PI Newswire

A report has found workplace fraud is costing Canada’s small and medium enterprises (SMEs) at least $3.2 billion a year – probably much more – and is hurting employee morale, just as the authors of the report say the problem is growing.

About 290,000 SMEs were victims of one or more instances of work-place fraud in the past year, says a Certified General Accountants Association of Canada (CGA-Canada) study.

Tim Houghton, vice-president of risk solutions for CKR Global Risk Solutions in Calgary, says 75 per cent of all employee-related crimes – theft, fraud, assaults and others – go unnoticed.

Houghton says a company is 15 times more likely to have an employee steal from an employer versus a non-employee. “If you consider that 75 per cent (of all crimes) go unreported, then that $3.2 billion is actually a quarter of the actual loss,” he says.

“It has a huge impact, both financially and non-financially, for most (SMEs).”

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It’s not the kind of cheating most victims had in mind.

As millions of lonely hearts and lusty pants head online to find mates and dates, those who specialize in finding skeletons in the closet are warning online daters to be careful.

This comes a few days after a Toronto human resources firm called for all dating sites to make users supply a criminal background check as part of the registration process.

Ottawa private investigator Robert Gater said that’s “part of a good first step.”

Over the past few years he’s been hired more than a dozen times to find any available dirt on potential boyfriends or girlfriends found online.

A criminal background check will tell someone what their lover has done in the past, but not necessarily what they’re up to now.

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The destruction of millions of old federal court records is well under way after a judicial committee last year said it was “cleaning house,” a move estimated to save millions of dollars but one that has raised sharp concerns in the private-security industry.

The National Archives says no criminal case files are being destroyed yet, pending final approval, but millions of old civil cases have been destroyed and bankruptcy cases are now heading to the shredder. Archivists say docket sheets that include names of parties and the outcome of cases will be preserved.

Still, Peter Psarouthakis, chairman of the trade group Investigative and Security Professionals for Legislative Action, said the loss of so many court records would hurt the ability of companies to conduct background checks, including those on people applying for government security clearances.

“All of a sudden, you’re taking away a huge section of public records and making them go away forever,” said Mr. Psarouthakis, president of Michigan-based EWI & Associates. “It’s catastrophic what they’re doing here.”

The trade group recently told its members in a website posting that the policy will “seriously” hamper background checks on litigants, potential business partners and prospective employees.

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Following an investigation by the U.S. Equal Employment Opportunity Commission (EEOC), Pepsi Beverages has agreed to pay $3.13 million and make major policy changes by providing job offers and training to resolve a charge of nationwide hiring discrimination against African Americans with criminal background checks, according to a press release from the EEOC website. The Commission found that the criminal background check policy formerly used by Pepsi discriminated against African Americans in violation of Title VII of the Civil Rights Act of 1964, and most of the monetary settlement will primarily be divided among black applicants for positions at Pepsi.

The investigation by the EEOC – the agency of the U.S. Government that enforces federal laws prohibiting employment discrimination – revealed that more than 300 African Americans were adversely affected when Pepsi applied a criminal background check policy that disproportionately excluded black applicants from permanent employment. Pepsi’s former criminal background check policy denied job applicants who had been arrested pending prosecution a chance to be hired for a permanent job even if they had never been convicted of any offense. Pepsi’s former policy also denied employment to applicants who had been arrested or convicted of certain minor offenses.

During the course of the EEOC’s investigation, Pepsi adopted a new criminal background check policy. In addition to the $3.13 million in monetary relief, Pepsi will:

Offer employment opportunities to victims of the former criminal background check policy who still want jobs at Pepsi and are qualified for the jobs for which they apply.
Supply the EEOC with regular reports on its hiring practices under its new criminal background check policy.
Conduct Title VII training for its hiring personnel and all of its managers.

Under Title VII of the Civil Rights Act of 1964, the use of arrest and conviction records to deny employment can be illegal when it is not relevant for the job since it can limit the employment opportunities of applicants or workers based on their race or ethnicity. The EEOC has guidance and policy statements on the use of arrest and conviction records in employment that makes the use of a blanket “no hire” policy that excludes job applicants with criminal records unlawful under Title VII of the Civil Rights Act of 1964 since it discriminates against minority groups with higher rates of criminal convictions.

