EmployeeScreenIQ Blog

It’s official.  Both the media and the government are turning the screws on employers using credit reports as part of their job candidate background screening process.  Every day, we are seeing more and more state laws introduced to curb the use of credit reports and in the case of a federal bill sponsored by U.S. Rep Steve Cohen (D. Tennessee), HR 3149 an attempt to ban them altogether from the hiring process.

Certainly, there are employers out there who have abused the privilege of reviewing this information.  However, the vast majority of employers who utilize credit reports are doing so legitimately and only when necessary.  SHRM reports that nearly 47% of all employers use them for certain job positions.  I am not the great defender of credit reports, but an all-out ban of them would be disastrous for some employers and their customers.  There are many unintended consequences of making this practice illegal.  It is these consequences that have caused California governor Arnold Schwarzenegger to veto a bill introduced to do so not once, but twice.  The governor argued, “This bill would significantly increase businesses’ exposure to civil actions over the use of credit checks. Further, the bill would increase administrative costs to those employers who must legitimately use credit reports as a screening tool by requiring that the employer first abide by its onerous requirements. California employers and businesses have inherent needs to obtain information about applicants for employment. The bill would become a new employer obstacle to the use of available information needed to make hiring decisions.”

The Wall Street Journal published a balanced article in this morning’s paper about this issue which identifies the concerns of job applicants while highlighting the needs of employers to arm themselves with such information. Take a look.

In the meantime, SHRM also published an article this morning that discussed the EEOC plans to address this issue in the next 12-18 months.  They also offered some solid advice from attorney Leslie E. Silverman, partner at Proskauer Rose LLP, in Washington, D.C. for what employers can do to ensure that their practices don’t invite litigation:

“It would be really risky for your company to use a ‘one-size-fits-all’ policy,” Silverman said in a March 3, 2010, Society for Human Resource Management webcast. “A blanket application of credit checks [provides] your company with less of an ability to argue that it is job related,” she said. Silverman advised that HR:

• Be selective on which positions to subject to a credit check.
• Be able to articulate a rational reason on why a credit check is needed for predicting job performance and related to the business functions.
• Ensure that your managers use only the information relevant to the job in question that is needed to make an employment decision. “Avoid making decisions based on extraneous issues if you can avoid it,” Silverman said.
• Allow your candidates to explain the reasons for negative credit information. “This will place you in a better position to assert that the credit information really was job related and consistent with business necessity,” she said.

For the record, most employment attorneys and employment background screeners have been saying this for a long time.

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I feel like I write the following statement (or similar sentiments) a lot when talking about about the prospect of hiring those with criminal records, particularly those with felony convictions, here I go again.

True, some convictions prevent individuals from working in certain positions.  True, some of the most heinous offenders are unemployable.  True, those who hide or lie about their past are of concern to prospective employers.  True, people can successfully rehabilitate.  True, it is not the job of background screeners to prevent people from getting jobs.  We simply report the information that we find and let employers make informed hiring decisions.

Why the soliloquy? CNN just reported about a job fair for convicted felons in Houston and I find myself applauding the efforts of the organizers and for the 3,000 people who attended in search of gainful employment.  People often question how we can get behind efforts like this and I go into the rationale I conveyed above.  Criminal recidivism rates are a serious societal problem.  They soar when those released from prison can’t find jobs.  Therefore, when those with criminal records are honest about their past, vow not to repeat their mistakes and decide to get a job, I’m all for it.  BTW, even employers that knowingly hire convicted felons should still conduct employment background checks.

People Line Up at Job Fair for Convicted Felons

(CNN) — More than 3,000 people turned out in downtown Houston, Texas, Wednesday for a job fair designed for convicted felons.

Organizers of the Road to Re-entry Employment Fair, created to help those with criminal records find work and reintegrate into society, had expected a few hundred job people. The line of job seekers, which ran for a few blocks and tied up traffic, as reported by CNN affiliate KHOU, took the planners by surprise.

“These were not individuals trying to get concert tickets or a free dinner,” said Jarvis Johnson, a Houston City Council member who helped sponsor the inaugural event. “They were individuals who were waiting in line because they want to be productive members of society.”

Lavell Byrd was just one of the people who came out in search of work. He told KHOU that he hadn’t had a full-time position since December.

“I’m an ex-con, and that’s the main thing that’s holding me back,” Byrd said to KHOU. “It’s a very, very, very hard thing that people still look at what you did in the past and not what you can do in the future.”

Giving people like Byrd a chance to succeed and be a productive part of the work force is in the interest of all of us, said council member Johnson. If ex-criminals can’t findjobs, they’re more likely to land back in prison, he said.

