Category Archives: background checks

FTC Background-Check Primer

In case you missed it, the Federal Trade Commission issued a blog article on Apr. 28 titled “Background checks on prospective employees: Keep required disclosures simple.”

According to the FTC’s blog post:

Background screening reports are “consumer reports” under the Fair Credit Reporting Act when they serve as a factor in determining a person’s eligibility for employment, housing, credit, insurance or other purposes and they include information “bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living.”

If your company uses background screening reports to make hiring decisions, here are some steps the FCRA requires you to take:

  1. Before you get a background screening report about a prospective employee, disclose to the person that you intend to get the report and then get their written authorization allowing you to do that.

  2. If the background screening report reveals something that may cause you to decide not to hire the person, you must notify them of the results of the report and provide them with a copy. Next, you have to give them sufficient time to review the report so they can challenge any elements that might be incorrect.

  3. If you ultimately decide not to hire someone based in whole or in part on the contents of a background screening report, you must provide a notice to that person that states they weren’t hired due at least in part to the result of the background screening report.

The FTC blog post says one issue employers struggle with making the required initial disclosure before they obtain the background screening report and get the prospective employee’s authorization.

But it’s easier than you might imagine:

Under the FCRA, you must provide the prospective employee with a clear and conspicuous written disclosure that you plan to get a background screening report about them and you must get the person’s written authorization that gives you their permission to compile the report. It’s OK to put the required disclosure and your request for their authorization in one document. Just be sure to use clear wording that the prospective employee will understand.

Some companies trip themselves up by using complicated legal jargon or adding extra acknowledgements or waivers, the FTC notes. Here are some examples of the kind of things that shouldn’t be in this simple document:

  • Don’t include language that claims to release you from liability for conducting, obtaining, or using the background screening report.
  • Don’t include a certification by the prospective employee that all information in his or her job application is accurate.
  • Delete any wording that purports to require the prospective employee to acknowledge that your hiring decisions are based on legitimate non-discriminatory reasons.
  • Get rid of overly broad authorizations that permit the release of information that the FCRA doesn’t allow to be included in a background screening report – for example, bankruptcies that are more than 10 years old.

That extra stuff not only makes it harder for the prospective employee to understand the main purpose of the document, but it also may violate the FCRA. Adding other acknowledgements or releases of liability is beyond the scope of what the FCRA permits in this document. If you have additional waivers, authorizations, or disclosures you want to give to prospective employees, do it in a separate document. Don’t include them in the FCRA disclosure and authorization document.

The FTC says the matter is as simple as this: “Complying with the FCRA’s disclosure requirement for the use of background screening reports is easy. You can do it in a few sentences. Just include a simple, easy-to-understand notification that you will obtain a background screening report, perhaps with a simple explanation of what information will be included in the report. The request for the prospective employee’s authorization should be in plain language, too.”

Psychopaths in Silicon Valley

As we’ve written previously in HRE, psychopaths are more likely to be found in the C-suite than in the general population (according to research by psychologists Robert Hare and Paul Babiak, who found that while psychopaths make up 1 percent of the population at large, their numbers in the executive ranks could be as high as 4 percent). This week, a panel at the SXSW festival in Austin, Texas, examined the phenomenon of psychopathic CEOs in Silicon Valley — and why HR may be to blame for not holding them in check.

He’s charming and gregarious … but quite possibly a psychopath.

As reported in yesterday’s Guardian, a panel of psychologists, social scientists and venture capitalists discussed what they consider to be Silicon Valley’s high proportion of psychopathic CEOs. “Psychopath” doesn’t necessarily describe someone like Norman Bates — in fact, most are non-violent. However, their combination of remorselessness, callousness and lack of empathy — along with an uncanny ability to mask these traits with a veneer of charm and gregariousness — allows them to cause serious (non-physical) damage all the same, the experts said.

