Infinity Screening: Why Background Checks Should Never End
New screening tools are becoming available that will help businesses be informed about their employees as it relates to professional licenses, certifications, driving records, criminal convictions, immigration status, etc. Having this information will help firms make better decisions that will mitigate the risk associated with many employment decisions including promotions, transfers, etc. and whether employees continue to qualify for the position they hold. This will be an important weapon in every business's arsenal as it will help prevent many negligent retention lawsuits.
The good news is that these tools, known as Infinity Screening or Continuous Post-Hire Screening, have been deemed the "next big thing" in background screening. The bad news is that businesses should be aware that implementing an Infinity Screening Program must be given a considerable amount of forethought to address the trail of legal requirements, human resource, and employee relations issues. In addition, firms must carefully consider a myriad of other issues to ensure not only consistent employee practices, but also that decisions are made that are congruent with the firm's culture and human resource philosophy. To ignore this reality will only lead to future employee relations issues that could have been avoided with forethought and planning.
Why Should Firms Consider Implementing an Infinity Screening Program?
Manage Your Risk
First and foremost, infinity screening presents firms with the opportunity to better manage the risk associated with employees. Too often businesses make faulty assumptions when they hire a new employee. They presume that because the person starts a job with a clean criminal, credit or driving record that this means the person's record will remain this way. Many firms have learned the hard way that somewhere down the line this same employee who started with a clean record turns in a different direction. Regular background checks are the only way an employer can know of changes in employees' status that may have a negative impact on the company. Some firms have relied on voluntary reporting, but this has not worked for obvious reasons.
Unfortunately the negative exposure can take the form of fraud, theft of information and property, workplace violence, embezzlement, etc. and can have a significant cost impact on the business. The following illustrates some of the potential impacts:
- Employees are responsible for approximately 60% of losses due to fraud, information and property thefts.
- 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. The cost of fraud from such things as employee espionage or identity theft is estimated around $6 billion annually.
- The number of workplace violence homicides has 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 trial cost, on average, over $3 million to employers that lose, while cases settled prior to trial are running around a half million dollars.
Beyond managing risk, the management of a business has a fiduciary responsibility to appropriately manage and protect the assets of the business. It must ultimately determine the company's appetite or tolerance for risks - those risks it will take and those it will not take in the pursuit of its goals and objectives. Once the level of risk that a firm is willing to accept has been determined it is management's responsibility to ensure that the company implements an effective and ongoing process to identify risk, define the potential impact and then to activate what is necessary to proactively manage these risks.1
Infinity screening helps to manage risk because having current information on employees positions you to make proactive decisions versus being caught off guard in a reactionary position. In other words, Post-employment screening allows employers to keep ahead, quantify their risk, know where and in whom their risk lies, and most importantly, it helps with the management of risk. For example, if you have a driver who delivers products to your clients and through an infinity screening process you find out he has been convicted of driving while intoxicated you can make a decision regarding continuing to allow that person to deliver your product. Without this information being brought to your attention you could have faced a situation where the driver has an accident while making a delivery and seriously injures someone. You then find out he is driving on a suspended license and has been convicted of a DUI. This is not a pretty picture or a situation that will make you or your attorney happy since it likely to lead to the company getting sued for negligent retention.
Negligent retention is the legal doctrine that has evolved out of numerous court cases. The underlying premise of negligent retention is that if an employer is aware of a problem or should have been aware of the problem and did not take reasonable actions to address the situation then the employer can be held liable for their employees' actions. This concept has been applied to a wide array of employment situations. To go back to the delivery driver example identified above, in court, several questions are likely to be raised:
- Is it reasonable to expect that the company should have been aware of their employee's driving record?
- Were there reasonable steps that the employer could have taken to have had current information on their employee's driving record?
- If they had been aware of it what action would they have likely taken?
While we cannot speculate on the decision that a jury might make in this type of situation you can clearly see where this line of questioning is leading. We believe that firms can avoid this situation altogether by staying informed about their employees' records through infinity screening.
Pre-employment screening reduces the risk of a bad hiring decision, post-employment screening reduces the risk to which a company is exposed over the long term. These are the actions that a responsible employer should be aware of in their workforce and may become a new standard for judging if an employer took reasonable steps to provide a safe work environment.
Since we have discussed risk it is important to mention the legal issues associated with infinity screening. Most firms are well aware that the primary legal requirement for conducting background screening is defined by the Fair Credit Report Act (FCRA) as amended by FACTA, and this is equally true for infinity screening. FCRA provides the requirements for using Consumer Reporting Agencies, which includes background screening firms, however, if a business does its own background screening using internal staff and does not use a consumer report in any part of their process they do not have to follow the FCRA requirements. Although this may be the case, we strongly encourage businesses to still follow the FCRA requirements to avoid even the appearance of unfairness and also to place themselves in a rock solid position should their process get challenged.
