
a system so each report on an applicant is graded consistently
and fairly. Using rules that apply to the various searches conducted
during a background screening, a system can electronically evaluate
all the information to yield
individual search decisions, as well as an overall recommendation.
Does the vendor have this ability to create ‘smart’
systems? |
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Please note that
care needs to be taken that these systems do not simply identify “pass/hire
or fail/no hire’ decisions which could run afoul with EEOC guidelines
addressing hiring ex-convicts. For example, a decision matrix that defines
positions that involve handling of cash or other valuables no one with
a conviction within the last seven years for a financial related crime,
e.g., embezzlement, etc. would be recommended for hire might very well
be fine versus a blanket rule that no one ever convicted of a felony
would be automatically disqualified.
17. Does the vendor have a documented and visible training process in
place for all staff whom will be involved in processing or will have
access to personal identifiable information? This training should be
offerred at time of hire and on an on-going scheduled basis to ensure
competency levels are maintained. Training should, at minimum, cover:
- legal requirements
for conducting background screening,
- effective data
protection and privacy to ensure security of information, essential
elements of a background screening policy and how to effectively implement
an effective
background screening program. (see http://www.hrtutor.com/en/featuring_Background_Screening_Violence_Prevention_Suite.aspx)
Require the vendor to provide periodic reports that demonstrate that
the training is occuring as scheduled.
18.
Can the vendor assist you in developing an effective Background
Screening Policy, if needed, or if one already exists will they
review your policy and make recommendations for improvements?
.
19. Does the vendor have a documented compliance policy, on-going
training and audit processes in place that ensures that all staff
complies with all appropriate federal, state, local and international
laws and regulations as required to legally conduct background
screenings?
20. Does
the vendor have System Security that provides high level of Data
Protection. Ensure that the vendor has an Information Security
Policy that:
- details
the purpose of the collection of an applicant or employee’s
personal identifiable information,
- the intended
use, and how the information will be shared, stored and destroyed
- creates
an audit trail of who has accessed information?
Have your
Information Technology staff verify that the vendor and any sub-contractors
that are involved with processing personal identifiable information:
a. have system
security in place that fully meets your data security requirements
and meets background industry standards as defined by NAPBS.
b. have procedures in place to mask some or all of the social
security number from all reports, as well as obscure the year
of birth.
c. have your Information Technology staff closely scrutinize data
security processes for communicating and securing data if the
firm utilizes independent contractors or home operators for court
record verifications or sends data offshore for processing. In
addition, if such practices are used by the vendor you should
have your Legal Counsel define contractual language to be included
in the vendor’s agreement with their contractors that addresses: |
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- the appropriate
type and amount of Errors & Omissions insurance coverage that
needs to be in force with your firm named as co-beneficiary,
- the contractors
and their employees are held to the same requirements and standards
as the vendor’s employees,
- specific procedures
exist to ensure your data is protected and
- all data protection
laws are strictly followed.
d. Have your Security
staff verify that the vendor and any sub-contractors that process personal
identifiable information meet your physical security requirements for
securing their systems and meets background industry standards as defined
by the NAPBS.
21. Does the vendor have a documented quality assurance policy and on
going process in place to ensure the highest report accuracy and maintains
records of quality audits for all their sources of data and information?
22. Does the vendor have demonstrated financial stability over the last
three years? Have your Controller or CPA review :
- Debt ratio and
outstanding debt to analyze whether they are within acceptable industry
standards and do not indicate potential problems in the near term,
- Existence of
sufficient cash, credit and liquid assets to fund continued investments
in technology to maintain a competitive position
23. Verify that
a written policy exists that states that applicant or client personal
data information is never resold . Make sure this language is built
into your contractual agreement.
24. Require the vendor to disclose all sub-contractors that will be
used that are involved with the processing of personal identifiable
information or will have access to this information and ensure that
these vendors and their employees be held to same standards you have
established for your employees. Require that new vendors that may be
hired during the duration of the contract be held to these standards
and require the vendor to either provide periodic reports verifying
this procedure is being followed or to allow their processes to be audited.
+ + + +
In the above items
we have presented many of the essential factors that should be considered
in selecting a background screening firm to help you make informed hiring
decisions. Two future considerations that we believe also warrant your
attention include two technology driven issues. The first issue deals
with “Infinity Screening (continuous post hire employee screening)’
which is emerging as a valuable tool to notify firms of derogatory information,
status of licenses, etc. that occur after the person becomes an employee.
This will become a powerful tool to prevent negligent retention, once
the myriad of issues that must be addressed to introduce it are overcome.
The second issue
is the impending convergence of two heretofore separate areas: Physical
Access Control and Background Screening. This will usher in the age
of Identity Verification Management in which verification and authentication
are joined together in one automated system. Any future plans dealing
with selecting a background screening firm should consider these emerging
issues.
In summary, we have
attempted to present comprehensive information to you regarding ‘factors
to consider in selecting a background screening firm,’ and hope
that this information will provide you valuable insight in selecting
your future employees. It should also be noted that the specific application
of these recommendations should be done under the auspices of a knowledgeable
labor attorney and/or expert consultant with specialized knowledge of
background screening. There is no intent to provide legal advice in
any form which can only be provided by a licensed attorney.
Citations
1. Ward v. Visiting Nurse Association and Trusted Health Resources,
Inc. No. 94-4297H (Suffolk Superior Court, MA
2. 2 – This statement was originally made by --Deirdre Mulligan
as quoted in Philadelphia Inquirer, February 15, 2001
Additional
Reference Materials to Help Your Selection:
1. Andler, Edward C., The Complete Reference Checking Handbook, Amacom,
New York, 2002.
2. Barada, Paul W., Reference Checking for Everyone, McGraw-Hill, New
York, 2003.
3. Nadell, Barry, Sleuthing 101:Background Checks and the Law, InfoLink
Screening Services, Chatworth, CA., 2004.
4. Rosen, Lester, The Safe Hiring Manual, Facts on Demand Press, Tempe,
AZ 2004.
5. Criminal Background Checks for Employment Purposes; www.NAPBS.com
6. ‘LPA Background Check Protocol: Achieving the Appropriate Balance
Between Workplace Security and Privacy, Workplace Security Advisory
Board, Labor Policy Association (LPA), 2003.
7. NAPBS Employment & Education Verification Provider Guidelines;
www.NAPBS.com
8. ‘Preemployment Background Screening (Draft Guidelines), ASIS
International, Background Screening Taskforce, www.ASISonline.com.
www.PreemploymentDirectory.com
For Information: Call 949-770-5264 oremail wbnixon@aol.com
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