In fact, many of society’s most-successful people have traits that resemble psychopathy — including many successful presidents, said panelist Michael Woodworth, a forensic and clinical psychologist who’s studied psychopathic murderers in high-security prisons.

Psychopaths are often successful in start-up environments, said venture capitalist Bryan Stolle. “You have to have a tremendous amount of ego [and] self-deception to embark on a journey … you have to make sacrifices and give up things, including sometimes a marriage, family and friends. And you have to convince other people. So they are mostly very charismatic, charming and make you suspend the disbelief that something can’t be done.”

Psychopathic executives are classic manipulators of people, said social scientist Jeff Hancock. But when they don’t get their own way or things suddenly go wrong, their “mask of sanity falls off,” he said.

Often, HR tends to protect a psychopathic CEO, said Stolle, which only furthers the damage. “Because they are the founders and leaders, they tend to get protected by HR … this reinforces the behavior,” he said.

Company investors are also often at fault, because they’re willing to overlook bad behavior in order to protect their stake in the organization, said Stolle.

Having a psychopath in charge can hurt employee retention, said Hancock, citing FBI research which found that departments managed by psychopaths have lower productivity and morale (go figure!).

Hancock has developed software that’s designed to analyze written language for cues associated with psychopathy. Psychopaths tend to write in a way that’s “disfluent” and hard to understand, he said, and — because they’re more interested in themselves than others — tend to refer to other people a lot less than non-psychopaths.

Text-based communications are a good way to detect psychopaths, said Hancock. “Text-based communications improve your chances of not being manipulated, as they are verbally not very skilled. You can smoke them out in an online context.”

HR Automation is on the Way

We might never see the human touch completely leave the HR suite—it is the human resource department, after all—but new research suggests that automation is still going to significantly touch the function in the years to come.

The pace of automation in HR might be a bit slower than in other departments, though. In a survey of 719 HR managers and recruiters, CareerBuilder finds that, while more companies are turning to technology to address time-consuming and labor-intensive talent acquisition and management tasks that are susceptible to human error, a “significant proportion” of firms still rely on manual processes. For example, 34 percent of respondents said their companies don’t use technology automation to recruit candidates, while 44 percent don’t automate onboarding and 60 percent said they don’t automate human capital management activities for employees.

So, what is being automated within HR? According to the CareerBuilder study, most automation is centered around messaging, benefits and compensation, “but there is room to increase efficiencies across a variety of basic functions.” Among employers reporting that they automate at least one part of talent acquisition and management, 57 percent said they are automating employee messaging, with 53 percent and 47 percent saying the same about setting up employee benefits and payroll, respectively. In addition, 47 percent indicated that their organizations have automated background screening and drug testing.

Not surprisingly, the overwhelming majority (93 percent) of those whose companies have automated part of their talent acquisition and management processes say they’ve saved time and increased efficiency by doing so. Another 71 percent feel their organizations have improved the candidate experience by automating some processes, with 69 percent saying they’ve reduced errors and 67 percent reporting they’ve saved money and resources.

As organizations expand and add employees, “there’s a certain tipping point where things can no longer be managed efficiently and accurately by hand,” says Rosemary Haefner, CHRO at CareerBuilder, in a statement.

In order to successfully turn certain HR-specific tasks over to technology, “automation needs to be incorporated,” says Haefner, “so the HR team is free to focus on strategies versus tasks, and focus on building relationships with employees and candidates.”

As certain functions on teams become more automated, she says, “we’ll see those workers’ roles evolve and concentrate on the strategic, social and motivational components of HR that technology cannot address.”

 

 

NY Removes Barrier to Hiring Ex-Cons

Insurance companies in New York State will soon be barred from denying full coverage for crime-related losses to companies that hire ex-convicts — even if the crimes in question were committed by employees with criminal histories — thanks to a new rule signed by Gov. Mario Cuomo during the last week of December.

