Industry update!

It’s been a while since I have had the opportunity to update our valued clients and partners on the latest and greatest happenings in our industry. As many of you know, I am past Co-Chairman of the National Association of Professional Background Screeners (NAPBS) and remain an active board member. employeescreenIQ is a founding member of this organization and many of us were instrumental in getting it started. In this article I’d like to share a few events I’ve attended in the past six months and bring you up to date with the latest issues in the industry.

In early March I completed my annual lobbying trip to Washington DC. We spent two days visiting with members of the House and Senate, along with various members of their staff. The purpose of these meetings is to educate policymakers in Washington about our industry, its trends, and the future of the services we provide. In addition to the elected officials we met with we also spent time at the Federal Trade Commission and The Department of Homeland Security. This year’s focus was a bit different than past years because there was very little ‘buzz’ about specific bills that would have an impact on what we do. The two issues of most interest to us remain the various Privacy Bills and Immigration Reform Bills. It remains unclear whether or not these will go through in this 110th Congress or put off until the next term. Recent news has shown that the immigration bills are getting renewed attention but it’s still unclear which version will prevail. One consistent theme is that whatever bill passes will likely have a provision that all U.S. employers will be required to participate in the electronic I-9 process (SAVE Program) within the next five years. This is exciting news because of the potential this product has for employers. This service has been available to all employeescreenIQ clients for the past 18 months. We remain positive about all the bills we have read and are excited that we have become a trusted resource for policymakers when exploring issues that have an effect on our industry.

In late March I had the pleasure of once again presenting at the NAPBS national conference. This year I participated on an industry panel and delivered a presentation on “Trends in the Employment Screening Industry.” The presentation was attended by several hundred of my colleagues and was very well received. There are some exciting new products that we will be testing over the next several months in addition to some new features we will be releasing on my employeescreen 4.0.

employeescreenIQ remains at the forefront of our industry. We take great pride in contributing to the evolution of our industry and appreciate the responsibility that comes along with it. We recognize that innovation and sharing our knowledge with our clients and partners is the best way to remain a leader in the screening industry.

I look forward to seeing many of you at this year’s SHRM conference in Las Vegas. Please be sure to stop by booth 1521 and say hello!

Best,

Jason B. Morris

At employeescreenIQ, we have a responsibility to help our valued client/partners promote and maintain a safe working environment both for their employees and their customers. We also feel a responsibility to give back to those in need of assistance in the communities we serve. Since our inception, we have identified and contributed to many worthy organizations, increasing our contributions as our company grows. We are proud to announce that we have increased our annual donation by over 400% since 1999 including a 50% increase over last year’s program. 2007 recipients of these funds include the following:

• The Make a Wish Foundation of Ohio
• The American Cancer Society
• Celiac Disease Foundation
• The Ohio State University
• Prevent Child Abuse America
• The Gathering Place
• Urban Community School
• New Directions
• MedWish International
• Kent State University
• John Carroll University
• Peter Edward Mardikian Scholarship Fund (Ohio State Univ. Fisher School of Business)

If you wish to make a contribution to these worthy causes, please click on the attached links.

*By Kevin Bachman*

Bolster your image as a valued business partner by taking advantage of these low tech solutions to improve the quality of your background checks.

The latest technological revolution that is percolating within the background check industry is the seamless, electronic transfer of information from a client to the background check company. Applicant tracking systems (ATS), XML Transfers and online job applications are all useful tools to reduce labor costs and go paperless. And don’t get me wrong, these are great solutions. However, we have seen many companies excited about these capabilities get right to the water’s edge, and then step away due to the complexity and resource commitments required to implement them.

On our end, we simply work with a client’s IT department; exchange schema, then plug and play. It tends to be a pretty simple process. However, we have noticed that for many of our clients, getting to that point can be challenging. In the face of competing projects, the resources that are allocated and the collaboration that needs to take place between IT, Legal, Human Resources, and other departments, even the best intentioned integration efforts can derail.

Luckily, there is still enough low hanging fruit, if picked properly, to create an even stronger screening program without immense investments of time and resources. At the same time, this is an opportunity to demonstrate your commitment to your company and the value you can bring to the table as a business partner. Follow these simple steps and make yourself look good doing it.

