March 2008
One Bad Apple Could Sink Your Ship
Background checks could keep your business afloat
By Cindy Illig Lum

Bob Gandee, CEO of BackTrack Inc., an employment checking company in Mentor, with wife Linda, estimates that two-thirds of the companies he contacts are outsourcing background checks while the other third are still not doing much.

Last month, Major League Baseball was exposed for sending investigators to snoop around in the personal lives of their umpires. Presumably, they were trying to prevent the kind of publicity generated by the NBA referee who was discovered to be betting on games he officiated.

Last year, a Massachusetts Institute of Technology admissions officer was forced to resign after she admitted to lying about her credentials. And several years ago, the story of Sue Weaver made headlines when she was raped and killed by a repairman hired by a reputable company that failed to do a criminal background check on the two-time convicted sexual offender they hired.

These and other headlines might be enough to urge employers to conduct background checks on potential employees. Add to them a cost-benefit analysis and you will get a bottom line worth heeding, says Jo Prabhu, a member of the Staffing Management Panel for the Society for Human Resource Management.

“Without background checking, an employer runs the risk of hiring illegal workers, unqualified people or someone other than who the candidate says he is,” Prabhu said. “In the end, they could pay huge fines.”

At best, an employer who fails to do pre-employment screening risks losing the time and money invested in a new employee. At worst, they may face costly lawsuits that hold them liable for their employee’s actions if, for example, they would have uncovered a criminal conviction that might have predicted a violent episode.

“An employer can be held accountable for not doing their due diligence when hiring someone,” Prabhu said. “They could be sued or lose any license they may have to operate.”

Despite headlines and lawsuits, a 2004 survey conducted by the Society for Human Resource Management found that 96 percent of human resource professionals said they always conduct some type of background or reference check on applicants.

That number was up from 51 percent 10 years prior. Still, those from companies employing 500 or more were more likely to conduct checks than those with staffs under 100. Businesses with fewer than 100 employees and fewer resources were not even included in the survey.

Bob Gandee, chief executive officer of BackTrack Inc., an employment background checking company in Mentor, said when he first got started in 1994 about 10 percent of the companies he called were outsourcing background checks. The remaining 90 percent were evenly divided between those doing checks in-house and those not doing background checks at all. Today, Gandee estimates that two-thirds of the companies he contacts are outsourcing while the other third are still not doing much.

Marleen Birky, sales manager for Kelly IT Resources in Cleveland, says many of her clients don’t require any background checking.

“I’ve been at Kelly for six years and I still have clients that don’t require anything,” Birky said. “I have others who have just added the background checking process.”
    
Mandatory checks

Except for in a handful of industries, background checks are not mandated by any federal or state laws. The only requirement is that employers verify that the applicant is legally allowed to work in the United States.

“The transportation industry requires more extensive driving record history and drug testing,” Gandee said.

Also, in some industries where the employee will have contact with children, a more extensive background check may be required by any number of regulatory bodies.

Jack Blackwell, the director of human resources for Crossroads, a community-based counseling center in Mentor, says these regulations are taken very seriously.

“One thing that is unique about us is, because we serve children it is very important that we hire people who won’t do harm,” Blackwell said.

Crossroads is required by the Ohio Department of Mental Health, the Ohio Alcohol and Drug Abuse Services Board and a Head Start contract with the federal government to conduct thorough criminal background checks on potential employees. They are periodically audited to ensure the checks are being conducted.

Jonathon Lee, CEO of the Northcoast Center, a counseling agency with three locations in Northeast Ohio including one in Willoughby, said background checks have turned up a few people they wouldn’t hire.

“There have been people who said they had licenses but didn’t and people who told us they had worked somewhere much longer than turned out to be the case,” Lee said. “People have lied about the reasons for their discharge and most importantly fingerprint checks have come back showing criminal records.”

Outsource or in-house?

Lee said from a liability and accreditation standpoint, contracting with a company like BackTrack to do their background checks is both economical and practical.

“They are much more thorough than we could be and the turn-around time is a lot faster,” he said.

Both Lee and Blackwell contract with BackTrack, often receiving the results in 48 hours. Outsourcing to a company that specializes in background checking and is held accountable to the laws that govern them is one way an employer can get a thorough, legal and professional check on a potential employee.

Chuck Gehrisch, president of Roll-Kraft, said his company outsources all background checks but it hasn’t always been that way. Roll-Kraft employs 135 people between its Mentor and Canadian facilities.

“Ten years ago most companies like ours hired by word of mouth,” Gehrisch said. “We didn’t even have a human resources person.”