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The use – and, in some cases, misuse – of criminal background checks of job applicants by employers, a practice which has come under greater scrutiny of the U.S. Equal Employment Opportunity Commission (EEOC), has topped the fifth annual Employment Screening Resources ‘Top 10 Trends in Background Checks’ for 2012. For the past five years, Attorney Lester Rosen, founder and CEO of Employment Screening Resources (ESR) – ‘The Background Check Authority(SM)’ and nationwide background screening firm accredited by the National Association of Professional Background Screeners (NAPBS®) – has compiled a list featuring emerging and influential trends in employment screening background checks for employers.
“Although the EEOC’s concern over criminal background checks of applicants was the number one trend for 2012, employers need to be aware of several other developments, including the increased regulations of credit report checks, the controversial use of social media background checks, and screening automation leading to both increased efficiency and risks,” says Rosen, a recognized background check expert and author of ‘The Safe Hiring Manual,’ a comprehensive employment screening guide for employers. For 2012, Rosen has selected the following Ten Top Trends in Background Checks:

Number 1 – Criminal Background Checks of Job Applicants by Employers Coming Under Greater Scrutiny by EEOC

With a recent survey showing nine out of ten employers conduct criminal background checks on some or all job candidates, the Equal Employment Opportunity Commission (EEOC) held a public meeting in July 2011 examining the use of arrest and conviction records by employers for criminal background checks to determine if the practice was an unfair and discriminatory hiring barrier to job seeking ex-offenders. The EEOC’s actions, coupled with the growing “Ban the Box” movement seeking to remove the criminal history question from job applications, shows that employer use of criminal records is under fire now more than ever. Read more about Trend Number 1 of the Employment Screening Resources Top 10 Trends in Background Checks for 2012.

Number 2 – Credit Report Background Checks of Job Applicants by Employers Increasingly Regulated by State Laws

In recent years, several U.S. states have passed laws regulating the use of employment credit reports of job applicants and current employees that have impacted the way employers conduct background checks. Seven states – California, Connecticut, Hawaii, Illinois, Maryland, Oregon, and Washington – currently have laws that limit the use of credit report checks by employers for employment purposes, with the most recent law, California Assembly Bill 22 (CA AB 22), taking effect January 1, 2012. Other states, and the U.S. Equal Employment Opportunity Commission (EEOC), are considering further restrictions on credit checks by employers. Read more about Trend Number 2 of the Employment Screening Resources Top 10 Trends in Background Checks for 2012.

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In 2010, the Chicago Public Schools declined to hire Darrell Langdon for a job as a boiler-room engineer, because he had been convicted of possessing a half-gram of cocaine in 1985, a felony for which he received probation. It didn’t matter that Mr. Langdon, a single parent of two sons, had been clean since 1988 and hadn’t run into further trouble with the law. Only after The Chicago Tribune wrote about his case did the school system reverse its decision and offer him the job.

A stunning number of young people are arrested for crimes in this country, and those crimes can haunt them for the rest of their lives. In 1967, President Lyndon B. Johnson’s Crime Commission found that about half of American males could expect to be arrested for a nontraffic offense some time in their lives, mostly in their late teens and early 20s. An article just published in the journal Pediatrics shows how the arrest rate has grown — by age 23, 30 percent of Americans have been arrested, compared with 22 percent in 1967. The increase reflects in part the considerable growth in arrests for drug offenses and domestic violence.

The impact of these arrests is felt for years. The ubiquity of criminal-background checks and the efficiency of information technology in maintaining those records and making them widely available, have meant that millions of Americans — even those who served probation or parole but were never incarcerated — continue to pay a price long after the crime. In November the American Bar Association released a database identifying more than 38,000 punitive provisions that apply to people convicted of crimes, pertaining to everything from public housing to welfare assistance to occupational licenses. More than two-thirds of the states allow hiring and professional-licensing decisions to be made on the basis of an arrest alone.

Employers understandably want to protect their employees and customers from risk. Yet at the same time, there is a growing public interest in facilitating job opportunities for those who have stayed crime-free for a reasonable period of time. The weak economy and a rethinking of the logic of mass incarceration — driven in large part by budget pressures — have also brought attention to the situations of ex-offenders like Mr. Langdon, who face the collateral consequences of conviction long after their involvement with the criminal justice system has ended. Federal authorities are beginning to pay attention. Last April, Attorney General Eric H. Holder Jr. urged state attorneys general to review laws and policies “to determine whether those that impose burdens on individuals convicted of crimes without increasing public safety should be eliminated.”

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In recent years, several U.S. states have passed laws regulating the use of employment credit reports of job applicants and current employees that have impacted the way employers conduct background checks. Seven states – California, Connecticut, Hawaii, Illinois, Maryland, Oregon, and Washington – currently have laws that limit the use of credit report checks by employers for employment purposes, with the most recent law, California Assembly Bill 22 (CA AB 22), taking effect January 1, 2012. Other states, and the U.S. Equal Employment Opportunity Commission (EEOC), are considering further restrictions on credit checks by employers. This is Trend Number 2 of the fifth annual ‘Employment Screening Resources (ESR) Top 10 Trends in Background Checks’ for 2012. To view the list of trends, visit http://www.esrcheck.com/ESR-Top-10-Trends-in-Background-Checks-for-2012.php.
The EEOC & Employment Credit Checks

The U.S. Equal Employment Opportunity Commission (EEOC) held a public meeting in October of 2010 on the ‘Employer Use of Credit History as a Screening Tool’ that explored the growing use of credit histories of job applicants as selection criteria during employment background screening to see if the practice was discriminatory. The EEOC – the agency of the United States Government that enforces the federal employment discrimination laws – heard testimony from representatives of various groups to help the Commission ensure that the workplace is made free of all barriers to equal opportunity.

