EMPLOYERS ARE increasingly facing lawsuits over how they handle background checks during the screening process for job applicants.
For a lesson in what can happen, take the recent class-action lawsuit filed against a Whole Foods Market Inc. store in Fresno, California. The suit alleges that the store’s online form asking for job applicants’ approval for criminal background checks violates the Fair Credit Reporting Act.
The lawsuit seeks damages of up to $1,000 for each individual from whom Whole Foods obtained a consumer report without valid authorization, plus punitive damages and costs.
This case highlights two things: how careful employers have to be when conducting background checks and the importance of securing employment practices liability insurance.
Forbes magazine recently published this list of how to conduct background checks without breaking the law:
- Be broad and thorough – Consider a spectrum of information, including an applicant’s education, employment and criminal history, driving history and social media.
Companies lose great candidates when they look at only one specific item. Worse yet, you could become the target of an Equal Employment Opportunity Commission investigation for excluding applicants with criminal records, no matter the charge or how long ago the offense occurred.
- Don’t use the ‘box’ – The EEOC and many states are making efforts to ban the “box,” which is that question on applications that reads, “Have you ever been convicted of a crime?” Instead, interview and consider all applicants equally. Then you can run a broad and thorough background check.
- Follow the law – Before you start a background check, make sure you first obtain a legal release from the applicant, inform that applicant of their rights and provide them with a copy of the report.
- Be consistent – Keep your application process consistent for all applicants. Applicants going for the same job should have the same checks run on them to avoid charges of discrimination.
- Communicate – If you find something on a background check that may affect your decision to hire an applicant, consider asking the applicant about it. Many misconceptions, mistakes and reporting errors can be resolved via face-to-face communication.
- Locate patterns – Positive and negative patterns are the best way to evaluate an applicant. A single bad act should not be the defining measure of a person or their ability to do the job. Considering consistent patterns of behavior is a defensible way for employers to make hiring decisions.
- Don’t seek out only the negative – While most background checks are conducted to ferret out negative information, use them also to find positives that can help you decide on the best candidate.
- Use a professional agency to conduct checks – A good screening firm has the experience to be accurate and efficient. It also will prevent you from viewing data that might be a violation of state or federal law.
Employment practices liability insurance
Unfortunately, even if you do everything right, you can still be sued by an applicant for perceived discrimination or other infractions due to your background-check policy.
An employment practices liability policy can cover the costs associated with a number of claims, including:
- Wrongful termination claims,
- Discrimination claims (covering those by current, former and prospective employees),
- Sexual harassment claims, and
- Whistleblower claims.