“They made a mistake, but they’ve paid their debt to society,” he said. “At the end of the day, we are all going to pay if we don’t open the doors of opportunity — whether we become the victims [of future crimes] or we have to use our tax dollars to imprison them.”

And according to the Road to Re-Entry Web site, there are incentives in place to make hiring ex-offenders more appealing to employers. For one, the Federal Work Opportunity Tax Credit gives tax credits to those who open their doors to those with criminal records.

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As we reported previously Oregon is trying to ban the use of credit reports as part of a pre-employment background check.  While credit reports are rarely used as the sole factor for denying employment they are still an important tool.  Oregon is only one of many states going forward with similar efforts.  We don’t necessarily disagree with the story below, but it is important to note that credit does have an important place in some background checks…for some positions.

States may ban credit checks on job applicants

ANNAPOLIS, Md. – It’s hard enough to find a job in this economy, and now some people are facing another hurdle: Potential employers are holding their credit histories against them.

Sixty percent of employers recently surveyed by the Society for Human Resources Management said they run credit checks on at least some job applicants, compared with 42 percent in a somewhat similar survey in 2006.

Employers say such checks give them valuable information about an applicant’s honesty and sense of responsibility. But lawmakers in at least 16 states from South Carolina to Oregon have proposed outlawing most credit checks, saying the practice traps people in debt because their past financial problems prevent them from finding work.

Wisconsin state Rep. Kim Hixson drafted a bill in his state shortly after hearing from Terry Becker, an auto mechanic who struggled to find work.

Becker said it all started with medical bills that piled up when his now 10-year-old son began having seizures as a toddler. In the first year alone, Becker ran up $25,000 in medical debt.

Over 4 1/2 months, he was turned down for at least eight positions for which he had authorized the employer to conduct a credit check, Becker said. He said one potential employer told him, “If your credit is bad, then you’ll steal from me.”

“I was in a deep depression. I had lost a business, I was behind on my bills and I was unable to get a job,” he said.

Hixson calls what happened to Becker discrimination based on credit history and said his bill would ban it.

“If somebody is trying to get a job as a truck driver or a trainer in a gym, what does your credit history have to do with your ability to do that job?” Hixson said. He said he knows of no research that shows a person with a bad credit history is going to perform poorly.

Under federal law, prospective employers must get written permission from applicants to run a credit check on them. But consumer advocates say most job applicants do not feel they are in a position to say no.

Most of the bills being proposed this year resemble laws in Hawaii and Washington that prevent employers from using credit reports when hiring for most positions. The laws contain exceptions in cases where such information could be relevant to the job — for example, if the person is applying to work in a bank or an accounts-payable office.

On a national level, Rep. Steve Cohen, D-Tenn., introduced a similar bill last summer in Congress, where it is still bottled up in committee.

Even though more companies are using credit checks, only 13 percent perform them on all potential hires, according to the Society for Human Resources Management’s most recent survey. Mike Aitken, the group’s director of government affairs, said a blanket ban could remove a tool employers can use to help them make good hiring decisions.

Aitken pointed to a 2008 survey by the Association of Certified Fraud Examiners that found the two most common red flags for employees who commit workplace fraud are living beyond their means and having difficulty meeting financial obligations. The same survey estimated American companies lost $994 billion to workplace fraud in 2008.

Aitken said someone who cannot pay his or her bills on time may not be more likely to steal, but might not have the maturity or sense of responsibility to handle a job like processing payroll checks.

In Maryland, where the state Chamber of Commerce opposes a bill banning most credit checks, employers at a recent legislative hearing said they are not interested in applicants’ credit scores.

Instead, they said, they are concerned about things like debt collections and legal judgments rather than poor credit because of medical bills or school loans. They also said companies give job applicants a chance to explain their credit problems.

Last year California lawmakers voted to curb the use of such checks, but Gov. Arnold Schwarzenegger vetoed the bill under pressure from Chamber of Commerce leaders who called it a “job-killer.”

But Maryland Delegate Kirill Reznik, who drafted the bill being considered in his state, said people struggling to get jobs need help.

“We are in the great recession and this creates a vicious cycle,” Reznik said. “People lose their jobs, that naturally precipitates them getting behind on bills, their credit scores go down, they are trying to find a job to pay off the bills, and employers won’t hire them because of their credit score.”

Maryland public school employee Jen Harwood said running credit checks on job applicants “perpetuates the divide between the haves and the have-nots.”

“If you continue digging into people’s past and not looking into what people have to give today, you are making a bigger divide,” Harwood said.

Consumer advocacy groups are also lining up behind the legislation, pointing out that credit reports can contain inaccurate information.

