Posts Tagged ‘Background Checks’

EEOC Breaking New Ground

Thursday, March 31st, 2011

Hiring PracticesMarch 2011 – Minnesota

By: James B. Sherman, Esq.

Employers have long known not to press job applicants for information such as age, race, religion, etc., and, more recently, disability status unless in one of those rare instances where the information is a bona-fide occupational qualification. After all, most everyone knows of the federal and state laws prohibiting discrimination on the basis of age, race, religion, etc. in regard to terms and conditions of employment, including hiring. But how many employers have heard of laws prohibiting workplace discrimination on the basis of being unemployed, or based on a person’s zip code? The fact is there are no such laws – at least not yet – but this has not prevented the Equal Employment Opportunity Commission (EEOC) from challenging employers’ hiring decisions if they rely on such information.

On February 16, 2011, the EEOC held hearings to address concerns that employers are now screening out job applicants based on their status as “unemployed.” Specifically, the EEOC is concerned that employers are systematically refusing to interview candidates whose resumes show they are unemployed at the time of their application. Given today’s high unemployment rates, frankly, it should come as no surprise that many job applicants are unemployed. However, the EEOC is relying on statistics that blacks, Hispanics, older workers and disabled workers, all of whom are protected by various federal laws, make up a greater percentage of those who remain unemployed. This being the case, a practice of rejecting job candidates simply because they are unemployed could have a “disparate impact” on minorities and other groups protected from discrimination under federal law.

Last October the EEOC held similar hearings on whether pre-employment credit checks have a similar disparate impact on minorities. The outcome of those hearings was both evident and swift when only two months later the EEOC filed a class action law suit against a large employer who used pre-employment credit checks for its job applicants. Allegedly the employer’s policy was to weed out any applicants with poor credit ratings. The suit alleged that the employer’s hiring practice was neither job-related nor justified and had the effect of discriminating against African-American applicants because statistically, as a group, they tend to have poorer credit scores. Whether any court adopts the EEOC’s new theory on credit scores remains to be seen; just as employers are left to wonder whether anyone will soon be sued for “unemployment discrimination.”

One thing seems clear: the EEOC seems intent on expanding the growing list of forbidden pre-employment inquiries to include subjects previously unforeseen by employers. When laws are passed, employers rely on counsel to advise them of their responsibilities. However, when the EEOC or some other agency merely changes or adopts a new theory or position on what is unlawful, the word does not always get out. This is unfortunate and potentially fatal to employers since EEOC litigation is increasingly brought as class action litigation, particularly in challenges to hiring practices which arguably impact many applicants.

At least in the case of credit scores employers are somewhat put on notice by the fact that the issue has found its way into many state legislatures. Illinois, for starters, already has a state law restricting background checks into an applicant’s credit history and at least 14 other states are considering similar legislature. But few could predict the EEOC’s latest foray into possibly declaring unlawful an employer’s reliance on an applicant’s status as unemployed. In another instance, not long ago the Chair of the EEOC was in Minneapolis telling lawyers how the EEOC was exploring a theory called “address” discrimination. As the theory goes, if an employer rejects an applicant because his or her zip code, or because the person lives on a “street” or “avenue” versus a “way” or “court”, chances are it disproportionately impacts a protected minority group or some other protected class.

With the EEOC expanding its list of unlawful pre-employment inquiries at a seemingly torrid pace these days, what can employers do to stay out of court? Well, first of all, look on the bright side – if you are hiring at all your company may well be on the upside of the recession. On a more practical note, try to stay aware of what the EEOC is doing and saying because, like it or not, if the federal government sues your company on any of these new theories it will be a costly and unpleasant experience, to say the least. The best practice for employers is to avoid blanket policies or practices that reject job applicants who may otherwise be qualified, based on a single ground unless it is closely related to the job opening and consistent with business necessity. On a final note: Do any employers really screen job applicants based on their address?

Reprinted with permission of Wessels Sherman Law Firm

Contact any Wessels Sherman attorney to discuss questions regarding this subject.

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.

The Dollars and Sense of Employment Screening

Tuesday, June 29th, 2010

Background CheckAs businesses and government agencies are streamlining their budgets, more and more emphasis is being placed on Return-On-Investment or ROI. The burden of ROI proof initially fell to the operations side, but now even hard-to-quantify business areas like Human Resources are asked to prove the value of their stated best practices.

Employment background screening is widely recognized as a necessary process designed to help find the applicants who fit your employment criteria, but it also represents an expense. The question is, what dollar value does a background screening program deliver?

Here are some basic statistics:

  • 1 out of 3 applicants provide false, inaccurate, misleading or incomplete information on their resume or application.
  • 1 in 20 job applicants falsify their name, Social Security Number or Driver’s License Number to hide a conviction or other problem.
  • The average fraud scheme in a small to mid-sized business will result in $105,000 in losses.
  • The United States Department of Commerce reports that 30% of all business failures result from theft or embezzlement.
  • So, the primary areas in which companies are adversely affected by hiring the wrong employee can be prevented by reducing these areas of concern by implementing a quality employment background screening program.

    The three primary areas are:

  • Turnover
  • Occupational Fraud
  • Catastrophic Events
  • TURNOVER – is defined as the ratio of the number of workers that have to be replaced in a given time period divided by the average total number of workers employed during the same period.  Turnover ranges vary widely depending upon the industry and employment level. For example, the Aberdeen Group states the following annual turnover rates for hourly workers:

  • Hotel Chains: 51.7%
  • Specialty stores: 104%
  • Fast food chains: More than 200%
  • In addition, a study done in 2004 by The Employment Policy Foundation estimated that the average cost of turnover for businesses is 25% of the replacement salary.

    OCCUPATIONAL FRAUD – consists of asset misappropriations, corruption schemes, theft of property and fraudulent statements.  According to the Association of Certified Fraud Examiners’ 2010 Report to the Nations on Occupational Fraud and Abuse, the median fraud loss over 1,021 cases studied was $105,000.

    CATASTROPHIC EVENTS - include workplace violence, sexual harassment, and accidents that occur due to falsified qualifications or alcohol/drug use. Compounding these events are the resultant law suits and negligent hiring litigation that tend to follow.  The Workplace Violence Research Institute estimates the annual cost of workplace violence at $36 billion, while the Substance Abuse and Mental Health Services Administration (SAMHSA) says that alcohol and drug abuse costs U.S. businesses about $81 billion each year; totaling $117 billion/year.

    What is the Final ROI?
    The US Small Business Administration states for every dollar an employer invests in employment screening, the return on investment ranges from $5-16.  The savings are a result of improved productivity, reduced absenteeism, lower turnover, and decreased employer liability.

    Visit the PCS website for more information on background checks.

    Contributed by:

    Tony Lipinski
    Trusted Employees
    Trusted Employees Website

    Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney or an HR Professional.


    Sunday, April 25th, 2010

    Trusted Employees ImageOver the past year PCS has been reviewing our strategic partners to make sure they are a good fit for PCS and its Customers.  As a result, we have chosen to partner with a new background check provider, Trusted Employees, and have been working with them behind the scenes structuring our relationship.

    Trusted Employees is a Minnetonka based employee screening service provider that has been providing background checks and employee screening for the past 15 years.  They offer a broad range of screening solutions for small, medium and large scale organizations.

    As a function of our partnership, they have provided us some basic, common screening packages which offer our Clients very competitive prices.  Besides the competitive pricing, another great benefit is that PCS will be bill the Client directly truly making this a seamless partnership.

    We’ve created a page on our website which explains the FREE sign up process which allows you to take advantage of this new service.  Click here to visit our website and start making better hiring decisions today!