Here’s some good news for employers that check workers’ compensation claims against an applicant’s claim he’s never been injured on the job: You don’t have to inform him where you got the information before you take action because workers’ comp checks aren’t background investigations subject to the federal Fair Credit Reporting Act (FCRA).
Recent case: Jason Bachman applied for a job as a mailman with the U.S. Postal Service. He was hired and completed a standard medical assessment form, which asked whether he had ever been injured on the job. He answered “No.”
The post office then investigated and found Bachman had filed prior claims. It fired him for essentially lying on his form.
Bachman sued, alleging he should have been informed about the investigation before being terminated. He contended the investigation was a consumer report subject to the FCRA.
The 5th Circuit Court of Appeals dismissed his case. It said the investigation wasn’t a consumer report because his past injuries weren’t related to his credit worthiness, character, general reputation or mode of living. (Bachman v. Donahoe, No. 11-11060, 5th Cir., 2012)
Final note: It appears the inquiry into medical history was made post-offer. Thus, it was legal if it was business related. Presumably, one’s ability to walk or drive is important when delivering mail. In addition, Bachman was terminated for not being up front about his past claims, not because he had claims.
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Raise your hand if you’ve had a tenant show up, with a rental truck, on a Friday afternoon to see your property. Sounds funny, doesn’t it? It happens all the time and you should be very concerned if someone is desperate to move-in right away.
If you watch the news or read the paper, you know the substantial increases in foreclosures and short sells, due to the housing market crisis, have caused many former owners to now become renters. This shift in behavior is challenging for both renters and owners.
You may find a well established empty-nester couple walking through your rental property asking about the neighborhood, local golf courses, shopping and even access to the airport. Many former home owners with an established credit file, including a home loan, a car loan or two and possibly several credit cards,often have a story about why their credit file shows delinquencies reported from a mortgage company or credit card company. Checking their credit will verify if they are paying most of their bills but may have stopped paying their home mortgage and may have been late on their credit cards because their variable rate mortgage adjusted and they weren’t prepared for it or the fix and flip property they purchased wasn’t finished in time to flip.
Don’t panic just yet! The days of renters with great credit are few and far between for now. Landlords and property managers have been forced to reevaluate the standards by which they accept and reject tenants. Finding great tenants is actually still very possible because the rental market is flooded with people who need need housing. You just may need to relax your credit expectations.
When I asked Investigative Screening and Consulting they highly recommend looking for criminal convictions, rental evictions and credit. Be prepared to only receive a pass or fail return on a specific credit range because the new FCRA standards do not allow independent rental owners to simply obtain a full credit report. However, if you can obtain a credit score range plus a nationwide criminal and eviction search you will feel pretty confident about the people occupying your rental. Be sure to require 2 past landlords because a current landlord may want a tenant to move the but the previous landlord is likely to be honest about their tenancy.
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Can A Background Check Be Started Before A Conditional Job Offer Is Made?
An employer looks at numerous considerations before hiring any potential employee, including an employee’s background. The appropriate time to check into the background of employees can be confusing and have many variables depending on the state and the laws governing the state.
In general, the answer to whether it is possible to start a background check before providing a conditional job offer is “yes.” However, state laws differ and potential employers are not allowed to inquire about birth records or medical records of any potential employee due to discrimination laws.
The appropriate timing of when to check an employee’s background depends on numerous factors, such as which information is included in the background check or the state requirements. For example, a business that looks into worker’s compensation records as part of the standard background check is not allowed to check before providing a conditional job offer. Otherwise, the company might discriminate due to disabilities.
Employers can only inquire about health conditions that potentially interfere with job performance or ability after the offer is made to protect individuals who have disabilities. Once the offer is made, but before the potential employee starts working, inquiries about health conditions that prevent work are allowed.
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If you’re working in construction, there’s a good chance you’re laboring next to someone with a criminal past. But if you’re working in the nonprofit sector, you’re more likely to be sitting next to someone who has lied about his education.