The new regulation — the first of its kind in the nation, reports Reuters — is designed to make it easier for companies to hire ex-convicts. Approximately 2.3 million New Yorkers have criminal records, according to the state.

Many insurance companies regard ex-cons as high risk and will deny or limit coverage to companies for sustained losses related to loss or theft committed by an employee with a criminal record, under the assumption that the employer should have known it was taking a risk by hiring the person. This discourages companies from hiring ex-cons, the governor said.

“This first-in-the-nation action will further break down artificial barriers that prevent previously incarcerated New Yorkers from obtaining work and turning their lives around,” Cuomo said in a statement.

The new regulation, which takes effect on July 1 2017, lets businesses obtain the coverage so long as they adhere to a state law that applies to hiring people who have criminal convictions — including considering whether a prior criminal offense is related to the duties an employee will perform, reports Reuters.

“So long as every business owner follows the letter of the law, we should encourage more companies to hire prospective employees rather than punish someone for a mistake in the past,” said Maria Vullo, superintendent of the state’s Dept. of Financial Services, in a statement.

 

A Bad-Behavior Hiring Predictor

Assessing job candidates for honesty and integrity is nothing new in hiring and HR. Employers have been concerned about who exactly is 103579486-executive-in-handcuffsworking for them — their moral fiber, if you will — long before the Bernie Madoff and Enron scandals rocked corporate America. A quick rundown of a search on HREOnline for “honesty” proves the topic has been around for quite some time.

But this release about a new tool that can help employers in the financial sector and their hiring managers predict whether a prospective hire might compromise a company’s reputation by engaging in fraud, deceit or some other type of errant behavior seemed new and different enough to catch my eye.

Veris Benchmarks created the tool and claims in its release that, by applying it to all job candidates, a company can “improve its hiring process in 15 minutes and help to protect its image and reputation.”

To develop the test, Veris sent its chief scientist, George Paajanen, an expert in the area of psychometrics, into the American prison system to build a tool that identifies the character traits manifested in currently incarcerated white-collar felons. David Shulman, Veris’ CEO and founder, and a Wall Street veteran who’s spent more than 30 years in the institutional-financial-services industry, describes his motivation behind creating the tool:

“Veris Benchmarks was really inspired by the Madoff scandal. After family members and friends were directly impacted by the corrupt scheme, I became consumed with trying to determine precisely what firms were doing to better understand those being hired to act in a fiduciary capacity.

“Executives now have the responsibility to take advantage of new methods to help protect their companies, their shareholders and, even more importantly, their customers. What are companies doing to better understand how their employee would respond when faced with situations of moral gray?”

Of course, fraud and theft are not isolated to the financial industry. Cheating and moral breakdowns happen everywhere. As the release states, “from embezzlement at the dentist’s office, to the PTA, to the retail space and beyond, employee theft amounts to billions of dollars of losses annually.”

As Shulman muses:

“Issues of impropriety have burdened industries and businesses for centuries. What if companies could detect potential malice and the likelihood of theft before the key players were ever hired?”

“What if,” indeed.

Of course, this is but one tool out there. My hunch is there will be more like this to come — tools specific to predicting bad behavior before it ever enters your doors.

Successful C-Suite Psychopaths

Higher-than-expected levels of psychopathic traits exist among people found in the upper echelons of the corporate business sector, and companies should undertake psychological screening to help identify ‘successful psychopaths.’

That’s according to new research presented at the Australian Psychological Society’s Congress, which was recently held in Melbourne.

Forensic psychologist Nathan Brooks says emerging studies show that, while one in 100 people in the general community and one in five people in the prison system are considered psychopathic, these traits are common in the upper echelons of the corporate world, with a prevalence of between 3 percent and 21 percent.

Brooks says the term “successful psychopath,” which describes high-flyers with psychopathic traits such as insincerity, a lack of empathy or remorse, egocentric, charming and superficial, has emerged in the wake of the 2008 global financial crisis, prompting a range of new studies.

