EmployeeScreenIQ Blog

Domino’s Pizza is the latest employer to find themselves in court facing a class action law suit alleging that their background check process violates the Fair Credit Reporting Act (FCRA).

The former employees claim that the company (1) ran background checks on employees without proper authorization; and (2) “systematically” failed to provide employees with copies of their background checks prior to taking adverse employment action against them.

This should not be news to employers. It’s Background Checks 101. So it is not surprising that last week, a Maryland US District Court judge allowed the case to move forward, denying Dominos motion to dismiss. In a long and critical opinion, the Court ruled that the plaintiffs properly alleged that Domino’s violations were “willful.” That means that the claims are putitive and if the Plaintiffs are successful, Domino’s pays an addtitional statutory penalty of $1000 per plaintiff. Ouch.

Sound familiar? It should. The Plaintiffs’ counsel– Minnesota firm Nicols Kastor, PLLP, filed a similar suit in December of last year against banking giant Capitol One. We told you about that case a few weeks ago. Plaintiff Kevin Smith accuses Capital One of violating the FCRA by combining it’s authorization with the company’s standard application. On this claim, Capital One may be liable to all employees and prospective employees who signed Capital One’s standard job application. Double ouch. The lawsuit also alleges that Capital One failed to provide copies of the reports when it used them to take adverse employment actions. Same story, different day.

Employers, these law suits are not going away. Review your adverse action process, and check your forms. If you need a compliant authorization form, you can get one from us.

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Somebody didn’t do their homework…

A London man was able to gain employment as the Deputy CEO of a Middle Eastern bank after a headhunting firm located his fictitious resume online.  His resume claimed degrees from both Harvard and Oxford as well as long term employment at one of the world’s top financial institutions – J.P. Morgan.  The headhunters forwarded the resume to their client who promptly interviewed and hired the fraudster.  It was only after they had flown him to the Middle East to meet their wealthiest clients that they discovered his lies.

A few simple inquiries into this person’s past prior to a job offer would have saved this bank a little bit of money and a lot of embarrassment.

Fraudster conned his way to top bank job

A conman used a fake CV to trick his way into becoming the £165,000-a-year deputy chief executive of a City investment bank, a court heard.

By Paul Cheston, Courts Correspondent – London Evening Standard – 1/31/2011

Peter Gwinnell, 49, posted a résumé online which claimed he had degrees from Oxford and Harvard and had worked for JP Morgan for 20 years.

The fake was enough to convince City headhunters Connaught Partners to put him in touch with Ahli United Bank, which was looking for a new deputy chief executive, in the autumn of 2009. Gwinnell played the role of senior banker so well that after two interviews he was appointed to the job.

He worked for a month, flying out to the Middle East several times to meet wealthy clients and collecting £14,500 in salary. It was only when Ahli ran extra checks that it realised Gwinnell’s story was a lie.

In reality he was a convicted conman who had served six months in prison in the Nineties and had not attended either university, or worked at JP Morgan. Gwinnell, of Harrow, admitted a single count of fraud and was handed a 50-week prison sentence, suspended for 18 months, at Southwark crown court. Judge Geoffrey Rivlin QC spared him an immediate jail term after hearing he had already spent 12 weeks in custody on remand, and was suffering from serious depression.

The judge instead ordered Gwinnell to complete 100 hours of unpaid work, 18 months of supervision with a probation officer and to continue to undergo treatment for his depression.

He also banned him from uploading a CV onto the internet without the court’s permission. Sentencing, he told Gwinnell: “Somehow or other you managed to convince Connaught Partners that you were a suitable candidate for employment by the bank.

“This offence was deliberately planned, and it caused loss, but also no doubt much trouble and aggravation, and quite obviously embarrassment to the bank who determined that you were suitable for employment.”

The court heard that even after Gwinnell was questioned by police, he sent a fraudulent CV to a Swiss bank before withdrawing the job application.