As a result of high unemployment forcing more people into the job market, an increasing number of job applicants are exposed to employment background screening tools such as credit checks that could unfairly exclude them from job opportunities. Critics of using credit histories for employment purposes said the practice can have a disparate and discriminatory impact on protected groups, including people of color, women, and the disabled. They can also be inaccurate and are not valid predictors of job performance.

Another concern expressed was that the use of credit histories creates a “Catch-22” situation for job applicants during the current period of high unemployment and high foreclosures, both of which have negative impacts on credit. Many job seekers are caught in a classic ‘Catch-22’ situation where they cannot pay their bills because they do not have a job but cannot get a job because of bad credit since they cannot pay their bills.

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Employers and recruiters have discovered a treasure trove of information about potential job applicants on social media sites such as Facebook, LinkedIn, and Twitter, and so-called ‘social media background checks’ are becoming more popular and prevalent than ever. However, the use of social media background checks for job applicants has become controversial and can present legal risks. Failure to utilize social media resources can arguably be the basis of a negligent hiring claim if an unfit person was hired for a position where a search of the internet may have raised a “red flag.” Conversely, employers face numerous landmines and pitfalls that can include that include privacy, discrimination, and accuracy issues. Lawsuits and developments in this area will likely be an ongoing topic in 2012. This is Trend Number 3 of the fifth annual ‘Employment Screening Resources (ESR) Top 10 Trends in Background Checks’ for 2012. To view the list of trends, visit http://www.esrcheck.com/ESR-Top-10-Trends-in-Background-Checks-for-2012.php.
The Lure of Social Media Background Checks

It is important to keep in mind that not only will social media searches be a critical part of pre-employment background screening, but there may be considerable activity in how social media is handled after a person is hired. Every employer should have a social media policy for current employees. This article, however, is focused on pre-employment selection and screening.

No discussion on employment screening background checks these days is complete without an analysis of how the Internet is used for uncovering information about job candidates. A social media search allows an employer to literally “look under the hood,” and hopefully find out who a person really is. Not only does a social media search help in finding candidates, but it may prove to be an invaluable due diligence tool. For example, if a person’s blogs, social networking page, or tweets appear to promote inappropriate sexual activity or perhaps threats of violence, an employer may want to think twice before putting such a person in contact with groups at risk, such as children, the aged, or the infirmed. Likewise, if a person has made derogatory or unprofessional comments about co-workers or past employers, or engaged in online harassment, those are things that any Human Resources manager may be interested in knowing about.

However, while employers and recruiters may feel they hit the information jackpot on potential job applicants by using social networking sites such as Facebook and Twitter, business networking sites like LinkedIn, videos on YouTube, search engines like Google, and various blogs and posts, the unrestricted use of social media background checks can land them in hot water since just because certain information is online does not mean it is risk free or even true.

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SecureWatch, an ADT authorized dealer based here, takes steps to make sure job applicants don’t have criminal backgrounds—such as paying a top-notch company to do background checks on them and searching the Internet for information about them, said company COO Paul Victor.

So the company was stunned to learn that a brand-new door-to-door sales rep it had hired—who Victor said had checked out clean—stands charged with raping and attempting to murder a potential customer in her home last week while he was working for SecureWatch in Tampa, Fla.

Rashad Hales, 19, of Tampa, was out selling security systems the evening of Dec. 30 when he forced his way into the woman’s home, raping and choking her and threatening her with a knife, according to news reports.

“This is beyond shocking,” Victor told Security Systems News. “We did all the damn right things and still this happened. So I guess the lesson is: You never know and think about the unthinkable.”

No information the company had about Hales would have predicted he would be a threat to anyone, Victor said.

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In recent years, employment background screening has gone from a costly and time consuming task reserved for selected job applicants to an increasingly automated and technology driven business necessity in a global economy where employers expect fast, accurate, and inexpensive results from screening providers. However, both employers and background screeners are finding with increased efficiency comes increased risks, especially when it comes to the use of unfiltered information going directly to employers from criminal database or inaccurate information obtained by “screen scrapping or automated robotic searches.”