Like a lot of smaller manufacturers, Gehrisch said they would “find a guy and if he had the skills, we would bring him in and see what he could do.”

Often these candidates would be referred by a friend or another employee. But headlines over the past decade and a lack of skilled workers led Roll-Kraft to make background checks, and more recently, drug testing, a company policy.

“When you read the paper and look at the news, whether it’s about theft by an employee or disgruntled workers, you just better be a lot more careful about whom you actually bring in,” Gehrisch said.

Roll-Kraft goes one step further than a standard background check. They profile candidates using a personality test called the DiSC Personality Factor profile. Gehrisch stands behind this decision despite its unconventionality in the manufacturing industry.

“If we’re hiring for a position that requires an individual to sit for eight hours a day, a profile will tell you whether or not they can do that,” Gehrisch said. “If not, we know that the individual needs to be placed in a different function.”

Despite Roll-Kraft’s commitment to more extensive background checking, Gehrisch can only think of one situation in which a check turned up information which discouraged him from hiring the candidate.

“It was a drug-related situation and the candidate had a felony record,” Gehrisch said.

It’s top secret

Stephen Norton, the manager of corporate communications for Steris, said the type of background check they conduct depends on the level of the position being filled. With 860 employees at the Mentor campus alone, it can be a major undertaking.

“Generally the background process ranges from a basic verification of employment history and education to a fairly extensive check,” Norton said. “Given that we are a government-contracted company, the Department of Defense requires us to do an extensive background check on candidates who will have access to top-secret information.”

In those instances, Norton said Steris would partner with an outside company. Norton advises all employers to annually review their hiring policies and procedures.

“Make sure you have the best possible checks in place to ensure that the people you are hiring do have the experience and education that they say they have,” Norton said.

As for what kind of background check should be done, Prabhu recommends a minimum five to seven years of criminal background history, a review of their motor vehicles record, and a verification of education and employment history.
    
Credit history tells all

For companies who can’t or don’t want to conduct their own background checks, businesses like BackTrack offer the experience and resources.

“We have access to information that they have great difficulty laying their hands on,” Gandee says. “For example, we can pull a credit report which gives us information that a person can’t lie about.”

A credit report might seem an odd way to check someone’s experience but Gandee said it provides the best clues to the candidate’s previous addresses and aliases. These can be used to determine where a criminal record should be checked. Credit reports can also reveal previous employers the applicant might have left off their resume.

Recently, a credit report on an applicant for a position with a local car dealership revealed an address in Texas which was not mentioned on the applicant’s resume.

“We did a criminal record check in that Texas county and there was an open warrant for his arrest for bank robbery,” Gandee said.

Gandee also said it’s not unusual to find criminal activities among the 250 checks they do each day.

“We uncover a good dozen individuals every month that are wanted on a warrant,” Gandee said.

Just such a discovery could save an employer the considerable time and money they would normally invest in a new employee. On the other hand, Gandee says some employers don’t really care about criminal history.

“The fact that a person is dishonest is not always important to them,” Gandee said. “They say they don’t care if the candidate has a criminal background, it’s a dirty job and they just need someone to do it.”
    
Fictional schools, fake degrees

More often than a criminal history, discrepancies are found in an applicant’s education or employment history.

Birky said that more often than finding outright lies, she encounters diplomas and degrees from schools that no longer exist.

“The school may not be open anymore so we ask the candidate to bring in their transcripts or diploma,” Birky said. “There have been a few people who can’t do that.”

Recently, Gandee says he is often seeing degrees from Internet companies.

“For $495 you can go on the Internet and get a degree in anything you want and have an official-looking diploma from an “accredited” college. The Internet company will even supply a telephone number that prospective employers can call to verify the degree.”

In the human resources industry, these are called diploma mills.

“Some of them are so aggressive that if we put in our report that the candidate has a degree from an unaccredited institution, they will sue us,” Gandee said.

What can be included in a background check falls under the standards set by the Federal Trade Commission in the Fair Credit Reporting Act (FCRA).

“It’s the legislation that protects consumers against bad information,” Gandee said. “If we make serious mistakes, the candidate has a right to contradict the information.”

Among the most important procedures set by the FCRA is that employers get a signed release to conduct a background check and that the employee has a right to review and dispute any negative information used to disqualify them.

Gandee said inaccurate negative information rarely surfaces in a background check.

“Occasionally an educational institution will report that a person does not have a degree or they have no record of the person but we will go back and double check,” Gandee said. “Usually it is a typo on the part of the person checking the records.”

Gandee said his company double checks all negative information, reducing the number of errors significantly.

Cindy Illig Lum is a Madison Township freelance writer.