In addition, there are several industries where ongoing screening has become a legal requirement. Medical and healthcare facilities are typically required to make sure that medical licenses and certifications are current and meet established standards. The U.S. Department of Transportation (DOT) oversees drug and alcohol testing programs on mandated employees. The DOT requires employers to conduct a pre-employment drug test and obtain a two-year drug/alcohol test history. Additional regulations set forth by the DOT require employers to monitor their employees on an ongoing basis. DOT employers who fail to conduct this screening are subject to penalty fines. Section 19 of the Federal Deposit Insurance Act prohibits any person who has been convicted of any criminal offense involving dishonesty or breach of trust or money laundering, or has agreed to enter into a pretrial diversion or similar program in connection with a prosecution, from becoming or continuing as an institution-affiliated party; owning or controlling, directly or indirectly, an insured institution; or otherwise participating in the conduct of the affairs of an insured institution without the prior written consent of the FDIC. Banks and brokerage firms have their guidelines as well.
Important Considerations in Implementing an Infinity Screening Program
A Comprehensive Background Screening Policy
It is very important to set the overall framework for your pre-employment and post-employment screening process in a comprehensive policy that provides clear guidance to all.
The Electronic Report Line (ERL) is an essential risk management tool that offers a simple, efficient, and secure method of reporting incidents, misconduct, or grievances related to fraud, harassment, discrimination, hazing, violence, alcohol, theft, embezzlement, among other matters. Utilizing ERL's technology-based initiatives, conscientious organizations can provide an open avenue of communication for reporting incidents without fear of retribution. This type of reporting procedure is not only required for all public organizations under Section 301 of the Sarbanes-Oxley Act, but it can also help organizations establish the Faragher/Ellerth affirmative defense under Federal employment discrimination statutes. No organization can afford to do without it.
Identify Sensitive Jobs
One of the important areas that the policy should address is to classify jobs on the basis of their sensitivity or the risk factor that is associated with a specific job. In this context, risk refers to the risk of an incumbent being able to commit fraud, embezzlement, steal confidential information or property, etc. For example, a Chief Financial Officer who has signature authority for up to $100,000.00 has a greater risk factor than a receptionist who cannot approve any expenditures. This is important because the greater the risk the higher the sensitivity of the job and therefore, the greater the precautions the employer should take, such as regularly checking the CFO's credit and criminal record. Unfortunately, "very few employers tailor the background information they collect to the requirements of the job," says Lewis Maltby, president of the nonprofit National Workright Institute.
Outsourced staff and sub-contractors
Aside from permanent employees, companies need to be especially aware of outsourced staff, or sub-contracted companies (e.g. cleaners, guarding companies and all personnel who come onto a company's premises). As part of service contracts, companies should be insisting on ongoing screening as part of service level agreements. These individuals pose as much a risk as any permanent staff member and very often are even more of a potential threat with unrestricted access to all areas and after-hours servicing. For example, consider the unsupervised access that night cleaning crews have to your facilities.
EEOC guidelines regarding the use of criminal records to not automatically disqualify an individual from consideration without a legitimate business reason for doing so, also apply to current employees as do restrictions on use of arrest records.
Employee Privacy and Monitoring
A policy needs to be very clear regarding not creating an 'expectancy of privacy' and openly communicating to employees about how the firm intends to monitor their records in areas to be covered (e.g., criminal records, licensing, etc.) based on the nature of the responsibilities assigned to specific job function and the qualifications for the job.
Employers must ensure that such checks are done with consent. Ensuring that employees are given proper notice is a very important part of positioning your firm to be able to act at a later date should something go awry with the employees records. It should also be noted that having the traditional statement that 'omission of information or giving false statements is grounds for termination' may not be sufficient to address the consent issue.
Notification and Appeal Rights
Employees must be given proper notice, the right to challenge incorrect information, and a reasonable time period to provide correct information. This raises a question that deals with should the employer grant the employee time off to rectify or bring in correct records; with pay or without pay?
Access to Information
Access to information should be tightly controlled for improper viewing, use of information and to avoid 'tainted' views of the employee creeping into employment decisions.
When Should You Take Action?
This is probably one of the most challenging issues related to infinity screening - defining when to act on the information that is discovered and what is an appropriate action to take. One option is to put in place a Background Screening Review Committee composed of a Human Resource Manager, Security Manager and Legal Counsel with the charge to oversee decision-making regarding 'adverse actions' based on learning about derogatory information. The intent of this committee is to provide an objective body to review the totality of the circumstances surrounding a situation and to apply a consistent framework to how decisions are made.
Infinity screening is an idea whose time has come. Businesses should embrace this opportunity to be able to further manage their risk by being able to identify potential problems in a proactive manner. In addition, having current information in employee records positions a business to be able to make decisions not only to reduce risk, but also to ultimately create a safer workplace. While it is a well known premise that "knowledge is power," in this case we know that having the right information at the right time can empower businesses to better manage all of their assets to improve overall business performance.