What do you want us to find?

Some clients ask us to verify employment or education but don’t provide any information other than the name of the company or college the applicant attended. We find discrepancies on approximately 50% of all employment verifications and college degrees are among the most fraudulently claimed components of a background check. The more information we receive, the more we can compare and contrast to what we are told. Some companies and schools will only verify what is provided to us. If we receive nothing, there’s no way to ascertain if the degree, the title, the salary, the dates of employment or the reason for leaving he/she said in an interview were lies. For the clients that provide to us limited information, we report back fewer discrepancies, because there is nothing to compare what we are told. Let’s hope applicants for these companies are more honest! The result of getting this information ahead of time is a better background check which enables you to make an informed hiring decision.

*How can you benefit? Put your company in a position to make a good hiring decision by telling us all you know. The more information we receive, the more thorough the background check. Take an extra minute when entering orders through **My Employeescreen 4.0**. If faxing orders, send us the job application, rather than the resume. Job applications tend to ask for more detailed information.*

What do you want us to find, part II?

A comprehensive criminal check includes a felony and misdemeanor criminal records search under every name the applicant has gone by in every county the applicant lived, worked or went to school in over the last 7-10 years. We recommend our clients take this approach to accomplish their screening strategies. Choosing to not run all names and all counties often means missing criminal records that you may have otherwise found.

Many of our clients have begun using our instant Social Security Number Trace (Address History Search) tool when placing orders online. This feature gives our clients more control over their orders and allows them to choose alias names and counties for criminal research themselves. The primary advantage is that the client knows immediately how many previous addresses and/or alias names will be involved in the criminal background check. Clients that do not desire to run a full 7 year criminal check may utilize this functionality to limit the scope of the background check. It is important to note that using this tool for this purpose is not recommended, because it will defeat the purpose of running a best practice background check on your applicants. Exempting previous addresses from the criminal history research on a consistent basis WILL result in fewer criminal records identified and increase risk to your organization. Please contact our Client Relations Department or your Sales Representative if you would like more information on this tool.

*How can you benefit? By choosing to run a thorough, compliant, criminal records check, you can mitigate the physical, legal and financial risks associated with hiring and employing a workforce. Decide to find all criminal records your applicant may have over the past 7-10 years. Prevent someone who should not have access to money, customers or employees from affecting your bottom line. Or, by the confidence generated from a good background check, hire those who should.*

Save money by doing a better background check

That’s right. There is an opportunity to do better background checks and spend less money to do it. As companies across the world evolve from “doing background checks” to “doing better background checks” we have spent a lot of time collaborating with our clients on efforts to focus on the applicable services that offer the most benefit.

In conjunction with our clients, we’re shifting some programs away from conducting the same seven services (for instance) for each applicant across the board, no matter what. Instead we are creating screening programs based on levels of responsibility, or by position. Thus, we would now provide three services for example, for 33% of applicants, five services for the other 33%, and nine services for the remaining 33%. By reshuffling dollars, clients are able to do an even better background check for the level of candidates that need it most, while at the same time saving money across the board.

*How can you benefit? On an annual basis, convene with your hiring or recruiting managers to reconfirm which services are most applicable. This communicates within your company that you are committed to making good hiring decisions while at the same time adhering to a budget, innovating and delivering cost savings.*

Use the resources at your disposal

Many areas of responsibility that Human Resources, Security, and Loss Prevention personnel oversee are extremely complex and regimented. These obligations can be well documented with clear standards. Non-conformity is usually easy to determine. In many cases, these regulations are dictated by a regulatory agency or legislative body.

The background check industry is not as clear cut. This is an evolving industry; one where state and federal legislatures propose vague umbrella laws like “all contractors should do a background check” and where court clerks allow or restrict criminal record information depending on the week. There are few mandates that stipulate the certain type of a background check that should be done in order to hire a certain type of applicant for a certain type of position. It is the “do it good” directive. Companies are told to do it, and to do it well, without guidance on how and without direction on what constitutes a thorough and compliant search.