To arrive at their conclusions, Brooks and colleagues first examined psychopathic traits in the business sector. One study of 261 corporate professionals in the supply chain management industry showed extremely high prevalence rates of psychopathy, with 21 percent of participants found to have clinically significant levels of psychopathic traits — a figure comparable to prison populations.

The current issue of HRE also features a story by Julie Cook Ramirez about how HR can weed out psychopaths in the workplace:

What sets a psychopathic leader apart is the way in which he or she manages or interact with people, says William Spangler, associate professor of management and organizational behavior at the School of Management, State University of New York at Binghamton.

“Psychopathic leaders are toxic individuals who manage subordinates [with] a combination of fear, threats, punishment and public humiliation,” says Spangler. “They present a positive persona to their superiors and are often promoted for what is perceived to be their effectiveness, but they can [cause] great harm to the organization by destroying relationships, damaging work units and putting the entire company at risk for legal action.”

Ramirez also quotes A.J. Marsden, assistant professor of human services and psychology at Beacon College in Leesburg, Fla. who says that, by hiring a person who demonstrates these types of tendencies, “you are putting your other employees at risk for bullying and other abuse.”

“The organization may end up losing many good employees [and] facing harassment suits against the psychopath,” says Marsden. “At higher levels of employment, psychopaths may engage in unethical and illegal behaviors, such as embezzlement, just to look successful.”

 

The ‘Ban the Box’ Paradox

HRE columnist Peter Cappelli recently penned a piece suggesting that “ban the box” legislation, while certainly well-intentioned, may not be the best approach to helping ex-felons transition back into the workforce.

Such laws, which prohibit employers from making questions about criminal convictions part of the hiring process, have been adopted in 24 states and more than 100 cities and counties in the U.S.

The good news is that “more ex-felons seem to have gotten jobs,” says Cappelli, a professor of management and director of the Center for Human Resources at The Wharton School of the University of Pennsylvania in Philadelphia.

Meanwhile, the overall hiring of young black and Hispanic men has declined, he adds.

“In other words, we swapped one form of discrimination for another,” says Cappelli. “It wasn’t supposed to work that way. The problem is people don’t behave the way the legislation anticipated. We don’t wait until the law allows us to find out about criminal records. We start guessing.”

Researchers Jennifer Doleac, an assistant professor of public policy at the University of Virginia, and Benjamin Hansen, an associate professor of economics at the University of Oregon, seem to share that view.

In their recent study (which Cappelli does reference in his column), the pair of professors tested the net effects of ban-the-box policies on employment outcomes for various demographic groups, using data from the Current Population survey.

The authors found that, among men between the ages of 25 and 34 who don’t hold a college degree, BTB policies decrease the probability of being employed by 4.5 percent for black men, and by 3.5 percent for Hispanic men.

In the same age group, black men with a college degree and white women of all educational levels benefit from this policy, according to the study. This finding suggests that, when criminal history information is unavailable, “employers pursue candidates who are less likely to have been recently incarcerated based on their remaining observable characteristics,” the authors write.

The goal of BTB laws “is to improve employment outcomes for ex-offenders and thereby reduce racial disparities in employment.”

The legislation, however, “could do more harm than good,” they continue, noting that firms that don’t want to hire ex-offenders might statistically discriminate based on race and gender in order to avoid interviewing applicants who are more likely to have been recently incarcerated.

“Of particular concern, employers might avoid interviewing young, low-skilled, black and Hispanic men when [ban-the-box legislation] is in effect,” note Doleac and Hansen. “This could worsen employment outcomes for those already-disadvantaged groups, without meaningfully improving outcomes for ex-offenders.”

In a recent UVA Today article, Doleac offers a “two-fold policy plan” to help combat discrimination against those for whom “ban the box” laws were designed, “without unintentionally hurting minority men without criminal records.”

