Searching the Criminal Database

The problem with criminal background checks is that, at present, no record verification vendor, despite advertisements to the contrary, has access to the same computerized FBI record data that may be available to law enforcement agencies. What many of these services provide is a check of courthouse records for whatever city, county, or state the employer indicates in the record request. Hence, the screening is hit or miss, as the individual may have lived in one state, but records on his criminal convictions may be in a different state. To check in all counties and states for every newly hired person would be prohibitively expensive.

Additionally, these records often are misleading. Even with identifiers such as social security numbers and dates of birth, name confusion (a divorced and remarried woman may have had two or three prior names, for example), and other factors render these checks suspect. Any positive hit needs to be carefully screened by obtaining the actual record and, if applicable to the new employee, discussed in a confidential interview. There may be a logical explanation for a criminal record, and not every criminal felony constitutes dishonesty (a charge of vehicular homicide arising out of a serious auto accident, for example). The absence of a hit in a criminal background check is not assurance that the employee does not have such a record. Furthermore, with the increase in identity theft, the finding of a record that matches the name, social security number, date of birth, and even address, still may not represent the applicant for the job.

Janet Cortez, of the Georgia record screening firm, ChoicePoint, confirmed that there is “no comprehensive national [crime] database,” reported Joanne Friedrick in her article “Companies ramp up pre-employment screening,” in Security Director News, July, 2004. “Even the FBI database covers about 63 percent of criminals,” said Cortez, noting that her own company's database provides “about 60 percent coverage.” Her firm also does Social Security verification, important for identification of illegal aliens.

Between 1996 and 2003, the number of criminal background checks increased by 29 percent. One problem created by the screening process is the privacy issue. If a job applicant is advised that the company wishes to do various background screenings, the application form should have a permission clause to be signed by the applicant. This requirement, in and of itself, may deter someone with a criminal record from proceeding with the application. If the person is hired before a record check, the new employee should be advised that screening to confirm any statements on the application will be conducted, and that any falsification will be a reason for termination.

Claims, in its September 2004 issue, reported that the National Association of Insurance Commissioners had drafted a model act for states to adopt that provides them the ability to collect fingerprints of insurance employees and submit them to appropriate law enforcement agencies, such as the FBI. The NAIC also proposes to use its National Insurance Producer Database as a central repository for fingerprints and background checks.

The admission of a crime should not necessarily bar an entity from hiring the person. The nature of crimes differs. As a teenager, the applicant may have been arrested for smoking pot, a criminal offense, but debatable as fitting a fidelity bond definition of dishonesty. In some areas, bouncing checks may be dealt with as a crime, regardless of how innocent it may have been. Minorities in urban settings often have criminal records because they are frequently targeted by aggressive police departments and charged with misdemeanors or felonies that they may or may not have committed.

Better than 5 percent of the U.S. population either is currently in prison or has been in prison for some crime, a rate that is the highest in the world. It is likely that many job applicants have criminal records, but they may not necessarily pose security risks They would, however, have to have special clearance by the surety for fidelity bond coverage.

Reviewing Driving Records

Driving record checks can be useful in many ways, even if the job applicant would not be using a vehicle on company business. A record of one or more drunk driving charges or serious alcohol or drug-related accidents may indicate an employee with substance abuse problems. As with criminal records, driving records are generally produced by states and, properly to screen applicants who have lived in more than one state (or live in areas where two or more states are in close proximity), the cost of screening can be prohibitive. However, driver records should be checked at least every three years for any employee who does operate a vehicle on the entity's behalf.

Whenever an employee is at fault in a serious automobile accident, either in the course of employment or while operating the employer's vehicle, it is likely that the employer's records regarding that driver will be subpoenaed. If the records show a history of violations or accidents, or that no driving record check was made, the possibility of a demand for punitive damages could increase.

The legal issue is one of negligent entrustment or supervision, as in the cases of Northern Ins Co. of N.Y. v. Ekstrom, (784 P.2d 320 [Colorado, 1989]), Oakley Transport Inc. v. Zurich Ins. Co., (648 N.E.2d 1099 [Illinois, 1995]), or Sapp v. USF&G Co. (572 So.2d 158 [Louisiana, 1990]).

Prior Employers

Contact with previous employers is not always a successful means of obtaining useful information about prospective employees. First, due to fear of slander suits, most direct supervisory personnel are instructed to refer any reference inquiries to human resource directors, who will provide only verification of dates of employment. Although former employers may agree to give information, obtaining useful information in this manner is doubtful, and could be hazardous to both the provider and the receiver if such information is false, misleading, or alleged to be slanderous.

In the Louisiana case, Adams v. Pro Sources Inc., a federal court addressed a coverage dispute as to an employment practice exclusion regarding a defamation claim by a former employee due to information in that employee's records. Similarly, in the Oregon case, Clinical Research Inst. of So. Or. v. Kemper Ins. Co. (84 P.3d 147 [2004]), a coverage dispute resulted from an insured employer's informing a former employee's prospective employer that it would sue that employer if it hired the former employee. The former employee sued for slander, alleging that the former employer had sent a “false and defamatory letter.”