So how can a company “do it good” without being told what that entails? Just ask! As a best practices provider, we get together. We talk. We listen. We ask questions. In tandem, we design a program that provides you with as much protection, information, and compliance at an affordable price.

*How can you benefit? Take advantage of all we are willing to offer. Ask our opinion of your hiring program, your job application and your screening classifications. Demonstrate within your organization you are current with the changing nature of this industry and how the services you request continue to suit your needs.*

*Kevin Bachman is Vice President of Quality Service for Cleveland-based employeescreenIQ, a best practices provider of pre-employment screening services throughout the U.S. and worldwide. Kevin can be reached at (800) 235-3954 ext. 450 or kbachman@employeescreen.com”.*

What is a credit report? Why are they so difficult to understand? Why are they so long? We could go on and on illustrating the types of questions we are asked on a daily basis about credit reports. And with good reason. They are difficult to understand. Further, understanding what constitutes good and bad credit is a moving target depending on what job an applicant is being considered for and no one can provide a solid definition or litmus test for determining such. Rather than attempting the impossible task of defining good and bad credit or what on a credit report makes an individual ineligible for employment, I spoke with Maxine Sweet, Vice President of Public Education at Experian to get a true insider’s perspective of this tool. Let’s start with a few definitions and then we’ll look at how this information is best applied to an effective employment screening strategy.

Employment Credit Report v. Consumer Credit Report

Did you know that there are two distinctive types of credit reports commonly issued by the credit bureaus? One is the standard credit report and another is a credit report that has had certain information suppressed so that it can be used for employment purposes. Here are the differences:

• Credit Score – the credit score is an algorithm or equation developed by credit scoring companies, such as Experian Decision Analytics or Fair, Isaac Corporation. Contrary to popular belief, credit bureaus do not develop or formulate the algorithm. Credit scoring algorithms are proprietary to the risk score developer and are not known by the credit bureau. They are called credit scores because they use information from a credit report to do the calculation. Credit scores are tools used by lenders to analyze the information in a credit report. Credit scoring is an entirely separate process from credit reporting, and credit scores are not part of a credit report. That myth has evolved because lenders typically have the scores printed with the credit report, and so the scores appear to be part of the report, when in fact credit scores are the result of an entirely separate process. Credit scores cannot be used for employment purposes. Therefore, a credit score will only be provided on a Consumer Credit Report (not on an Employment Credit Report).
• Account Numbers – account numbers are purposely left off an Employment Credit Report.  This is for the protection of both the applicant and the employer.  An employer would have no need to access their applicant’s account numbers.  Lack thereof in the Employment Credit Report mitigates the risk of an un-authorized person accessing such information and doing significant damage and as we all know the protection of data is a hot topic these days.
• Hard Inquiry v. Soft Inquiry – each time a Consumer Credit Report is accessed a record of that access is added to the credit report. That record is called an inquiry. There are two different types of inquiry. Inquiries resulting from your application from credit can be shown to others when they request a report, and are often referred to as “hard inquiries.”  Hard inquiries can count against a consumer’s credit scores. Recent hard inquiries mean you may have taken on new debt which has not yet had time to be reported in your accounts. The more hard inquiries, the more debt you may be taking on, which is an indicator of risk. However, inquiries are a minor factor and are only significant if they occurred in last few months. The second type of inquiry is not shown to others, and so has no impact on a lender or employer decision or credit scores. Soft inquiries are a record of your report being accessed when you have not applied for credit. They include pre-approved offers, account management, reports for employment purposes and requesting a copy of your personal credit report. An Employment Credit Report inquiry, therefore, does not count against an applicant’s credit score.

Because employeescreenIQ focuses solely on employment screening, we only offer Employment Credit Reports. This means that your candidates can rest assured there will be no adverse impact on their borrowing capability resulting from your employment screening strategy.

What Information does an Employment Credit Report Reveal?

