Good (and Bad) Background Checks

More organizations use background checks to investigate criminal histories and to make hiring and firing decisions. It's up to CSOs to make sure this powerful but flawed weapon doesn't backfire.

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"You work around it and obtain as much information as you can," says Lampeter of Boston-based State Street, which has employees in 24 countries. Because State Street is a financial services company, it has a legal obligation to make sure that it doesn't hire anyone with a history of crimes such as theft or money laundering. Lampeter relies on a global, cross-functional team of legal counsel, human resources and security to navigate the legal waters.

"What we have tried to do on a country-specific basis is evaluate and understand the local laws and labor practices," Lampeter says. "We're not, in many cases, able to implement 100 percent of the U.S.-based screening program in other countries, but we can implement an equivalent program within the balance of local laws and regulations."Mistakes Get MadeWhen researchers at the University of Maryland studied recidivism rates in a county in Virginia, they were unable to gain access to records housed by the state police; so, they decided to turn to the experts. To save valuable staff time, they enlisted a background check company to conduct a search on the 120 parolees and probationers that were part of the study, to see whether any additional arrests would appear on their records.

Sixty-four of the 120 convicted criminals in the study came back with spotless criminal histories. "The company we hired did what was considered the gold standard approach; they went to the courthouse and checked records," says Shawn Bushway, an assistant professor at the university and a criminologist. He won't reveal the name of the company that did the checks, but he does say, "This was not one of those national $9.95 searches," which are widely acknowledged to be suspect.

Inadvertently, Bushway and his colleagues had revealed in a dramatic way something that everyone in the industry knows but hates to acknowledge: Even the best companies' reports contain errors. Criminals look innocent, or the innocent look criminal.

"Doing a background check is still a very manual process, because the government agencies that create the records are largely paper-based systems," says James Lee, chief marketing officer of ChoicePoint. "I'm not going to deny that there are errors, because in any system that involves human beings or technology, there are going to be errors."

Lee downplays the number of errors at ChoicePoint, saying that of the 6 million-plus background checks it conducts annually, less than one-tenth of 1 percent of them require an amendment. He also acknowledges that the company is doing good business in a joint endeavor with HotJobs.com, which allows job seekers to run a background check on themselves to look for mistakes.

So how do errors happen? Social Security numbers get transposed during data entry. Names, addresses or dates of birth get mistyped. Identities get confused: a problem that has worsened because some jurisdictionsincluding federal courthouseshave removed identifiers such as Social Security numbers from their records for privacy reasons. There are rising concerns about identity theft, particularly the growing practice of a criminal using someone else's name when being arrested or convicted of a crime. It's also hard to get a thorough report. There are thousands of counties in the United States, all with their own records departments. Misdemeanors and felonies might appear in separate repositories. An overturned conviction that should have been erased from the record, might still appear on files at a corrections department.

"The overall reliability of the criminal background check, the way it's done today, is suspect," says Don Osterberg, vice president of capacity development and safety at Schneider National, where he oversees a program that performs criminal investigations, motor vehicle history checks and drug testing on all new drivers and owner operators. "It's better than nothing, but the probability of not finding a criminal conviction is pretty high."

Companies, in hopes of getting a more complete criminal record, are increasingly pushing for access to FBI criminal background checks (which now can be requested only for employees in certain regulated industries). But even those files are incomplete. In the University of Maryland study, a national search of FBI files found records for only 87 of the 120 study subjects. Only part of that was due to the fact that FBI files generally do not contain misdemeanors, and that some police departments don't report to the FBI. "The FBI data has holes too, because it's coming from the state repositories," Bushway says.

In some ways, demand for access to national records has made the situation worse. Many private companies are amassing records from city, county and state jurisdictions, and advertising them as national searches. Because of the wildly disparate information that's available in the first place, the fine print reveals their limitations. For example, the "National Criminal Index" sold by companies like Peoplefind.com has records on sexual offenders in just 32 states, and its Department of Corrections data covers 34 states: sometimes felony convictions, other times incarcerations, occasionally misdemeanors.

Because of all these vagariesand for legal reasons tooit's crucial that a company make every effort to confirm the accuracy of the information on a report before using it to make a hiring decision. That should be done by confirming the data with the original sourcesince databases may be out-of-date or inaccurate. But again, it's not clear whose responsibility it should be: the employer's or the screening firm's. Companies that don't take this extra step themselves need to make sure that it's written into vendor agreements.

The final check, of course, ought to come from the individual himself, who should know better than anyone else whether he has committed a crime. That's why the FCRA requires companies to warn individuals before acting on the information from a background check, to let them see a copy of the report and give them time to correct any errors.

Ultimately, the responsibility for correcting the record is in the hands of the individual. "It's up to them to go back to whatever court to resolve that," Equifax's Mecsics says. "We can't do that as a company." What the company can do, however, is put a process in place to help individuals correct errors, and then not hold mistakes against them.It's Not All Fair GameBut consumer advocates are afraid that that's not happening. In May, for example, Sterling Testing Systems, a background screening company in New York City, was served a $375,000 lawsuit from a Kentucky man named Edward Poore Jr. He claimed that Colgate-Palmolive had hired another candidate in the time it took him to correct an error on his background check.

Tena Friery, research director of the Privacy Rights Clearinghouse in San Diego, says she gets calls all the time from people who claim to have been denied employment because of errors in their background checks. And it's become clear to her that employers are not always following the rules. "The employer sometimes says pretty outrageous things, like that the individual isn't allowed to get a copy of the report," she says. It doesn't always help if the individual fixes the mistake, either. "Employers may get spooked and say, we'll hire this other candidate," she says.

More broadly, some observers voice their concerns that individuals who have paid their debt to society are being marginalized by excessive reliance on background checks. "Just because someone has a criminal history record doesn't mean they're dangerous," says Bushway, the criminologist. "How long has it been? What did they do? Employers need to know how to read these things."

Employers can best address these concerns by making sure that the information they're checking truly has a bearing on the job at hand. "What information about one's life is truly relevant to one's job?" Privacy and American Business's Westin asks. "The public can say, Yes, we think this is a legitimate thing for the employer to ask, but we don't think that is." In a recent survey by his organization, for instance, 92 percent of respondents said it was acceptable for employers to check whether a job applicant's résumé contains false information. But only 24 percent thought it was acceptable to check if an applicant had ever filed for bankruptcy.

The way Gus Bremer, senior manager for corporate security at Ryder, sees it, there are three keys to making sure a background check program is fair: a good job description, specific standards about what constitutes a "pass" and an exception system. "If you don't have a well-defined job and a process, if you deny me employment, I might have a leg to stand on going to the [Equal Employment Opportunities Commission] and saying, Look, they actually hired others with similar records to do similar jobs, so they're being unfair to me," Bremer says. "You need pretty good standards to apply to every situation."

Sometimes, though, there will be exceptionsas when, perhaps, someone has an old conviction for marijuana possession but has been a law-abiding citizen ever since. Every month, about 10 or 15 background checks land on Bremer's desk for possible exceptions. "There are people who have done some silly things that they have great regret for later, and [this process is] to make sure that you do have the right employee," he says. "You want the well-qualified person who does not have a recurring problem with honesty or drugs."

"It's a tough issue," says Osterberg of Schneider National. "Where do we cross the line between your individual right to privacy and your employer's right to know specific things that could be detrimental to your performance or public safety? We've got to find a working balance, where we're not being intrusive, but we're able to learn those things that might be indicative of problematic behavior."

It's no easy task; but it's worth the struggle. Because done well, the background check stands to become much more than another weapon in the CSO's arsenal. It can be a tool for doing the right thing.

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