Background Checks Do they Minimize your Risk or Add to it?

Transcription

1 Background Checks Do they Minimize your Risk or Add to it? Moderator: Dawn McCartney, Director CW Strategies and Research, Staffing Industry Analysts Panelists: Tom Shelley DP Procurement, DHL Clay Lewis SVP, Global Staffing Vendor Management, Bank of America Eric Rumbaugh Attorney, Michael Best & Friedrich

2 Staffing firms were asked the question, How frequently, if at all, do you conduct criminal background checks on temporary staffing candidates? A) We never do criminal background checks. B) We sometimes do them. C) We always do them. Only 2% of staffing firms reported that they never did criminal background checks. Sixty percent reported that they always ran such checks, and the remaining 38% said they sometimes did so.

3 Staffing firms were asked the question, What resources does your company use for criminal background checks? When we do them, we use internal resources only. We use an outside service for criminal background checks, but we're not sure how good it is. We use an outside service and we're pretty sure it does an adequate job. We use an outside service and we're very confident it does a good job. Nearly all staffing firms reported using an outside service to perform criminal background checks only 6% said they use internal resources only for such checks. Most staffing firms 59% of them said they were very confident their background check service was doing a good job. However, a significant portion of staffing firms were less than fully confident of the quality of those checks. Thirtyone percent said they were pretty sure their background check service was doing an adequate job, and another 4% said they were uncertain about the quality of the service.

4 Staffing firms were asked the question, Do you agree with the following statement? Since buyers are most interested in criminal background checks, they really ought to be the ones doing them. Roughly three out of four staffing respondents disagreed with that statement; only one in four thought criminal background checks ought to be done by the buyer instead.

5 Staffing firms were asked the question, How seriously does your company take criminal background checks for temporary staffing candidates? A) With regard to criminal background checks, we are just going through the motions. B) We do as good a job on criminal background checks as the buyer specifies, no more no less. C) We go out of our way to make sure criminal background checks are thorough, even if the buyer doesn t care. About half of staffing firms take background checks very seriously, even if the buyer doesn t. But nearly as many reported that they do only as good a job on background checks as the buyer specifies, no more, no less. Virtually all staffing firms took background checks at least somewhat seriously only 1% of staffing firms said that with regard to background checks they were only going through the motions.

6 Tom Shelley DHL DP Procurement

7 DHL: The Logistics Company for the World DHL is the world s largest and best in class logistics provider Air freight forwarder Ocean freight forwarder Global Market Position 2010 European road freight forwarder Contract logistics service provider International express parcel providers ,459 Export Tons 1) 2,772 TEU s 2) 2.4% European Market Share 3) 8.3% Global Market Share 3) ~30% Global International Express Market Share 4) Logistics facilities in 3,370 locations 32,300 Express service points in over 220 countries and territories about 275,000 people worldwide 1) Air freight market share is based on air freight volumes moved in 2010, figures stated are in export tons 2) Ocean freight market share is based on ocean freight volumes moved in 2010, figures stated are in TEU s 3) 2010 data 4) 2010 TDI Revenue: BE, CH, DE, ES, FR, IT, NL, PL, SE, UK, AE, RU, ZA, AU, CN, HK, IN, JP, KR, SG, US, BR, CA, MX 7

8 Clay Lewis Bank of America SVP, Global Staffing Vendor Management

9 Bank of America global program overview

10 Guiding principles for due diligence Dimensionalizing the challenge with contingent workers clients must weigh their priorities FDIC / FINRA OCC (regulator) Country laws Parity to employees Contractors only Physical access External factors??? Internal philosophy??? EEOC, Ban the Box initiatives Vendor accountability Global consistency Differentiated by risk factors All third party workers System access Foundational emphasis on risk management and hiring compliance

11 Eric Rumbaugh Michael Best & Friedrich Attorney

12 Should You Conduct a Background Check? What are the legal limitations on your ability to use criminal background checks? What questions can you ask/should you ask in the application process, and what can you do with the information you receive in response to those questions? Impact of state Ban the Box laws on timing of questions.

