Employer background checks: Protection or violation?

You're filling out the application for a new job and there it is in bold letters: You must agree to a background check as a prerequisite for employment.

During the interview you are asked, "If we check for criminal records, are we going to find anything?"

At the bottom of the application it says: Anyone who knowingly provides incorrect information, or incorrect information through omission of fact, can be subject to termination at any time.

At the end of the interview, the prospective employer gives you a written form asking for your permission to run an extensive background check that will verify your Social Security number, driving record, criminal record, credit records and civil court records.

Does your employer have the right to do this? Should you sign? What are your rights?

The reason for background checks
More employers are performing criminal background checks on new hires. In some states and for some professions, it is a legal requirement. One of the primary reasons is an increase in negligent-hiring lawsuits. An employer, says Lynn Peterson, president of PFC Information Services Inc. in Oakland, Calif., "can be sued for actions taken on the part of an employee."

An employer has a legal responsibility to hire someone who is safe, qualified and fit for the position. "If they fail to use reasonable care and they hire someone that they either knew or should have known presented a foreseeable risk of harm to a third party, then that employer is liable," says Lester Rosen, attorney and president of Employment Screening Services Inc. in Novato, Calif.

The size of financial settlements, awarded by juries, in these negligent hiring lawsuits is on the rise. "In 1999, employers lost 60 percent of all negligent hiring/supervision jury trials," according to "Practical Guide to Employment Law." And the average settlement is more than $1.6 million dollars according to at least one study, says Jason B. Morris, president of Background Information Services Inc., of Cleveland.

Another reason employers are running background checks is, well, people lie. "We know, nationally, when you look across all industries that about 10 percent of all applicants have some sort of criminal record," says Rosen. "That doesn't mean it's a disqualifying criminal record. It's a form of discrimination to automatically reject an applicant with a criminal record without considering whether there's a good business reason, but at least an employer needs to know if there's a criminal record involved. We know that up to 40 percent of resumes contain material omissions or fraudulent statements about credentials, education or employment. Some studies suggest that up to 40 percent of resumes contain some piece of fiction that is beyond the bounds of good taste."

But what about you? You don't have a criminal record. You have good credit. Why should you have to agree to a background check?

Maybe the background checks protect you as well. "In the larger scheme of things, I think it's very important to ensure that you're hiring people who are safe, from the perspective of the people who are co-workers," says Peterson. "I think it's very important to know that the person working next to you is a safe person. Particularly if you're talking about sending people out into the home; you've got to do it."

Types of background checks
So what's out there? Exactly what pieces of your personal history can your employer delve into?

• Resume and employment verification.
• Social Security number verification. It is illegal for an employer or third-party consumer reporting agency (CRA) to access the Social Security Administration for this purpose. This is performed using public records and credit bureau data.
• Criminal record checks. This is not a database check, if done correctly. The National Crime Information Center's (NCIC) database is not currently available to private employers, though legislation is being considered. A criminal record check is performed at county courthouses and sometimes state records are checked. Says Peterson, "The records are not available online and we have to send what we call a 'court-runner' out to the courthouse just as a quick check of the files to see if there's any criminal information pertaining to that person."