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The ABCs of pre-employment background checks

If you've applied for a job lately, chances are you signed a consent form for a background check. Employers, prompted by the widespread availability of information on the Internet as well as security issues highlighted by the Sept. 11 attacks, are intent on scrutinizing potential employees to avoid potential risks.

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When you sign that consent form, you open your past to a potential employer. The days when employers just verified resumes and education history are long gone. Your credit history, driving records, medical records, military records and court records are an open book. Some potential employers may even interview your neighbors and former co-workers in the course of a background check.

Unfortunately, there is a lot of inaccurate information out there. Just like the mistakes that may pop up on your credit report, bad data can turn up in the course of a background check. And this wrong information can cost you a job.

"What consumers don't realize is that there is a tremendous lack of privacy in our society," says Jay Stanley, communications director for the American Civil Liberties Union's Technology and Liberty Project. "Information is gathered and circulated about all of us, and the accuracy rates are very poor. Institutions are built for keeping tabs on people, but there are no checks and balances to ensure that people are treated fairly when the information is wrong."

You do have some rights under the federal Fair Credit Reporting Act, which can help in some cases if you are denied employment as a result of information uncovered in the course of a background check. However, there are major loopholes in the law.

The skinny on background checks
An employer must ask your permission to conduct a background check on a form separate from an application or other paperwork. If a potential employer wants to talk to your friends, associates or neighbors, they must get a separate consent for what is known as an investigative consumer report. In addition, if an employer wants to see your medical records, you must give specific consent.

Once you give your consent, employers have broad latitude to inquire into your background. According to the Privacy Rights Clearinghouse, a consumer rights organization, areas of inquiry can include:

  • Driving records
  • Vehicle registration
  • Credit records
  • Criminal records
  • Social Security Number
  • Education records
  • Court records
  • Workers' compensation
  • Bankruptcy
  • Character references
  • Neighbor interviews
  • Medical records
  • Property ownership
  • Military records
  • State licensing records
  • Drug test records
  • Past employers
  • Personal references
  • Incarceration records
  • Sex offender lists

"There are a lot of things that potential employers can find out about you," says Tena Friery, research director at the Privacy Rights Clearinghouse. "This goes far beyond credit information and can include information about your personal characteristics and mode of living. One of the privacy concerns related to this is that there is no standard of relevance. The information that is gathered and disseminated doesn't have to apply to the specific job."

Employers can either find this information out on their own or hire a third party to gather the data and provide a report to them. Such third parties are companies known as consumer reporting agencies. Many have been established for a number of years, while others have sprung up as more information has become available on the Internet.

Why employers want to know
An employer's need to know about potential employees is driven by a number of factors, according to the Privacy Rights Clearinghouse. These include:

  • False or misleading information given by job applicants, estimated by some sources at 30 to 40 percent of all information given on resumes and job applications.
  • Federal and state legal requirements for certain jobs, including those that involve contact with children, the elderly or disabled, as well as some government jobs.
  • Fallout from corporate scandals, such as Enron and WorldCom
  • The Sept. 11 attacks
  • Negligent hiring lawsuits, where a company is sued because an employee caused harm to someone else.

"The goal of a company is to find out as much as they can about the skills and behaviors an applicant will bring to an organization," says Mary Massad, vice president of human resource development for Administaff, a personnel management company. "An employer is basically trying to establish whether you will be a good fit for the organization and what type of risk you might pose to that organization."

Most employer background checks focus on employment history, educational background, credit history, motor vehicle history and criminal background, she says. Employment and educational background checks verify information that employees have provided in resumes and on job applications, so it's important to be honest on your resume and when filling out a job application, she says.

"A lot of applicants are shocked when a background check is actually run and turns up something that is at odds with the information they've provided," Massad says. If you sign a consent for a background check, it's safe to assume that the company you are seeking employment with will be conducting such a screening.

What they can't include
The federal Fair Credit Reporting Act put national standards in place for background checks. However, these standards only apply to companies that hire a consumer-reporting agency to do the background check. If a company does the background check in house, it is exempt from the provisions of this act.


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-- Posted: Feb. 16, 2005

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