An Employment Credit Report reveals the following information:

• A Profile Summary showing information such as total number of active lines of credit or accounts, number of delinquent accounts, liens or judgments, etc. While it is important to review the entire report, we typically tell our clients to start with the Profile Summary, which could be considered the “dashboard” of the report. It shows the number of public records an individual has, if any, and reveals monthly payment obligations such as mortgage payments and revolving credit (credit card obligations for example). It also reveals the percentage of revolving credit available to the consumer in relation to the maximum currently available. So if your applicant has a credit line of $5,000 and they have borrowed $2,500 against that line, it will show that they have 50% of their revolving credit available. The summary also shows the number of accounts in good standing and the number of delinquent accounts, both current and in the past.
• The Public Records section follows the Profile Summary. This will list any existing liens or judgments that have been reported to the credit bureaus, if any. These may include any suits or judgments against a consumer in regards to their failure to make proper payments to a creditor and/or bankruptcies.
• The next area is the Trades/Account Status report which details the balance for all lines of credit (active and inactive). This may include accounts such as mortgages, car loans, credit cards, bank accounts, etc. The account status descriptions include when the account was opened and closed (if no longer active), a monthly payment history, any existing balance, whether the account is/was considered in good standing, etc.

Okay so now we know what we are looking at. How do we go about making a decision? Before we answer this question, it makes sense to evaluate the theory behind credit report evaluation. According to Maxine Sweet from Experian an employment credit report is one tool that an employer should use to evaluate a candidate’s personal responsibility. Sweet says, “A credit report will not automatically tell you that you should or should not hire a candidate. Instead, in simplified terms, it will highlight whether they have paid their bills when they said that they would.”

When asked who should get a credit report Sweet indicated that the most common candidate for a credit report should be someone who is being considered for a position where they will be exposed to financial records, books, etc. and those that will be entrusted with large amounts of money or financial responsibility. However, with proper consent, employers have the right to evaluate credit reports on any candidate. How each candidate manages their own personal finances can be an indicator of how responsible they will be in managing a company’s assets. If an employer is considering several candidates with comparable resumes, their credit management skills can be a distinguishing factor.

I asked Maxine what employers should pay closest attention to on the credit report and she indicated that the Profile Summary was a great place to start. She thinks the most important questions to answer are:

• Does your candidate have public records (liens, judgments, bankruptcies)?
• Do they pay their bills on time?
• Do their monthly payments exceed the salary you intend to offer?
• And have they maxed out their available credit so that they are stressed with excessive financial obligations?

Once you have been able to assess this information, you can evaluate whether they are suitable for employment. In the event of adverse information, some employers choose to discuss some of the concerns with their candidates and ask for explanations.

Lastly, as we discussed earlier, a credit score cannot be used in the hiring decision; however, Sweet indicated that employers can develop their own evaluation system that is applied indiscriminately based on what information is important to them and then use that scoring system consistently across the board.

What tools do employeescreenIQ clients have available to them for further support on credit report-related issues and questions? First and foremost, our Client Relations Department is available to answer any questions by phone or email. For independent research, clients are invited to the “Resources” page of our website www.employeescreen.com. There we have sample reports with explanations of each field found on a credit report. We have a glossary of terms and codes furnished by the credit bureaus as well an FAQ manual. The credit reporting companies have Web sites with extensive education resources for consumers, such as sample consumer reports, answers to frequently asked questions, and advice columns, such as Maxine Sweet’s Ask Max (www.experian.com/ask_max) on the Experian Site.

The bottom line with credit reports is that there are many questions that arise when using them. It is important to know that you are not alone and we invite inquiries when you run into barriers. As always, we will be able to help you review the report and what the information reveals. What we cannot answer is how you should treat the information found or whether your candidate should be hired or disqualified. That decision should be a result of combining all the information gathered throughout your hiring process, and weighing it as a whole against the duties and responsibilities of the position.

Nick Fishman is Chief Marketing Officer, EVP for Cleveland-based employeescreenIQ, a best practices provider of pre-employment screening services throughout the U.S. and worldwide. Nick can be reached at (800) 235-3954 ext. 441 or nfishman@employeescreen.com.

employeescreenIQ is a 2005 and 2006 Weatherhead 100 Award Winner.

Should I run a background check on every applicant or just those who are offered a position? What should the background check consist of? If I wait two or three days for a proper background check I’ll lose this candidate; what can I do? Must I deny employment if I find criminal records or other adverse information?

