"A lot of employee problems can be solved in the hiring process. It’s easier to hire carefully than to fire someone later."

By Bonnie Kreitler

Business owners recognize that good employees are essential to their company’s growth, but identifying and hiring outstanding people is a perennial challenge. Pre-employment background checks are one way to take some of the guesswork out of hiring.

Small-business owners usually wear many hats, including that of human resources director. They base their occasional hiring decisions on a resume, an interview or two, and their gut instincts. A pre-employment check can verify or refute both resume information and those interview impressions.

"A lot of employee problems can be solved in the hiring process," says attorney Rob Fischer, a partner in the Greenwich office of Jackson, Lewis, Schnitzler & Krupman, a law firm specializing in employment issues. "It’s easier to hire carefully than to fire someone later," says Fischer.

Worth the effort

You have good reason to be careful about whom you hire. Rich Gagnon, of American Resume Audits in Manchester, estimates that 80% to 90% of the resumes he checks for employers contain incorrect information. Exaggerated salary information is common, he says, and a high percentage of job applicants either falsify their educational credentials or embellish the titles and descriptions of jobs they have held. About 2% to 3% hide criminal records.

"The main reason for a pre-employment check is to understand something about the people you’re hiring," says Fischer.

You want to develop a pool of productive employees to improve your business, but hiring people with skills and competence is not enough. You also want to know that the person you are hiring is honest, trustworthy and compatible with your company’s culture.

Employers not only want to protect themselves against white-collar crime, but they also need to be aware of third-party liability for negligent hiring or negligent retention. Courts have held employers liable when they failed to investigate an employee’s background and the employee later committed a crime or endangered the welfare of others while on the job. Gagnon notes, for example, that proposed federal legislation would require nursing-home operators to check the criminal backgrounds of all prospective employees because of the vulnerable population they serve.

What to check

A basic pre-employment screening should include verification of information on an applicant’s resume, including education credentials, previous employers, length of employment, job titles, salary history and job descriptions. Many employers do more, especially when a job involves handling money or dealing with the public. Just be aware that various state and federal laws, including the Americans with Disabilities Act (ADA) and the Fair Credit Reporting Act, place some restrictions on the kinds of information a prospective employer may use in a hiring decision. For example, if you have 15 or more employees, the ADA prohibits you from looking into an applicant’s medical history, including workers’ compensation claims.

With these caveats in mind, a complete background check might include checking:
• Educational credentials
• Previous employment
• Professional licenses
• Credit rating
• Bankruptcy filings
• Conviction records
• Driving records
• Social Security number and address verification
• Military records
• Drug testing

Fischer says you can save yourself time and effort by asking applicants to verify some of their own data. A lot of cum laude graduates become B-students, he notes, when you ask them to provide copies of their college or high-school transcripts. He also points out that Connecticut law requires employers to release personnel information to employees and former employees who request it. Asking applicants to provide copies of performance reviews or other information from their personnel folders can avoid the stonewalling commonly encountered when prospective employers do reference checks. Former employers often are unable or unwilling to divulge certain information. For one thing, Connecticut law prohibits employers from divulging the contents of an employee’s personnel file without the person’s permission, except to verify employment dates, salary and job title. Former employers may also fear being sued for defamation.

Making the necessary phone calls and accessing various public databases to verify resume information is not difficult, but it can be time consuming. Many small businesses outsource resume verification to specialized reporting services. You can find them listed under "credit reporting" in the business directory pages of your phone book, or search for them on the Internet using key words like "pre-employment check" or "background check." A basic search costs between $40 and $80, according to Gagnon. The written reports provided by these services can be evidence of reasonable care in the event you are ever sued for negligent hiring. There are also software packages available to help businesses do their own basic checks.

Cultural compatibility

Beyond verifying nuts and bolts factual data, you also want to gauge whether a prospective employee’s work ethic and style will fit smoothly into your company’s business culture. "We encourage clients to take the importance of the job fit/chemistry issue seriously," says Jim Bond, vice president of People Management Northeast Inc., which identifies senior management prospects. New hires often fail, not because of incompetence, but because of differences in style or outlook between them and the person they report to. The classic example, he says, is the Type A personality who hires a very laid-back employee. Regardless of how competent the new person is, their very different work styles are bound to clash eventually.

Bond tries to assess job fit by talking not only to previous supervisors but also to peers and even subordinates. Typically he asks whether these people have seen the prospect in certain situations and how he or she reacted under those circumstances. With three different perspectives, he is able to construct a profile of the prospect for his client.

Gagnon recommends that business owners hiring on their own ask previous supervisors whether they would hire the prospect again. Just be aware that some supervisors may not be willing to answer that question because of the prohibition against divulging personnel file information or the possibility of a defamation suit.

Privacy and consent

Don’t think of pre-employment checks as a license to snoop into whatever information you want. Employers are subject to a number of state and federal laws governing privacy and confidentiality as well as the gathering and use of any information they obtain.

For example, employers must inform prospective applicants in writing of their intention to do drug testing. Applicants must give their permission for the employer to obtain information from credit-reporting agencies. Some attorneys also advise getting consent for checks of driving history as well. Generally, when any of this information has an adverse effect on a hiring decision, the applicant is entitled to receive a copy of any report.

The point is, there should be no surprises after you’ve hired someone, says Fischer. You should be clear up front with prospective employees about the background checks you intend to do and how you will use the information in hiring decisions. "It’s always a good idea to let people know what you’re going to do," Fischer says. "There’s no reason not to."

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