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So CareerBuilder created a Do’s and Dont’s article for those looking for jobs as a follow up to their Social Networking study about background checks which was released last month.  Advice includes:

• Do Update Your Profile Regularly
• Don’t Badmouth Your Current or Past Employers
• Do Join Groups Selectively
• Don’t Mention Your Job Search if You are Still Employed
• Don’t Forget That Others Can See Your Friends

It’s pretty good advice, but they forgot the most important advice of all: Don’t Make Your Profile Public! I’m surprised by the omission.  If people that you don’t allow in can’t see your profile, then all of the above advice becomes a moot point.

Also on the topic of Social Networking and Background Checks was a great OpEd piece published in the Miami Herald by Mark Neuberger, labor and employment attorney for Foley & Lardner LLP.  Mark made provides an interesting analogy to to this practice by comparing it to pre-civil rights days.

“Before the Civil Rights Act, it was common for companies to require applicants to submit a photograph and routinely ask about religion, marital status and number of children. This information affected decisions regarding hiring, compensation and promotions. The widespread practice was that the ”family guy with kids” deserved the promotion and more money because he needed it and the single female did not.”

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It’s an interesting take, but at the end of the day, the comparison is entirely valid.  Even if you are not factoring things such as race, age, gender, sexual orientation, etc. into your search, the old saying still holds true.  “You Can’t Unring That Bell”.

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Check out our podcast of This Week in Background Checks from the Week of November 3rd.  Topics discussed include:

• Recap of the ERE Conference
• Governor of Ohio’s Background Check on “Joe The Plumber”
• Affects of the Presidential Election on Background
• FTC Red Flags Guidelines
• Fake Claims of Military Honors

Enjoy!  Have a great weekend.

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Greetings from the booth #219 at ERE Fall Expo in sunny, but not so warm Hollywood Beach, Florida.  There appear to be a number of attendees at this conference, which leads me to my first question: Why is everyone waiting in line for food when they could be talking to us about background checks?  C’mon people, we’re raffling off a Nintendo Wii, and you know conference food usually stinks.

On a serious note, ERE decided to broadcast a live feed of the conference on their website.  Very innovative, but I wonder if doing so both now and in the future will discourage people from attending.  Why spend the money or the time at the conference, when you can just tune in for the sessions that interest you?  Of course, a live feed can’t replicate perhaps the most important part of any conference, networking.

I attended a great panel discussion about cutting technology in staffing, moderated by Gerry Crispin and Mark Mehler of CareerXRoads and featuring Cheezhead’s Joel Cheesman.  They most technologies they mentioned most were Twitter, SMS messaging, and IM.  Wouldn’t it be great if background checks could be done that way?  Maybe in the future!

Anyway, back to the conference.  Things picked up since I started this post.  We’re going to be doing a podcast with Steve Curtis from iCIMS’ in a little bit.  I’ll keep you posted.

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The Daily Monitor, a Ugandan newspaper, has exposed a con taking place at the country’s largest and oldest university.  Makerere University has become the target of a degree fraud scam most likely perpetrated by members of its own staff and a contractor hired to speed up the degree issuance process.  The newspaper was able obtain a fake transcript from the university and then receive verification from the Academic Registrar that the transcript was genuine.

This is a trend that I think will definitely increase over the next few years and criminals get smarter and technology becomes more advanced.  Schools should conduct background checks on employees that will have access to confidential student information and important tasks such as issuing degrees and awarding financial aid.  There are numerous opportunities to commit fraud in these areas.  Schools need to recognize this and protect themselves as much as possible.

In addition, employers should always conduct education verifications on prospective employees whose position requires a certain level of education and/or a primary course of study.  There is no question that fake degrees are being sold worldwide.  The question is:  Who’s buying?  Could it be your applicant?

Makerere certifies fake transcripts

By Edwin Nuwagaba – October 27, 2008

Kampala

A criminal gang in Kampala is selling fake degree transcripts from Makerere University at Shs250,000, a Daily Monitor investigation can reveal.

While the trade in fake transcripts has been going on for many months, the forgery has become so sophisticated that the university cannot distinguish the fake transcripts they issue from genuine ones.

Following earlier reports of its transcripts being forged, Makerere set up an office earlier in the year to help employers vet documents submitted by prospective employees. However, the racket, which has contacts within the university, issues ‘fool-proof’ transcripts that the office cannot identify as being forged, leaving thousands of employers vulnerable to applicants getting jobs for which they are not qualified.