These are some of the most common questions asked by prospective clients of Consumer Reporting Agencies. The answers can only be determined by examining the unique needs and cost/benefits of the alternatives within your own organization. Some questions you might consider: What layers of due diligence do you perform in your hiring process? How many people are involved in your hiring decisions? What is the value of their time? How much of the process is outsourced? How much access to sensitive assets, information, or financial resources does each employee have? How much damage could a disgruntled employee do? What level of risk management are you looking for in relation to available resources? The answers to these questions are different for every employer.

The background check is one piece of the puzzle

Because new-hires are granted access to clients, business assets, and other employees, most companies conduct several layers of due diligence prior to issuing an employment offer. These layers may include resume and/or application review, a single or several rounds of interviews, testing for specific skills, aptitudes, substance abuse, or psychological and personality profiles, and any number of other industry- and occupational-specific measuring tools. These are all designed to paint a detailed picture as to whether an individual represents a good fit for the position and the company. Most of these methods are qualitative in nature, based on information provided by the candidate. Hiring managers know that every applicant wants to portray her/himself as the best candidate for the position. This can be an incentive for applicants to take liberties with expressing their qualifications, experience, education, and history.

The background check should be considered the capstone of the hiring process. In other words, it should validate the accuracy of the different pieces of information provided by the candidate throughout the process. Most employers choose to interview only the best candidates, based on previous job experience or education credentials claimed by the applicant. Little white lies may not seem significant to a job candidate trying to facilitate a career advance. Claiming a degree that was not quite completed or embellishing work experience to make it appear they are more qualified for a position than in reality is more common than one might think. Sometimes the white lies aren’t so little. Similarly, habitual criminals often gravitate toward positions that will grant them access to the objects or people of their deviant desire, and perpetuate lies about their past to achieve their goal. Unfortunately, if you as the employer do nothing to validate the claims of your candidates, you are not managing risk. The risk to your employees, customers, and business assets is immeasurable.

Define the parameters

A relevant and reliable background check is not a commodity product – one size does not fit all. The vast majority of employers consider criminal history the most important starting point for a background check. Depending on the duties of the position, the level of the responsibility of the employee, and the characteristics of people and assets the employee will be exposed to, other background information should be researched as well. For example, positions requiring specific experience or education are the most ripe for manipulation. Previous employment and degrees earned should be verified. For employees that drive company vehicles or personal vehicles during the course of the workday, you need to ensure they have a valid license and safe driving history. If an employee will have control over finances, access to significant amounts of liquid assets or expensive inventory items, you should review a credit report to ensure the salary of the position will provide them with reasonable means to support their current lifestyle and obligations. Any employee that will have access to children, the elderly/disabled, residential spaces, hotel rooms, etc. should be run through a national sex offender registry in addition to the standard criminal search. There are also many industry-specific tools such as D.O.T. regulations for pilots and commercial truck drivers, OIG/Excluded Party searches for health care workers, and Homeland Security Databases for industries that require OFAC and Patriot Act compliance, to name a few.

Timing: When to initiate the background check

In most cases, it would be unrealistic (and expensive) to run a complete and thorough background check on every applicant as the first step in the hiring process. Most organizations prefer to wait until they are ready to extend an offer to the job candidate to run the background check. This may make the most sense for your organization, but be sure you consider all the factors.

While waiting until the last minute minimizes the overall number of background checks run, it doesn’t necessarily minimize the overall cost to the organization. It is typically mid- and upper-level managers that are involved in interviewing candidates and weighing hiring decisions. Both the dollar value and opportunity cost of their time is significant. Third-party and standardized testing tools can also represent a significant cost. By waiting until the last step to validate the information with a background check, individuals who misrepresent themselves have already cost your company a bundle of valuable time and money.

Another concern with running a comprehensive background check as the last step in the process is that it can encourage taking shortcuts. Many organizations feel that they will lose good candidates if they must wait 2-3 days for a proper background check. Some employers choose to cut corners and utilize instant background checks, or worse, forego screening altogether. Instant checks offer no oversight and no auditable paper trail to even estimate the reliability of the information.

