Screening: A Look Behind the Veil

Employment background screening has become ubiquitous among organizations of all sizes and markets. A 2011 study by employment background check company HireRight queried nearly 1,800 individuals from companies large and small, in a range of industries, to identify the most common trends and business drivers impacting employment screening and related programs.

The study indicated the hiring outlook was slightly optimistic. Ninety percent of those surveyed expected no significant decline in employment, and 51 percent anticipated growth. This likely reflects pent-up demand for key personnel who are needed regardless of economic factors, as well as a small uptick in optimism.

About half of those reporting potential job growth expected that increase to come entirely from full-time employees. This is a change from last year when many planned additions came as temporary workers and contractors.

But employers with positions to fill can’t always find many qualified candidates among the ranks of the unemployed. Forty-nine percent of study participants reported that finding and retaining quality talent is their top business challenge (Figure 1). This statistic is supported by another study question, which revealed 56 percent of participants cited attracting and retaining experienced workers as their No. 1 talent management issue (Figure 2). These statistics support the idea of a hiring gap between available jobs and people qualified to fill them. This gap was discussed in the 2011 Manpower Talent Shortage Survey, which said 52 percent of U.S. companies are experiencing difficulty finding employees qualified enough to fill mission-critical jobs.

Background Screening and Quality-of-Hire
With even more riding on fewer key hires, nearly half of survey respondents stated that the principal benefit to conducting background checks and drug/alcohol checks was improving the quality of the hire. Only a few years ago, the top responses focused on reducing risk and improving safety and security. While these remain important, they have been supplanted by concern over finding qualified people.

Hiring managers also want to be first to make an offer to a high-quality candidate, thus increasing the chances of employing that person. The need for talent is also reflected in other talent management challenges reported: 32 percent of survey respondents cited knowledge transfer as a top challenge; 30 percent are challenged by attracting and retaining entry-level employees; and 23 percent are challenged by appealing to multiple generations.

In the past, companies could recruit enough people with the skills they needed, but today they have to develop more extensive training programs and expect to invest in training employees for these highly skilled positions. In prior generations, it was more common to begin a job with the expectation to work at the company for most of a career. In return, companies invested in employees by offering extensive training and support. During the last couple of decades, both of these things decreased. Now, as a result of the shortage of qualified candidates, companies are instituting training programs to invest in long-term employee development.

As employers institute high-investment, long-term development programs, it’s even more important that they make smart hiring decisions to ensure their investments are well-placed. Effective background checking is critical to increase the chance of a good hire by verifying a person’s background, integrity and fit.

Another trend from the report is increasing concern about regulatory compliance. There are a number of federal and state laws and industry regulations that organizations must follow throughout the hiring process. A company that is not in compliance with applicable laws can face stiff penalties and fines. Conducting effective background checks is an important step for employers in many industries to help ensure they stay in compliance. For example, employers in the transportation industry must conduct regular motor vehicle records checks on commercial drivers to stay compliant with Department of Transportation regulations. Regulatory compliance ranked second only to improved quality-of-hire as the primary benefit of employment screening (Figure 3).

Further, organizations are responding to new legislation related to background screening on the local, state and national level. The survey data indicates that employers are increasingly focusing on their background screening programs to make sure they are in compliance with a range of regulations. These checks include:

Employment credit check: With unemployment high, there is concern about anything that may limit hiring ability, and the use of credit checks in a hiring decision is one area some argue could unfairly limit one’s employment opportunities. For this reason, the use of credit for employment purposes is under attack at the state and federal level.

In January, California became the seventh state to incorporate regulations regarding the use of credit data for employment purposes, and 20 more are considering it. These laws limit when private and public sector employers can use credit reports for employment screening purposes. Although each regulation is different, employers may use credit reports if the individual will work in a position that has access to large amounts of cash or sensitive information or if the position is in a financial institution.

Only about one-third of survey respondents reported using credit data as part of their background screening program. Of the survey respondents using that data, most reported use for specific roles.

Regardless of common practice, the change in many state laws means companies with a legitimate need to review credit history for certain roles must proceed with greater caution as they develop and manage their screening programs. This year’s report showed 13 percent of respondents had changed their screening policies based on pending laws.

Medical marijuana: Shifting legislation primarily on the state level to decriminalize marijuana for medical use also impacts company drug screening policies. Of companies that reported doing drug testing, only 10 percent have made any accommodations for medical marijuana in their policies with another 12 percent planning to do so. Nearly 80 percent of survey respondents reported their organization maintains a hard line on the use of marijuana and has no plans to change their program.

Social media use: While legislation is not yet in place on the issue, an area of particular sensitivity for employers is the use of social media in hiring. Social networking sites such as LinkedIn have proved to be helpful to source or find job candidates, but using social media for sourcing does encompass the risk of the hiring professional discovering that a candidate may belong in a protected group, but so far this has not proved to be a major concern.

General sentiment changes, however, when organizations consider extending the use of social media from sourcing to screening to check a pending job candidate’s background. Eleven percent of survey respondents reported using social media for employment screening, and an additional 10 percent are planning to. This means the vast majority of organizations are taking a conservative approach and not using social media for screening.

Although negligent hiring arguments could be made if an employer did not check for information that was reasonable and publicly available, big issues arise when using social media for background checking, such as:

• Discrimination: Most employers have stringent employment policies that prevent those influencing hiring decisions from coming into contact with potentially discriminatory information. Visiting a person’s social media site, however, may reveal information contrary to these non-discriminatory practices.

• FCRA regulations: Another issue has to do with the application of the Fair Credit Reporting Act (FCRA) as it relates to social media. Employers must receive permission from applicants before performing any pre-employment checks through a background screening provider. There are also rules that must be followed if any information gathered by a screening company adversely affects the employment of the individual, even if there are additional reasons for the employer’s decision.

• Source of information: As opposed to criminal records that generally are provided through a reputable government source, social media information is provided by the individual who posted the content, and there is no reliable way of confirming that the information was posted by the individual in question. There’s also nothing stopping the content owner from changing what’s posted. Privacy rights and settings continue to create additional questions regarding social media as a public information source.

While there is temptation to use social media for screening, with no specific case law or regulations guiding how to conduct it, the process is fraught with risk until there is clearer legal guidance on how employers can use social media as part of the background check process. By reviewing the benchmarks of peers, employers can evaluate their own screening programs and identify potential strengths, weaknesses and areas for improvement.

Rob Pickell is senior vice president of customer solutions for HireRight, an employment screening provider. He can be reached at