Becker, the Milton, Wis., resident with bad credit, has found work dismantling cars at an auto recycling company that did not ask to run a credit check. He worries, though, about friends in the auto industry are looking for work and coming up empty-handed because of credit problems.

“It just seems like once you fall behind, you’re behind,” he said. “It’s really hard to get back on the right financial track.”

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Today is “Get out of Jail Free” day in Miami-Dade County Florida, sort of.  According to NBC5 Miami, “If you have an arrest record in Miami-Dade County, don’t walk, run to the Miami Beach Botanical Gardens tomorrow because the State Attorney’s Office is offering a chance to start over again.”

The state will expunge arrest records that didn’t result in criminal charges or certain minor infractions for free;  in essence, they’ll wipe out the records.  Give the struggle to find gainful employment these days, I actually think this is a good idea so long as it is limited to the parameters described above.  Most employers that conduct employment background checks wouldn’t use these in their hiring decision, but being able to come in with a clean record is certainly helpful.

See story below.

Miami-Dade Erasing Criminal Records

State Attorney’s office expunging records for free tomorrow

If you have an arrest record in Miami-Dade County, don’t walk, run to the Miami Beach Botanical Gardens tomorrow because the State Attorney’s Office is offering a chance to start over again.

The “Second Chance” One-Stop Sealing and Expungement program will be from 4 p.m. to 7 p.m. for people who have not been convicted of a crime, but probably pleaded no contest to minor charges. And it’s free.

Considering the number of celebrities and sports figures who get cuffed down here, it might turn into a red carpet event. Make sure to bring your cameras.

The Second Chance program is sort of a get-out-of-jail free pass, only you’re not really in jail anymore.

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New online service equips job-seekers to screen themselves and uncover any potential negative history ahead of potential employers

Cleveland, Ohio (PRWEB) February 17, 2010 — With the release of TransparentMe, job-seekers can discover any skeletons in their closet before a potential employer does.

The public records provider allows candidates to perform an online criminal background check on themselves in a matter of days or even minutes – revealing any negative information that could keep them from landing their next job. With identity theft on the rise, the service can also serve as an alarm that one’s identity has been compromised.

“In today’s hyper-competitive job market, a background check can make the difference between landing a dream job or being cast aside in favor of someone else,” said Jason B. Morris, co-founder and principal. “TransparentMe equips a job seeker with information so they can be proactive with a potential employer instead of defensive.”

“More companies than ever are conducting background checks on their job candidates – as many as 85 percent of all employers,” said Nick Fishman, co-founder and principal. “Also, identity theft is forcing candidates to find out the hard way that their character and personal information has been tainted. TransparentMe arms people with knowledge so they can avoid unpleasant surprises that might impact their future career.”

The service is offered in three package levels: Basic ($19.95), Enhanced ($34.95), and Comprehensive ($69.95). All levels provide the following three services:

- Identity Verification – This search conducts a social security number trace, ensuring that an individual’s number isn’t being used by anyone else. The trace also provides a history of addresses where a customer has applied for credit. Most employers use this type of search as a roadmap to determine which court jurisdictions should be researched for criminal records and what names to check.

- National Criminal Records Database Search – A search of databases that comprise millions of records from various sources in the United States. These records are obtained by commercial vendors from several different sources including: County Court Houses, State Departments of Incarcerations, State Record Repositories, Probation Departments and Townships.

- National Sex Offender Registry Search – This multi-state database search provides sex offender case information in an easy-to-read report. Extensive search capabilities will check registered sex offender data sources nationwide, including: Bureaus of Investigation, Departments of Law Enforcement, Departments of Corrections, Departments of Justice, Departments of Public Safety, Sheriff’s Departments, State Attorney General’s Offices and state police agencies in all 50 states and the District of Columbia.

Basic level results are available within minutes. The Enhanced level includes the above services as well as the following searches:

- Current County of Residence Criminal Records Search: An on-site manual search of the superior, upper, lower, and/or municipal court records in the user’s current county of residence. A national network of professional court researchers covers all 3,500+ county court jurisdictions and will indicate if a subject has a felony, misdemeanor and possibly an infraction filing within the last seven years or longer.

- Homeland Security Search: This security check cross-references the user’s name against more than 14 worldwide known terrorist and fugitive databases that include individuals, organizations and companies considered a threat to global and national security. The Homeland Security Check database is updated daily as various lists are modified.

Results for the Enhanced and Comprehensive levels are available in one to four days. The Comprehensive level includes all five services above, but also allows users to conduct a criminal records search in up to five counties across the country.

Add on services such as Employment Verifications, Education Verifications, Reference Interviews and Professional License Verifications are available on all of the above packages.