New Technology Benefits Background Screening

Thanks to technology and the rise of the Information Age, background screening has gone from a laborious manual endeavor to more efficient automated processes. The many advantages of modern background screening for employers and recruiters include seamless integrations with convenient and paperless Applicant Tracking System (ATS), Human Resource Information System (HRIS), and Applicant Generated Report (AGR) solutions. These advances allow easy management of both pre- and post-hire recruiting including Tracking, Onboarding, Reporting, CRM, and Performance Management. It also cuts down on data entry, decreases error rates, and speeds up the entire process

With the use of technology, most employers and recruiters no longer have to fax orders to a screening firm or manually entering applicant data into their system. Employers tired of having to chase down and manage applicant releases, forward signed releases when an employment or education verification requires it, or signing on to different systems can avoid such hassles now. Getting a signature from an applicant can be as easy as moving a mouse across a computer or laptop screen for an electronic “e-signature.”

New online AGR systems allow job applicants to enter their own information and offer the following benefits for employers and recruiters:

Paperless online data collections of all information necessary for candidate screening.
Eliminates error prone manual data entry.
Eliminates paper based applicant release forms.
Features “mouse driven” signatures.
Eliminates concerns about collecting dates of birth or Social Security numbers.
State-of-the-art security, data protection, and redundancy.

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When the National Association of Professional Background Screeners (NAPBS®) was formed in 2003 as a professional trade association for the background screening industry, the idea of an accreditation process was a central driving force in order to demonstrate that background screening was a professional endeavor. Currently, NAPBS accreditation is quickly becoming a requirement of many employers when considering a background screening provider since it is the only practical means of third party verification of the professionalism and competency of a particular screening firm. This is Trend Number 5 of the fifth annual ‘Employment Screening Resources (ESR) Top 10 Trends in Background Checks’ for 2012. To view the list of trends, visit http://www.esrcheck.com/ESR-Top-10-Trends-in-Background-Checks-for-2012.php.

Background of Accreditation Program

Each year, U.S. employers, organizations, and governmental agencies request millions of consumer reports to assist with critical business decisions involving background screening. Background screening reports, which are categorized as consumer reports, are currently regulated at both the federal and state level.

Since its inception, the NAPBS has believed that there is a strong need for a singular cohesive industry standard. Over the years, it took a lot of hard work from many very dedicated people who put the NAPBS accreditation program together on their own time, and the screening industry owes a debt of gratitude to all of those people who made the accreditation program a reality.

In April 2009, in conjunction with its Annual Conference, the NAPBS launched the Background Screening Agency Accreditation Program (BSAAP) to serve as the industry’s primary vehicle for quality assurance, self-regulation, and public accountability. The NAPBS also formed a governing body for its new accreditation program – the Background Screening Credentialing Council (BSCC) – to ensure firms seeking accreditation would meet a measurable standard of competence.

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With the new year fast approaching, employers in California – and employers doing business in California – need to be aware of two new laws taking effect on January 1, 2012 that will change the way they conduct employment screening background checks in the state: California Assembly Bill 22 (CA AB 22), which relates the use of credit report checks of job applicants and current employees for employment purposes, and California Senate Bill 909 (CA SB 909), which relates to the “offshoring” of the Personally Identifiable Information (PII) of consumers who are the subjects of background checks.
California Assembly Bill 22

In October of 2011, Governor Jerry Brown signed into law California Assembly Bill 22 which prohibits most employers and prospective employers in the state – with the exception of certain financial institutions – from obtaining consumer credit reports for employment purposes.

Introduced by Assembly member Tony Mendoza (D-56th District), AB 22 amends Section 1785.20.5 of the Civil Code and adds Chapter 3.6 (commencing with Section 1024.5) to Part 2 of Division 2 of the Labor Code, relating to employment. AB 22 was Mendoza’s third attempt at legislation to limit or prohibit the use of consumer credit reports by employers for employment purposes. His previous efforts at similar legislation – Assembly Bill 943 in 2009 and Assembly Bill 482 in 2010 – were both vetoed by former Governor Arnold Schwarzenegger.

AB 22 prohibits employers or prospective employers from obtaining a consumer credit reports for employment purposes unless the position of the person for whom the report is sought is one of the following:

A managerial position;
A position in the state Department of Justice;
A sworn peace officer or other law enforcement position;
A position for which the information contained in the report is required by law to be disclosed or obtained;
A position that involves regular access to specified personal information for any purpose other than the routine solicitation and processing of credit card applications in a retail establishment;
A position in which the person is or would be a named signatory on the employer’s bank or credit card account, or authorized to transfer money or enter into financial contracts on the employer’s behalf;
A position that involves access to confidential or proprietary information; or
A position that involves regular access to $10,000 or more of cash.

In addition, AB 22 also requires the written notice informing the person for whom a consumer credit report is sought for employment purposes to also inform that person of the specific reason for obtaining the report.

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