The best practice recommendation for companies that feel they must make the offer immediately is to use a conditional offer letter, contingent upon satisfactory completion of the background check. This allows the employer to bring the individual onboard right away while the background information is properly validated. Don’t fear the scenario where you must dismiss an employee who has already begun working. If the proper questions have been asked of the candidate throughout the process, the background check is simply validating the answers to those questions. An employer should feel no remorse for having to dismiss a new employee after a few days because disqualifying discrepancies are identified in the background check. When done properly, the discrepancies will be validated and the applicant will have had ample opportunity to dispute any inaccuracies. A candidate that has provided misleading information or lied outright during the interview process has no basis to criticize this decision. Your organization will benefit by waiting a few days to conduct a proper, compliant background check.

The hybrid option

An alternative to consider for organizations that deal with a high volume of open positions and applications is to explore some inexpensive and quick background check tools as preliminary qualifiers before moving the candidates along to the more costly interview and testing phases. This is often called a progressive screening strategy. Consider including a question on your job application asking if the applicant has ever been convicted of a felony. You may then run a nationwide database criminal check as one of the first pieces of due diligence. It is important to note that a national criminal database should never be considered anything more than a cursory check. However, upon discovery of a criminal record through an inexpensive database check, the prospective employer has ample time to explore the issue with the candidate, or may choose to put the hiring process on hold for that individual until the criminal record is validated directly by the prosecuting jurisdiction (it is imperative that this step is performed since criminal database records often lack additional identifiers and may be based on a name match only). If the conviction is valid, and the candidate claimed no prior convictions, the hiring process is typically discontinued immediately for dishonesty. At the employer’s discretion, if the candidate has provided a satisfactory explanation for the situation, the employment relationship may still be pursued. A proper criminal check at the county level should always be performed before finalizing the employment relationship.

Adverse Action

When the background check reveals discrepancies between the facts found and the information provided by the candidate, you may consider taking adverse action. Taking adverse action typically means you have decided not to hire, or not to promote someone based on results of a background check performed by a Consumer Reporting Agency. When adverse action is taken, you should be able to show that those decisions were applied consistently and fairly when similar circumstances are present. To achieve consistency in applying adverse action, consider the following set of litmus tests in determining whether one or more discrepancies warrant disqualifying the individual from employment or promotion:

• How serious is the discrepancy?
• Does the candidate have a satisfactory and/or verifiable explanation?
• How long ago did it happen?
• Is it related to the duties of the job applied for?
• Is it an isolated incident or is there a pattern of irresponsible or disqualifying behavior?

In any event, if adverse action is taken based on information in a consumer report, the employer must follow the adverse action procedure defined by the Fair Credit Reporting Act (FCRA). The applicant must be sent a Pre-Adverse Notice letter informing them of their right to review and/or dispute any information in the report they believe is inaccurate. The Pre-Adverse Notice must also include a copy of the consumer report (background check) along with an FCRA publication entitled “A Summary of Your Rights Under the Fair Credit Reporting Act.” The Pre-Adverse Notice letter is then followed by the Adverse Action Letter, which informs the applicant that they are not being hired/promoted based on information from the consumer report.

Where the rubber meets the road: consistency is key

Having defined the substance of your screening strategy, the single most important aspect of implementing it is consistency. One of the primary purposes of the FCRA is to ensure that job candidates are treated objectively in the hiring process, based on individual merits and circumstances, and given reasonable opportunity to dispute and correct erroneous information at the public record source. In the unlikely event you are faced with negligent hiring litigation, you will face intense scrutiny as to how reliable your screening process is, and how consistently you’ve applied it. The same types of screening services should be run on all employees with similar duties or levels of responsibility.

Contact employeescreenIQ to discuss the elements of a proper employment screening strategy. Reliable information that manages risk for your employees, customers, and business assets, not to mention protecting the privacy rights granted to your job applicants by the FCRA, not only improves your hiring decisions, it is good business.

Rob Thomson is Communications Manager and Senior Account Executive for Cleveland-based employeescreenIQ, a best practices provider of pre-employment screening services throughout the U.S. and worldwide. Rob can be reached at (800) 235-3954 ext. 438 or rthomson@employeescreen.com.

employeescreenIQ is a 2005 and 2006 Weatherhead 100 Award Winner.