Making the Case for Ongoing Background Checks

*This article was published in Forbes on January 19, 2021, and is reprinted here with permission.

It’s an all-too-common story and it goes like this: The longtime treasurer of the youth baseball team, or a local charity, or a homeowners association, is suddenly discovered to have embezzled all the organizations’ savings. The causes are familiar, too. Personal bankruptcy. Bail money. A drug habit. Gambling debt.

But something like this would never happen in your business — or could it?

Over the past several years you may have heard the phrase “ongoing background checks.” Ongoing background checks are one of the best ways you can shield your business, employees and customers by providing another layer of financial and personal protection.

Even so, ongoing background checks shouldn’t be broadly applied. So how should they be used — and when?

What it could cost you

A Bakersfield woman and her two children went shopping for back-to-school clothes when a tractor trailer ran a red light and slammed into their SUV. Mother and son sustained traumatic brain injuries TBI, and they all suffered severe PTSD. The family filed a personal injury lawsuit against the trucking company. During the 12-day trial the plaintiff’s attorneys revealed that, in addition to running a red light, the truck driver’s commercial license had been suspended and he was involved in 14 other collisions.

The jury in December 2019, awarded the family a $70.5 million personal injury verdict — the largest-ever awarded in Kern County, California.

I don’t know for sure what the circumstances were that allowed this driver to still be on the road. What I do know, however, is that an annual or semi-annual background review of a drivers’ record most likely would turn up red flags which could avoid such serious tragedies.

And liability is only going to get costlier. Insurance companies are now starting to track the effect of what’s called “social inflation” on jury awards, which in a nutshell means public sentiment is trending toward larger awards at the same time there are more negative views of big business, or just business in general.

We hired someone a couple of years ago and after a week of working for us we heard on the news she was going with some other people stealing mail from mailboxes. It’s one of those things where we did background on her and she was clean, but you just never know. All you can do is be more proactive and not reactive.

Setting up continual background checks

Some industries already require regular, ongoing background checks. These include businesses that drive passengers, hospitals and nursing homes. Basically, any occupation regulated by a state licensing agency: Registered nurses, doctors, teachers, counselors and so forth.

Annual background checks should be considered for employees who deal with finances, visit clients at their homes, or who work with vulnerable people: the elderly, children, or the disabled.

  • Clearly spell out your policy for conducting annual background checks of current employees. Make certain this policy is included in your company’s employee handbook (you do have an employee handbook, don’t you?) and kept up-to-date.
  • Make certain your policy is consistent for every employee doing the same work. For instance, you might run a credit check as well as a criminal check on an accounting employee, but would run a driving record and criminal check on a truck driver.
  • Consider conducting the annual background check in connection with an employee’s annual review, or just before it. That way you have the most current information as you prepare.
  • It’s always best to hire an outside source so there is no conflict of interest, and that way there isn’t an adversarial relationship. Also, in California, some kinds of background information are illegal for an employer to obtain on their own. A third party, though, can alert an employer if a red flag comes up.

And remember, you cannot fire an existing employee or deny an employment opportunity based upon a criminal conviction that is more than seven years old.

Don’t overlook social media

A qualified background investigator can actually glean a lot about someone by examining posting histories, the groups they join, and their online comments and Twitter feeds. Does your handbook include a social media policy? Now’s a good time to review and update yours — or to create one.

Consider that some key personnel are also the face of your business; the higher the profile, the more sense it makes to conduct a regular review.

You have to be very specific in your company handbook that from time to time there will be a search of public social media because, just like drug testing, it can impact the company.

Be prepared for what turns up

Annual background investigations are legal as long as you have company policies addressing them, and if it says in your handbook that you’ll be doing semi-annual and annual background screening with the employee information in file. California, for instance, puts a lot of emphasis on employment safety as well as protecting employee privacy. There’s a contradiction there and it’s left to company managers to sort out.

When a background check turns up any derogatory results, what can you do?

It depends. If someone is driving for a company and gets a DUI, you can probably tell them they can no longer drive. Though you may not be able to fire them unless you have that specified in your company handbook. If someone’s primary role is sales, and they get a DUI, you have a different set of circumstances.

There are limits to what steps you could, or should, take. Say you find out someone is involved in a domestic abuse case. There’s not much legally you can do with him or her in the workplace. But maybe you can provide an employee assistance program, or offer to send him or her to anger management classes or something to help them out.

In general, employees should be monitored to some level if they are in charge of company checkbooks, handling funds, that kind of thing. Check regularly for tax liens, judgments and bankruptcies. Even so, there’s not much you can do about someone filing bankruptcy. Sometimes if they’re in a position where they have access to company funds, handling money can be tempting; but not much you can do to prevent that from happening. You can’t demote them or take that authority away from them. You can review their work, especially if that’s already a regular part of your processes and spelled out in the job description.

Be proactive

Things always change; policies change, laws change. Especially in California, you need to be very active in adding or deleting to keep up with regulations and supply employees with the updated handbook. If something negative or even questionable comes up through the check, always consult with your company attorney and get legal advice.

Overall, protecting your business, employees and customers boils down to management. Have an open-door policy. Always talk to your employees, ask personal questions once in a while. Get to know them and you’ll open lines of communication and trust that will make even uncomfortable discussions easier to resolve.

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