Special from SHRM's Employment Law and Legislative Conference—Washington, DC

Every employer has legal duty to exercise due diligence in hiring, says attorney Lester Rosen. An employer can be sued for negligent hiring if it hires someone who it knew, or in the exercise of reasonable care should have known, was dangerous, unsafe, dishonest or unfit for the particular job.

According to a recent California survey, Rosen adds, employers lose 60 percent of negligent hiring cases with verdicts averaging about $3 million, and average settlements are around 500,000 plus attorney fees.

Rosen, who is CEO of Employment Screening Resources in Novato, California, made his remarks at the SHRM Employment Law and Legislative Conference, going on this week in Washington, DC.

Background Checks Myth 1: There is a national database available to private employers for checking criminal records or false credentials, such as education or employment.

Contrary to popular belief, there is no such national database, despite some advertisers claims to the contrary, says Rosen.

Furthermore, he says, FBI fingerprint checks are only available when mandated by law (e.g. teachers/child care workers).

Unfortunately, he adds, the primary method for obtaining criminal records is to physically look at each relevant courthouse! And there are about 10,000 courthouses in America with court records in over 3,200 jurisdictions.

Beware of using commercial databases as a primary tool for records checks, Rosen cautions. There are substantial issues with accuracy, completeness, and timeliness, and false positives and false negatives are possible.

If you do get “hits” with such a system, the hit should be re-verified at the courthouse for accuracy and current status, he adds.

Background Checks Myth 2: Due diligence does not mean perfection

Unless set by a statute for your industry, Rosen says, due diligence is a moving target that is determined by a jury based evidence in the trial concerning injury, foreseeable risk, duty of care, and causation.

Nevertheless, you just need to show that you did the best that you could be expected to do, not that you did a perfect investigation.

Naturally, he adds, high risk employers, such as firms that send workers into homes, will have a higher duty of care.

If you haven’t done due diligence, Rosen says, typical defenses won’t help you. For example, don’t try to claim that:

• A background check would not have revealed any red flags or lack of causation
• Conducting a check would be too costly
• The applicant lied
• Others firms in our industry do not conduct background checks

Background Checks Myth 3: You can automatically disqualify an applicant based on a criminal conviction without a business justification.

You may not automatically deny employment based on a crimination conviction, says Rosen. The EEOC requires that you take into account the nature and gravity of the offense, nature of the job, and time elapsed.

However, if the person lied on the application, then the falsehood can be the grounds to deny employment.

New laws in New York effective 2/02/09 underscore the importance of no automatic decisions, says Rosen. In addition, other states/ and cities have “banned the box” to promote a second chance for those with prior convictions.

SHRM’s Employment Law and Legislative Conference is going on March 14-16 in Washington, DC.