Those differences came to light when Kroll analyzed “hit ratios” for the eight most common employment screening criteria to calculate what proportion of the potential employees it screened for various industries stretched the truth or left important information off their applications.
It found that more than 51 percent of real estate industry folks had at least one late payment on their credit history, 48 percent lied about former employment and more than 40 percent had a not-so-clean driving record. In financial services, nearly 7 percent of applicants had criminal records, nearly 48 percent fudged something about former employment and 21 percent lied about their educational credentials. Those in education flunk drug testing at the highest rate, nearly 9 percent.
“Based upon the results we see, people at all levels stretch the truth,” says Barry Nadell, a senior vice president of Kroll’s Nashville-based Background Screening division.
When Embellishing Goes Too Far
Sometimes an omission can be an innocent mistake. You think you started working somewhere in March 2004 when you really began in July 2004. Other times, omissions are not so innocent. “I can’t imagine any individual who when asked, ‘Have you ever been convicted of a crime?’ not knowing if they were convicted,” Nadell says.
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It doesn’t matter your reasoning or who the individual you are investigating is. You can never be too certain about anyone’s true identity until you perform an in depth back group check to verify their claims. The following are a few typical scenarios in which running a background check is applicable:
1. Job Applicant
A background check on possible applicants assures you are not employing someone with little to no work ethic or, worse, a record of bad behavior. Remember, if you are the one doing the hiring, you are the one responsible.
2. Babysitter
The nightmare of every parent: to leave for one night and come home to find that the irresponsible babysitter has let something happen to your children. You don’t want just anyone in control of your children’s well being. You need someone you can trust.
3. Health care professional
The same can be said for any medical professional who is solely responsible for the care of an aging loved one. Looking into their background will provide comprehensive reviews to assure that they handle their job and their patients with the utmost care.
4. House keeper
When your home is in the care of another, the last thing you should be concerned with is worrying that they are rummaging through your drawers.
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Even fraudsters need a break sometimes. The ones that are good at pulling off a long-lasting scheme, however, are unlikely to take time off. After all, the concealment of an ongoing fraud needs constant tending and protection from prying eyes.
In fact, fraud can lie undetected for as long as two years if it’s perpetuated by managers or executives, according to the Association of Certified Fraud Examiners (ACFE). In a recent report on workplace fraud, the organization suggests companies require all employees to take regular vacations. “A lot of cases that are brought to us or that we read about are brought to light when someone is filling in for someone else,” says Andi McNeal, director of research at the ACFE and co-editor of its 2012 “Report to the Nations on Occupational Fraud and Abuse,” which was published last week. Job rotations are another way to change up a fraudster’s routine.
The ACFE’s report stems from a biennial survey of 1,388 certified fraud examiners who investigated at least one instance of workplace fraud during the past two years. Employee misconduct threatens to take a 5% cut out of companies’ revenue every year, according to the association. Last year the median loss related to fraud cases in the workplace was $140,000, with more than one-fifth of those victimized companies seeing losses totaling at least $1 million.
The ACFE emphasizes that employee hotlines are the most common way companies root out fraud, even though employees may be reluctant to use them to tattle on their bosses (and hence the reason that executives are able to hide it longer; lower-ranking employees tend to be able to hide for only a year). “Perpetrators with higher levels of authority are typically in a better position to override controls or conceal their misconduct,” according to the ACFE report. The second and third most common ways companies first detect fraud are from management reviews and internal audits, respectively. External audits account for only 3% of fraud finds. One theory is because some frauds may fall below auditors’ materiality thresholds, McNeal says.
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If you use criminal background checks in your hiring decisions, you’re in the majority – 92 percent of employers subject job candidates to criminal backgrounds investigations. And usually for good reasons; to combat theft and fraud, address concerns about workplace violence, and meet state and local laws, like licensing requirements or those requiring background checks for particular positions. Whether you can make personnel decisions based on a criminal record often presents a complicated legal issue that implicates state and federal law.