For example, “individuals with criminal records may have histories of violent or dishonest behavior, and on average might struggle with greater emotional trauma and have worse interpersonal skills,” she says.

Providing opportunities for such applicants to demonstrate that they don’t have these problems—perhaps by having a local job-training program vouch for them—could potentially “help them overcome automatic assumptions about their temperament and suitability.”

Another “broad category of policies” that might improve upon current legislation includes education and rehabilitation programs that “would actually improve the underlying job readiness of this population,” says Doleac, who is currently working on a new technology-based project aimed at improving re-entry outcomes for individuals leaving prison.

“The reason that employers discriminate against people with [criminal] records is that, on average, that group is less job-ready than people without records.”

 

‘Professional Plaintiff’ Targets Firms via FCRA

Meet Cory Groshek. He’s an aspiring rapper who calls himself “Cory Crush.” He’s also a fitness guru who produces YouTube videos featuring himself as “Low Carb Cory.” He also writes scary stories under his own name and has worked as a customer-service representative.

Groshek also has found a pretty lucrative gig targeting companies that unwittingly violate the Fair Credit Reporting Act when they fail to properly disclose their intention to obtain his credit history as part of the hiring process. According to court documents, Groshek has used this tactic to obtain at least $230,000 in legal settlements from companies across the country.

As reported by the Milwaukee Journal Sentinel, Groshek applied to 562 jobs within an 18-month period of time and has admitted to threatening 40 companies with class-action lawsuits on behalf of all their recent hires for technical violations of the federal law unless they pay him a personal settlement to go away. In most cases, the companies decided to simply pay Groshek — about 20 paid him relatively small settlements of between $5,000 and $35,000.

Under the law, the plaintiffs involved in a FCRA class action could be entitled to up to $1,000 per employee should the case succeed. And, Groshek had good reason to believe he’d succeed: According to WebRecon, the number of FCRA class-action suits filed against companies last year doubled to 400 from the number filed in 2014. Companies such as Domino’s, Home Depot, Uber and the parent company of the Food Lion supermarket chain are among those that have agreed to pay millions of dollars each to settle FCRA class-action suits.

A small number of companies opted not to settle with Groshek, however, and Time Warner Cable was among them. He’d applied for, and was offered, an $11-an hour job with the cable giant. Instead of accepting the job, Groshek sent TWC a 2,300-word letter threatening to sue the company over FCRA violations on behalf of all recent hires unless they paid him a settlement of between $5 million to $10 million. TWC refused to settle and Groshek filed suit, which is how his activities came to light.

TWC’s lawyers have filed a motion to dismiss the lawsuit, arguing that Groshek (whom they referred to as a “professional plaintiff”) shouldn’t be allowed to sue because he intentionally initiated any alleged violations and that he violated state extortion laws. Groshek has also filed suit against three other companies that refused to settle; those cases are also pending.

Melissa Sorenson, executive director of the National Association of Professional Background Screeners, told the Journal Sentinel that previous settlements of FCRA claims have emboldened more people to file FCRA class-action lawsuits in recent years.

“It’s opened up an entire area of practice,” she told the paper.

Due to the many technical requirements of the FCRA statute, “there are lots of technical ways to violate the statute, and there are a lot of plaintiffs’ attorneys who recognize that,” Veena Iyer, a labor and employment attorney at Nilan Johnson Lewis told my colleague Mark McGraw for a story on FCRA lawsuits last year.

Many employers unintentionally commit FCRA violations in handling adverse-action notices, sources told McGraw. In particular, employers must ensure that applicants are given a meaningful opportunity to challenge any incorrect information that’s uncovered in a background report. Some of the most common FCRA claims are that employers’ background-check disclosure forms contained language not limited to the disclosure required by the statute, the employer failed to provide a pre-adverse action notice, and the employer did not wait the right amount of time before taking final adverse action against an individual.

