Top Ten Trends in the Pre-employment Background Screening Industry for 2009

Employment Screening Resources (ESR), a leading national employment screening background firm, released its "Second Annual Top Ten Trends in the Pre-Employment Background Screening Industry" for 2009 today. Although issues from 2008 remain on the list, the 2009 trends reflect increasing concerns over the use of Facebook and similar sites, lawsuits looming over inaccurate Background Screening reports, increasing government scrutiny of the screening industry and privacy and security issues.

"In the current legal environment, businesses want to make sure they are not only exercising due diligence but are also ahead of the curve on legal issues," said Lester S. Rosen, attorney at law and founder of ESR and author of two books on background screening. "The quickest way to get sued is to not understand the legal environment and latest trends surrounding background checks and employment."

Rosen believes that the federal and state governments will require more background screening in 2009, especially in sensitive jobs, and that more businesses will make Pre-Employment Background Screening a requirement for the job. The increased use of Applicant Tracking Systems will lead to "one button" clicks for background checks, he says.

"At the same time, consumers are worried about their privacy. That’s why data protection and accuracy have become so critical. The use of social networking sites like Facebook and MySpace are another minefield for employers," says Rosen. "We have identified 10 Trends to help alert employers on what to expect in 2009."

Hot topics for 2009 include tighter government regulation, privacy concerns, and controversy over sending sensitive data offshore for processing, increasing demand for accurate criminal record reporting, and the probability of more lawsuits against both employers and background screening firms. Not that the 2008 trends outlined in January 2008 are no longer relevant, but a shifting world has reshuffled the challenges facing employers, job applicants and screening firms.

1.  More Government Regulation: Likely to increase in 2009 are the requirements by federal and state governments for more background checks in sensitive industries – such as child care workers and certain health workers. Another area where the government requires checks is verification of the eligibility of a new hire to work by using the E-verify program. Although litigation has been filed, the announced rules require employers with certain federal government contracts to utilize the E-verily program starting in 2009. Along with the federal government, the states are becoming increasingly involved in regulating screening.

2.  Privacy and Accuracy: The subjects of privacy, accuracy, and fairness will also be major issues for 2009. Privacy Times newsletter, for example, led off its December 2008 issue with an article criticizing the screening industry. The letter noted that a coalition of legal aid groups has called on the Federal Trade Commission to take enforcement actions against background screening companies for “widespread noncompliance with the Fair Credit Reporting Act’s requirements for accuracy and dispute investigations.”

The report was especially critical of the use of criminal databases that can falsely accuse an innocent person of being a criminal, and the failure of some screening firms “to take into account the fact that criminal identity theft is unfairly tarring thousands of job applicants.” A leading cause of inaccuracies is matching innocent job applicants to criminal records based upon the same or similar name in a database, without re-verification of the record at the courthouse. A new organization called Concerned CRA’s has taken a stance against utilizing such databases without taking proper measures to ensure accuracy of criminal records.

3.  Second chance for ex-offenders: Unless as a society, we want to build more prisons than schools or hospitals, something must be done to reduce recidivism and find employment for applicants with criminal records. At the same time, placing the wrong person in the wrong job can be a disaster and cause untold grief. As a result of Title VII and notice from the EEOC, employers are well advised to review their hiring practices to ensure that they are not discriminating against members of protected classes by automatically denying employment without considering whether there is a business justification for disqualification based upon the crime and the job. This will continue to be a developing area in 2009. One example are the new laws passed by the State of New York that become effective this year that place a greater emphasis on employers analyzing a past criminal record to determine whether there is a business justification not to hire a person. The New York law also requires that notice of various rights be provided to job applicants (See an explanation of the New York laws in the December, 2008 ESR Newsletter.

4.  Consumer Protection Litigation: As the screening industry matures, and applicants and their lawyers become much more informed about their consumer rights, it is likely that there will be an increase in litigation. The may include class action lawsuits against screening firms, particularly when it comes to various notices required under the federal Fair Credit Reporting Act, and accuracy requirements in the federal law. Since database searches can result in false negatives (meaning a criminal is missed) as well as false positives (meaning an innocent person is labeled a criminal), it is probable that employers and screening firms that rely upon databases may be the subject of litigation where a database search failed to locate a dangerous person.

5.  Impact of the recession: As a result of the recession and higher unemployment, it is likely that employers will need to scrutinize applications even more carefully, to be on the watch for fraudulent credentials, such as inflated or fictional employment history or educational degrees. Another recession related trend may be the increase in applicants who are willing to perform their own background checks in order to present to employers a self-certification that their credentials are for real. Since more temporary employees and Independent Contractors are hired during a recession, the issue of screening non-employees will continue to be important.

6.  Data security and data breaches and Offshoring Data: Since identity theft continues to be a national and international problem, expect even more emphasis in 2009 on data security and protection. Closely related is the continuing issue of employers and screening firms offshoring consumer data to India or other similar places for cost savings. Once data leaves the United States., it is beyond U.S. privacy protections. A new organization called Concerned CRA’s has taken a stance against offshoring such data without notification to consumers. The use of home-operator networks also presents an unnecessary risk to privacy as well. There is no justification for personal information to be spread across kitchen tables and dorm rooms across America.

7.  Accreditation by the NAPBS: The non-profit trade organization for the screening Industry, the National Association of Professional Background Screeners has announced the introduction of an accreditation program. NAPBS has gone through an exhaustive process to develop “Best Practices” for the industry, and it is anticipated that firms will start going through the process this year.

8.  Social network sites: The use of social networking sites as a pre-employment screening device will continue to be a hot topic in 2009, as more recruiters and HR professionals go online to satisfy their curiosity about candidates. The problem: contrary to popular belief, just because it is online does not mean that it’s a good idea to utilize it without developing policies and procedures. Online material can be inaccurate, discriminatory, and under certain circumstances, its use can be an invasion of privacy. Stay tuned as more courts give their opinions on this issue.

9.  Integration of services: With the advent of “Web 2.0,” it is likely that technology will play an even bigger role in the coming years. Seamless integrations with Applicant Tracking Systems allow paperless background screening systems at the click of a mouse.

10.  International background checks: In 2008, we observed that, “With mobility of workers across international borders, due diligence is no longer limited to just what an applicant has done in the United States. Although there are numerous practical and legal challenges as well as data and privacy concerns, international background checks are becoming very accessible to employers.” That will continue to be the trend in 2009 as well.