A new set of guidelines issued by the Equal Employment Opportunity Commission (EEOC) indicates that an employer’s good reason to employ criminal background checks may not be enough. If you have a policy of using criminal background checks to screen candidates – for all positions or even certain categories of jobs – you may be at risk for EEOC enforcement actions and lawsuits.
The EEOC recently released new guidance clarifying the agency’s long-standing policy on employers’ use of criminal background checks in hiring decisions. The lengthy report details the EEOC’s enforcement of Title VII, the federal law that prohibits discrimination in hiring based on factors like race and ethnicity, and how use of criminal background checks may be discriminatory and violate the law.
Hiring decisions that treat criminal history information differently for different applicants based on their race or national origin – rejecting Hispanic or African-American applicants while interviewing white candidates with histories of similar criminal conduct – is obviously discriminatory. But the report makes clear that even general hiring policies related to criminal history – screening out all applicants with criminal records, for example – may be discriminatory, even if the employer doesn’t intend it to be.
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The D.C. Council, which has been dogged by allegations of corruption for months, has voted to exempt its employees who handle sensitive matters from background investigations of their criminal and credit histories.
Earlier this year, the council passed legislation that mandated new city employees “whose primary duties are of a policy determining, confidential or policy advocacy character” go through criminal background checks similar to those required of people who care for children, along with credit checks.
But those requirements, formulated in part to respond to criticism of the city’s lax hiring standards, could soon vanish.
Under language Council Chairman Kwame Brown inserted into the 2013 budget, council staff members would be exempted from the mandate, which became law in March.The move could put the council at odds with Mayor Vincent Gray, who in 2011 ordered more thorough screenings of his top aides after reports surfaced that several appointees had criminal pasts.
Gray, a former council chairman, said Wednesday he has no plans to seek a similar exemption for executive branch employees. “I think background checks are always a good practice,” Gray said.
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Wells Fargo Bank recently discovered some of their employees were more than they claimed to be. Some of the bank employees where convicted criminals who liked about their previous transgressions with the law. However, background checks revealed that the employees were in fact lying about their pasts. Wells Fargo has dismissed them for past criminal records concerning dishonesty and breach of trust.
According to the article in the Sun Herald…”The decision to terminate team members over criminal matters that occurred prior to their employment with Wells Fargo may seem tough – we recognize that these situations are difficult for everyone involved – but laws and regulations related to the employment of bank employees are designed to protect the interests of all consumers who put their trust in financial service companies.
As an insured depository institution, Wells Fargo is bound by Section 19 of the Federal Deposit Insurance Act that prohibits us from hiring or continuing the employment of any person who we know has a criminal record involving dishonesty or breach of trust – regardless of when the incidents occurred. This includes convictions as well as situations where the person has agreed to enter into a pretrial diversion or similar program in connection with a prosecution for such an offense, even if the charges ultimately are dismissed. Wells Fargo has been performing thorough background checks on all its team members – regardless of when they were hired – which includes a fingerprint check with the Federal Bureau of Investigation.”
The decision to terminate team members over criminal matters that occurred prior to their employment with Wells Fargo may seem tough – we recognize that these situations are difficult for everyone involved – but laws and regulations related to the employment of bank employees are designed to protect the interests of all consumers who put their trust in financial service companies.
As an insured depository institution, Wells Fargo is bound by Section 19 of the Federal Deposit Insurance Act that prohibits us from hiring or continuing the employment of any person who we know has a criminal record involving dishonesty or breach of trust – regardless of when the incidents occurred. This includes convictions as well as situations where the person has agreed to enter into a pretrial diversion or similar program in connection with a prosecution for such an offense, even if the charges ultimately are dismissed. Wells Fargo has been performing thorough background checks on all its team members – regardless of when they were hired – which includes a fingerprint check with the Federal Bureau of Investigation.
