Why Do Businesses Need Background Checks?
Businesses need background checks to ensure they hire the right people the first time around. Therefore establishing a background screening program is a logical business practice because background checks:
- Are devices to help companies hire suitable employees.
- Can be used with current employees during investigations.
- Verifies candidates are who they say they are. This reason alone has become a great impetus for companies since September 11, 2001, when several of the terrorists involved in the airline hijackings used identification that was fraudulently obtained.
- Fulfills “due diligence” requirements and protects you from negligent hiring or retention lawsuits.
The end of the last century brought a new form of lottery to the forefront—the employment lawsuit. Unfortunately, several of the multi-million dollar verdicts awarded over the past years have been employment related cases.
For many years, human resource professionals have been advising managers and supervisors to document everything. The wisdom of these words has become even more important as employers learn that the best defense to many employment actions is found in the documentation leading up to a decision.
It is also helpful to have policies that define how decisions are to be made, and how problems will be addressed. Many times employees will allege that they have no knowledge of what is expected or how decisions are made.
Having policies in a handbook, or separate policies that are to be signed and maintained in a personnel file, will assist in defeating these claims of ignorance. Policies also help eliminate unnecessary misunderstandings, provide a source for supervisors to consult when they are unsure of what action to take and help inform employees of what is expected of them in an organized, easy to understand manner.
The Legal Reasons for Background Checks
“Due diligence” describes the attention and research legally expected of a person or company. For example, if you hire someone who has a criminal past and place them in a position where they could harm another employee or patron, your company could be sued.
Why? Because you could have known about this person’s past and should have known if you would have done a background check. We are not suggesting you shouldn’t hire someone with a criminal past. For the right positions, the ex-convict could be a good match. But you should know upfront so that you can place the individual in the right position to manage the situation, not let the situation manage what happens after an incident.
Here are some examples where a $50 background check could have saved these companies a lot of money. NOTE: The average jury award for negligent hiring is over $800,000.
In North Carolina an employee shot and killed 3 employees and injured a 4th. Plaintiffs sued for negligent hiring. Verdict: $7.9 million.
In Oakland a carpet cleaning company unknowingly sends an ex-convict into an upper Rockridge home where he murdered a pediatrician. Verdict: $11.5 million.
In addition to the settlement, organizations incur other direct costs:
- Decreased employee morale and loss of productivity
- Increased turnover
- Building repair and cleanup
- Business interruptions with customers
- Increased workers’ comp claims, medical claims, premium rates
- Additional attorney fees