13 Pros and Cons of Background Checks Disparate impact claims. - Does screening for arrest and conviction records have a disparate impact on minorities? - Defenses: No disparate impact, business necessity (job relatedness required). Arrest and conviction record discrimination claims (specific law in select states).

14 Disparate Impact Federal cases EEOC guidance - Facially neutral policy disproportionately screens out a Title VII protected group - Data supports finding that criminal conviction exclusions inherently have disparate impact on race and national origin Updated EEOC guidance - Will assess 1) applicant flow data; 2) workforce data; 3) criminal history background check data; 4) demographic availability stats; 5) incarceration/conviction data; and/or 6) relevant labor market statistics

15 EEOC Guidelines EEOC issued 52 pages of guidelines aimed at preventing discrimination based on background checks Three factors relevant to the job related/business necessity defense: - The nature of the offense - The amount of time since the offense was committed - The nature of the job Makes it difficult to prepare a hiring matrix

16 EEOC Guidelines Impact on Employers Stepped up EEOC lawsuits. What results? EEOC v. Freeman, No. 09 CV 2573 (D. Md. Aug. 9, 2013) - EEOC claimed disparate impact against African American, Hispanics and males - Freeman had very specific criteria for disqualification - Over course of suit, multiple EEOC claims dropped/dismissed - SJ filed Judge blasts EEOC theory and expert witness and grants motion

17 Sample Matrix Attention Hiring Manager: If you are unsure, do not make offer until you speak to someone in HR. If the offense is not listed and you have questions, please contact HR. Crimes 0 3 Years 3 7 Years 7+ Years Alcohol Consumption/Possession Y Y Y Alcohol Sale to Minor N N Y Arson N N D Auto Theft N N D Burglary (misd.) N D Y Child Abuse/Molestation N N N Child Neglect (felony) N N D Child Neglect (misd.) N Y Y Y = Will Hire N = Won t hire D = Contact Human Resources

18 Sample Matrix Item # Description Criminal Records Recommended Adjudication Status 8 Misdemeanor convictions except for the following: crimes involving weapons, violence, theft (includes petty theft), robbery, burglary, larceny, embezzlement, dishonesty, misappropriation, fraud, forgery or sex crimes Pending 9 Drunk driving or related (more than one conviction) Does Not Meet 10 Worthless (bad) check (one conviction or more convictions) Pending 11 Contributing to the delinquency of a minor Pending 12 Unresolved warrant Does Not Meet 13 Conviction on a single sex crime Does Not Meet 14 Any felony conviction except: those listed below Pending 15 Any felony/misdemeanor conviction involving: weapons, violence, theft (includes petty theft), robbery, burglary, larceny, embezzlement, dishonesty, misappropriation, fraud, forgery or sex crimes Does Not Meet 16 Mob action (AKA gang activity) Does Not Meet 17 Computer crimes Does Not Meet

19 Best Practices Decide whether to conduct a background check Decide scope of check - What is reasonable? - What is job related? - Evaluate disparate impact - Don t apply decisions for one job to all jobs - Credit Checks Severely limited in numerous states Decide whether to conduct check internally Comply with FCRA if applicable (bring checks in house if possible)

20 Best Practices (cont.) Make sure that: - State substantial/direct relationship tests are considered to determine if a background check is appropriate - Once the check has been run, that State and/or Municipal substantial/direct relationship factors are considered when evaluating the results of the check - EEOC factors are considered Self audit disparate impact on a periodic basis

21 Best Practices Background Check Processes Title VII does not require individualized assessment of convictions. HOWEVER that is exactly what the EEOC is alleging should occur (See Dollar General and BMW lawsuits) If you wish to use a matrix, there should be very few Red/No Hire categories. If there are, should be based on a law such as caregiver, financial sector, etc. For virtually everything else, should trigger additional review. State laws are severely limiting credit checks relationship to position

22 Questions?