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Combine a highly transient society with a large inventory of recently foreclosed or abandoned properties with absentee owners, the opportunity for fraud becomes apparent.
From the Snohomish County Business Journal (April 3, 2012):
“People will pay the first and last month’s rent along with a hefty security deposit. Add to this the cost of switching utilities, moving expenses and even simple home decor and tenants could easily invest over $5,000 up front with their move.”
http://www.heraldnet.com/article/20120403/SCBJ11/304039998/1005/BIZ
The moment a tenant pays first and last month’s rent as well as that security deposit the opportunity for fraud begins. Without the proper background check by a potential tenant how sure are they that the property they plan on renting is even owned by the so-called landlord? It would be a simple task for an individual to present themselves as a property owner or landlord and lead the unsuspicious prospective tenants into turning over that first rental payment and find themselves without a property and without their money.
In New York City, the Village Voice (April 26, 2012) reports:
“New York courts are going to stop selling your names to companies that make it harder for you to secure your next apartment.”
http://blogs.villagevoice.com/runninscared/2012/04/courts_will_sto.php
The issue at hand is a so-called “Blacklisting List.” Tenants that are involved with various legal actions against a landlord or property manager have been purportedly placed on this list, whether or not the action was instigated by the tenant or the landlord. With the City readily selling information to third-parties, landlords could gather this data with relative ease and limited expense. However, going forward, Information involving tenant-landlord cases would still be available, however it would require greater time investment to retrieve specific case files.
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Employee theft and fraud in small businesses has become a serious issue that can have long lasting consequences. In 2010, the average loss caused by fraudulent activity in small businesses was $150,000 [1], and it often lasted an average of 18 months before it was finally detected [2].
To coincide with May’s SCCA membership meeting on Fraud, we have provided a list that was compiled by the Small Business Association of 6 simple tips for small businesses to help prevent fraud in the workplace. If you are interested in learning more tips about fraud prevention, ways to protect yourself from fraud, as well as commonly used fraud schemes, then please join us this Wednesday, May 16th, at our monthly SCCA meetings. It will be held at US Bank from 11:45AM to 1:00PM. Food will be provided by the Birchwood Café.
1. Use Pre-Employment Background Checks Wisely
One of the first steps to preventing fraudulent employee behavior is to make the right hiring decision. Basic pre-employment background checks are a good business practice for any employer, especially for those employees who will be handling cash, high-value merchandise, or have access to sensitive customer or financial data.
It’s worth noting, that the law varies from state to state on whether a private employer can consider an applicant’s criminal history in making hiring decisions. Check with your state laws in your area before going down this path.
2. Check Candidate References
It’s good practice to check references, particularly those of former employers or supervisors. If your candidate has a history of fraudulent behavior, then you’ll want to know about it, before you hand them a job offer.
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The smallest organizations are the most vulnerable to occupational fraud, according to a new study from the Association of Certified Fraud Examiners (ACFE).
The 2012 Report to the Nations on Occupational Fraud and Abuse shows the typical organization loses about five per cent of its revenue to fraud each year, or a potential projected loss of $3.5 trillion worldwide in 2011. But because small firms invest in fewer anti-fraud controls that larger enterprises, they are less likely to catch fraud before damage is done.
Occupational fraud is defined as the use of one’s employment for personal benefit through the deliberate misuse or misappropriation of resources or assets of the employing organization. The most popularized example of this type of fraud was likely in the 1999 movie Office Space, serving as a main plot device when employees scam their company by skimming fractions of a penny off each financial transaction into a personal account.
The ACFE’s report includes specific details about fraud in Canada’s workplace.
In Canada, tips were still the most common method for detecting fraud, but not as high as in other regions – 38.6 per cent were detected by tips compared to 43.3 per cent across all regions. Using surveillance and monitoring was a more successful method to detect fraud in Canada, with 5.3 per cent compared to 1.9 per cent worldwide.
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