In an effort to expose the loopholes in the verification process, Daily Monitor paid a racket member Shs250,000 for a fake transcript which came with a certified copy. When Daily Monitor submitted the fake transcript to the university for verification, it was certified as a genuine transcript.

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Be sure to check out our Internal Resource for Identifying Known Diploma Mills.  It can be downloaded at http://university.employeescreen.com/white_papers

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The folks over at HR.BLR.com just published a fascinating story entitled, Court Ponders Implications of Deceitful Resume.  A company employee was terminated when fellow employees alleged sexual harassment.  This gentleman was on an employment contract which included a severance provision.  The employer then investigated the employee and found that he had committed resume fraud to get the job and that he was not entitled to the severance package.

The court ruled that the employer had an opportunity to discover the resume fraud before they extended a job offer and therefore was liable for the severance.  This should serve as a lesson to employers that background checks which include Employment Verifications are vital to ensuring you hire the best candidate for the job.

Court Ponders Implications of Deceitful Resume

What the court said.

The question was whether the man’s alleged fraud was sufficient basis for NMHC to rescind his contract. The appellate court pointed out that the testimony at trial showed that NMHC, its recruiter, and its interviewers failed to ascertain the truth about his employment history, though it appeared to have been readily available via background checks and calls to former employers. The recruiter testified that NMHC had not authorized him to check prior employers. He was only authorized to check references.

Due diligence would have revealed the falsities, the court said, because after the firing, NMHC looked more closely at the  résumé in the hope of showing that the man was terminated for cause and bolstering its claim that he was not entitled to the severance benefits. Based on NMHC’s failure of due diligence, the court agreed that the action to rescind the contract should be dismissed. National Medical Health Card Systems v. Fallarino, Supreme Court of New York, Nassau County, No. 12519/05 (8/25/08).

Point to remember:

This ruling suggests that when employers don’t thoroughly investigate applicants’ backgrounds, they’re in a weak position to try to rescind an employment contract based on a misleading and inaccurate résumé.

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Yesterday, the FTC announced a 6 month delay in enforcing their “Red Flags” Identity Theft Guidelines.  In reading through the release, it was unclear as to how this would affect employers.  Well, we’ve been in touch with the FTC and we now know that this delay only pertains to Financial Institutions and Creditors.  Employers still must be in compliance with the these guidelines as they relate to developing and implementing a policy to handle “Red Flag” Address Discrepancy Notifications from National Consumer Reporting Agencies (primarily credit bureaus) when conducting background checks.

For more information about these guidelines, please refer to the articles listed below.

Users of Consumer Reports Have New Responsibilities as of November 1, 2008

employeescreenIQ Offers Free Webinar on New FTC Identity Theft Guidelines

FTC Enforcement Policy: Identity Theft Red Flags Rule

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The FTC has just announced that they were delaying enforcement of their “Red Flag” rules on Identity Theft until May 1, 2009.  However, it is important to note that these rules are different from the Address Discrepancy Rules we recently conducted a Webinar on with Seyfarth Shaw attorney, Pam Devata.

I just spoke with Pam and it is still her position that employers who are using credit reports should still comply with the November 1, 2008 deadline for having a written policy in place.

We’ll keep you posted as we learn more.

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FoxNews is reporting that a 76 year old New York woman has just been arrested for a 73rd time.  According to the story, “A criminal complaint filed earlier in this case charged Kelly with grand larceny and attempted grand larceny. It said she took a wallet, left by police as bait, from a shopping cart in a supermarket a few blocks north of Lincoln Center for the Performing Arts on Oct. 15. It said an officer recovered the wallet from Kelly’s ‘bra area.’”

I’m thinking that this woman might want to switch to a new line of work.  She clearly hasn’t been a very good crook.  The story also says that she has used 36 aliases since she began her life of not-so-lucrative crime.  Can you imagine what the background check would look like on this?  The paper used alone could rival that of Homer’s The Odyssey.  How about the cost for checking criminal records for a woman with 36 names?  Can you say “National Deficit”? That would be one expensive and time consuming background check.  Yikes!

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