About TransparentMe
TransparentMe is a public records provider that allows job candidates to gain a competitive edge in finding the perfect job, through self-administered background checks. Our approach is simple: provide clients with the peace of mind that there won’t be any surprises when prospective employers conduct their own due diligence. For more information, contact: www.transparentme.com.

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We are proud to announce that EmployeeScreenIQ was recently named to Workforce Management Magazine’s 2010 “Hot List” of Employment Related Screening Providers. The list recognizes the top screening companies in our industry. There were a total of 14 companies recognized.

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Well it’s been six months in the making and we’ve finally officially launched our redesigned EmployeeScreen University.

Because I’m lazy (hey it’s Friday), I’ll give you the high point of the improvements as told through our press release.

Originally launched in March, 2008, EmployeeScreen University is the first online educational resource for HR, security and risk-management professionals, featuring regularly updated, free background screening information aimed to help organizations make better hiring decisions.

“The site was already rich with our expert and guest articles, the EmployeeScreenIQ Blog, legislative updates and notifications of current court delays,” says Nick Fishman, EmployeeScreenIQ’s chief marketing officer and executive vice president. “Now we’ve added new features to the site that make it far more valuable to visitors, including user polls, Social Networking plug-ins, videos and podcasts. The end result is an enhanced user experience for our clients and the overall marketplace.”

The company has produced a new video that speaks to the exciting changes, which can be viewed at http://university.employeescreen.com.

“We introduced this concept to the screening industry in 2008 and it has been rewarding to see it grow,” said EmployeeScreenIQ president and chief operating officer, Jason B. Morris. “There is nothing out there like this, so this re-launch has been cool because we were competing with ourselves to see just how much we could innovate.”

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According to Tennessean.com, Alive Hospice CFO Missy Bordelan has quit her job after admitting to committing mail fraud at her former employer.  Ms. Bordelan was hired in October while under indictment for 10 federal charges.  “Bordelon admitted to taking more than $192,000 total and entered a guilty plea to one count of mail fraud in September. The conviction carries up to 20 years in prison and a fine up to $250,000 on top of making restitution to the hospital. No sentence or penalty has been set yet, according to court records.”

Alive Hospice says that they conducted a background check and the article infers by that point that nothing turned up.  How is this possible?  I have a theory.

One scenario is that they didn’t conduct a Federal Criminal Record Search. Criminal activity tried in Federal District Courts typically involves violations of the Constitution or federal law. These crimes may include tax evasion, embezzlement, bank robbery, kidnapping, mail fraud and other federal statute violations. Federal criminal convictions do not appear in state or county felony and misdemeanor court record searches, therefore a federal district search is imperative if such records are needed. Each state is comprised of federal districts.

In the article, an expert from the Association of Certified Fraud Examiners suggests that pending charges sometime fall through the cracks.  However, if the article is correct that she plead guilty in September, there should have been federal record when they conducted the check in October.

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Lately, there is a heightened interest in the use of credit reports as part of the employment screening process.  There have always been some misconceptions about what information employers are actually able to see.  We wrote about these misconceptions in the article, Credit Reports: A Window to the Soul, where we dissected the difference between Consumer Credit Reports and the Pre-Employment Credit Report employers use.

The biggest misconception is that employers will use your FICO credit score to make a hiring decision.  A Pre-Employment Credit Report does not contain a credit score, does it include full account numbers and the inquiry does not have a negative impact on your credit score.

See article below from the Dallas Morning News.

While prospective employers can pull your credit report with your permission, they can’t get your credit score.

“Credit scores are not provided along with the credit reports that the bureaus sell for employment screening,” said John Ulzheimer, president of consumer education at Credit .com, a credit information Web site.

Here are the positions taken by the three national credit bureaus, Experian, TransUnion and Equifax:

• “The key point to consider here is that credit scores are not predictive of employment performance,” said Steven R. Katz, director of consumer brand at TransUnion. “They are designed to predict the likelihood of such things as an individual defaulting on a loan or filing for bankruptcy.”

• “We don’t provide credit scores with an employment report because they’re not extending you a loan,” said Michele Boddavice, president of product management and development at Experian Credit Services. “There’s no relevancy there to your credit score and an employment decision.”

• Equifax doesn’t “provide credit scores or files [credit reports] for pre-employment screenings,” said spokesman Tim Klein.

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The folks over at Recruiter Earth asked Jason Morris and I to do a podcast interview about all- things background checks.  We discussed EmployeeScreenIQ’s 10th Anniversary, how background checks have changed since 1999 and about some of the emerging trends in the background screening industry.  Check it out when you get a chance.

Listen to Recruiter Earth Podcast

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