“Do not assume that no one will challenge the information in the consumer report,” Doug Kauffman, a partner in Balch & Bingham’s labor and employment group, told McGraw. “Employers who become too mechanical in the application of providing the notice of a potential adverse action, wait seven days, and then automatically send the final adverse action, may effectively skip a key requirement under FCRA to provide a meaningful opportunity to the applicant to correct any misinformation.”

Americans Much in Favor of Background Checks

Granted, the company announcing this research has some “skin in the game,” as we sometimes say around here, but this study — which 502005532 -- criminal backgroundwas explained to me in some detail at the recent SHRM16 conference in Washington — bears sharing.

It’s so counterintuitive to so much of what we’ve been hearing when it comes to the popularity, or lack thereof, of background screening, I thought it might pique some interest.

The study (registration required) was commissioned by Sterling Talent Solutions, the entity created from the recent acquisition by SterlingBackcheck of EmployeeScreenIQ. (Kelton Global conducted the research.)

And here’s the statistic that compels me to share: It finds 95 percent of the 1,077 Americans over the age of 18 polled think background checks should be mandatory to determine whether a person has a criminal past before he or she takes on the responsibilities of a job.

As Nick Fishman, the company’s communications vice president, explained to me, “we’ve all heard a lot about background checks, and how they are negatively perceived, and negatively affect job candidates [indeed, here’s just a sampling of such content we’ve posted on HREOnline and HRE Daily, along with guidelines and regulations employers now need to be aware of], but no one’s gone out and asked the general public what they actually think about them. Well, we did.”

For so long, it’s been assumed employers take the safety of their workplaces more seriously than employees, Fishman said. “Now we see employees care as much, if not more.”

The poll also found 81 percent of Americans believe feeling safe at all times is their right and the workplace is one of the top two locations where they expect to feel safe. What’s more, 68 percent indicated they are willing to undergo background checks themselves; in other words, it’s not just something they believe should be in place for others.

“For too long, the debate about background checks has failed to take into account how everyday Americans actually feel about the role background checks play in their daily lives — namely to keep them safe — and has instead focused on issues promoted by [governmental agencies and advocacy groups],” says Clare Hart, chief executive officer of Sterling. (Think ban-the-box legislation currently spreading through the country at city, county and state levels.) Hart continues:

“[This explains] why Americans depend on employers to look into the backgrounds and criminal histories of job candidates. Importantly, contrary to much of what’s been reported in the media, only 14 percent of Americans consider background checks to be an invasion of privacy.”

So what are you/we to do with this?

Obviously, background-check providers would love the door to open ever-wider to the need for their services. But there’s more to this, I think, yet another reminder that we don’t always know what’s in the hearts and minds of the people working for us, and we should not pretend to know without asking them.

(Employee-satisfaction-survey providers would no doubt have some thoughts on this as well.)

 

 

 

 

 

Uber’s Horrifying New Headache

It seems the revolutionary ride-hailing app is once again in the headlines at the start of another week, and for all the wrong reasons.

As was widely reported over the weekend, Uber is now dealing with the PR fallout from the shootings in Kalamazoo, Mich., on Saturday night, allegedly by an Uber driver who may have even picked up a fare in between shootings.

(Indeed, one passenger’s harrowing tale of his trip with the alleged gunman, identified as Jason Dalton, on the night of the shootings, can be found here.)

According to the story in the Chicago Tribune, a spokeswoman for Uber confirmed that Dalton was a driver for the company, but she declined to say whether he was driving Saturday night.

The Trib story also notes:

Uber prohibits both passengers and drivers from possessing guns of any kind in a vehicle. Anyone found to be in violation of the policy may be prohibited from using or driving for the service.

While the alleged shooter had no criminal background, this incident nonetheless brings up a very difficult question for Uber going forward. Given the loose structure and general lack of corporate oversight  of Uber’s workforce, how can the company assure its customers that the next time they get into an Uber driver’s vehicle, they won’t be entering a possible crime scene?