However, termination of an employee due to information received from a previous employer does not always have the implication that the terminated employee will have a sustainable right of action. The Alaska Supreme Court found that termination of an “at will” employee, when the employer learned from a prior employer of co-worker sexual harassment, did not breach a duty of good faith to the employee. The terminated employee argued that he had “pre-termination rights” based on the employment manual, including the right to a complete investigation of the allegations. The court, however, noted that the employee had not disputed the evidence that the employer introduced to show that the termination also was for insubordination, intimidation, and non-sexual harassment of co-workers (Belluomini v. Fred Meyer of Alaska, 993 P.2d 1009 [1999]).

Drug Testing

Drug screening is popular with many employers, but the ultimate value may be questionable, as there are many ways the tests can be faked. Security Director News quoted Les Rosen, president of Employment Screening Resources in Novato, Calif., as saying that drug testing “has really become a bit of a no brainer.” With low costs and infrastructure in place, he suggests that “there are compelling statistics for doing it.” Additionally, he notes, specific jobs and industries mandate such testing.

Nevertheless, testing can lead to litigation under state privacy laws. For example, in the Colorado case, Roe v. Cheyenne Mt. Conference Resort (124 F.3d 1221 [10th Cir., 1997]), drug testing of employees with non-safety or sensitive jobs was deemed a cognizable claim under state common law.

Drug testing also might be a part of a medical record review and physical examination when employment requires physical labor or deals in any way with public safety, such as driving school buses, piloting aircraft, operating overhead cranes, or similar complex tasks that require a sound mind and body. Medical record review, however, is a potentially hazardous process if privacy safeguards are not in place. The Health Insurance Portability & Accountability Act of 1996 restricts access to medical records except when patients provide specific authorization.

Employers often need access to prior medical treatment to assess preexisting conditions, both for group insurance programs and to document any preexisting disabilities that might trigger Second Injury Fund claims in the event of workplace injuries. Additionally, if an employment applicant has a preexisting disability, access to medical records may be necessary to assess a reasonable accommodation under the Americans with Disability Act requirements.

Furthermore, a danger of seeking too much information arises if the testing or examination also includes DNA or genetic data. For example, in a 2001 Iowa federal case, the Equal Employment Opportunity Commission became involved in a dispute with the Burlington Northern Santa Fe Railroad that alleged violation of the Americans with Disability Act. The railroad had a genetic testing policy for workers who made carpal tunnel syndrome workers' compensation claims. It was argued that this was “an invasion of privacy and a person's bodily integrity,” and that it discriminated against those with the disability and led to retaliation for those who asserted their rights to object to the testing.

Blanket requirement of medical records from applicants or employees, however, could become a basis for an employment practice liability suit, if the records are used in any way to deny employment or terminate the person after hiring. In California's Wise v. Thrifty Payless, Inc., 83 Cal. App. 4th (2000), for example, a pharmacy was found to have violated a state Confidentiality of Medical Information Act by disclosing prescription drug information to an employer without authorization from the employee.

Theoretically, job interviews are to be made blind, so that the interviewer cannot know a person's race, gender, age, or health. Under Equal Opportunity Employment and other fair labor laws, use of medical information to deny employment when applicants are physically and mentally able to do the jobs can be found to be discriminatory.

One study made by the University of Illinois found that 35 percent of Fortune 500 companies admit to using medical information to make employment decisions. Two-thirds of the states require health-care organizations to maintain the confidentiality of medical records, and 22 have legal protection laws applicable to computerized or electronically transferred patient information, reported Robert F. Pendrak and R. Peter Ericson, in their article, “Information Technologies Need to Protect Patient Confidentiality,” in Healthcare Financial Management, October 1998.

Verification of citizenship or immigration status now is a legal requirement. Most employers make photocopies of Social Security cards or other required immigration documentation. The hiring of illegal immigrants not only is against the law, it is a potentially hazardous situation if individuals should happen to be terrorists or criminals.

In 1986, Congress passed the Immigration Reform & Control Act, which granted a one-time amnesty to certain classes of aliens who were in the United States illegally. Although the law did little to stem the tide of illegal immigration, the Justice Department has enforced sanctions against employers who hire illegals. Hence, employers have an obligation to be certain that any employee is in the country legally, and have three business days from the date of hiring to examine employees' documents, although the time can be extended if employees present applications for unavailable documents, suggests Stanley Mailman, in “The Employer as Immigration Inspector,” New York Law Journal, April 1996.

Credit Histories

Credit checks have declined as an employment screening device, ChoicePoint's Cortez says. She noted that credit checks are requested in less than 10 percent of pre-employment record checks, and that “companies feel there needs to be an intersection between the type of job [for which a person is being considered] and the type of check we're doing.” For some types of work, especially those related to financial tasks such as accounting and bookkeeping, however, a bad credit record could be a significant employment factor. If a person's personal finances become too negative, he may begin to look around for an additional source of revenue.

A personal interview remains one of the better methods of employment screening, provided that the interviewer is familiar with employment laws, a skilled observer of both the obvious and subtle aspects of human behavior (such as body language), and a good listener. Nevertheless, an individual with less than honorable intent can easily con an expert and make light of any deficiencies that may come to an employer's attention. As Jason Morris, president of Background Information Services in Cleveland, Ohio, reported to Security Director News, “The goal of HR is to get someone hired quickly, while the goal of security is to get the safest person.”

Ken Brownlee, CPCU, is a former adjuster and risk manager, based in Atlanta. He now authors and edits claim adjusting textbooks.