Hiring new employees can be risky business, and hiring mistakes are costly. Aside from the cost of replacing a bad hire, which can, by some estimates, rise to as much as five times the person’s salary, a bad hiring decision can leave your company vulnerable to theft or violence, falsification of work histories, experience or credentials, negligent hiring claims, and time wasted on the recruiting, hiring and training process, among other risks. These risks are exactly why pre employment screening has become so prevalent in business today, and background and credit checks are among the more commonly used screening tools.
So should you look for skeletons in your new hire's closet? When are background and/or credit checks advisable and appropriate? The answers to these questions will vary from one business to another, but as a general rule of thumb, these pre employment screening tests are best used only when issues they screen for are relevant to the position for which your potential new hire has applied. For instance, a credit check may be appropriate in the post offer phase of the hiring process for positions in which employees handle money and financial information, where it might be harder to justify as a cost-effective pre employment screening tool for janitorial staff. Criminal background checks, on the other hand, may be quite appropriate for janitorial staff if potential new hires will have unfettered access to offices and/or retail establishments during the overnight hours.
Once you have a clear policy in mind regarding how you would like to use pre employment screening in your company, checking to see just how those intentions stack up against federal and state employment regulations can save you a lot of future headaches. Federal regulations permit pre-employment screening so long as it is not designed, intended, or used to discriminate based on race, color, religion, sex, or national origin, and all applicants for a position are tested according to clear and consistent screening policies. However, if testing creates a situation of adverse impact, screening out a higher percentage of women or minorities, for instance, employers must be able to prove that tests are job-related and consistent with business necessity to avoid running afoul of EEOC standards.
State regulations on background and credit checks vary widely from one to another. For example, states like California, New York, and Colorado place limitations on the use of both these types of tests, while Florida, Alabama, New Hampshire and Rhode Island, among other states, have no regulations regarding credit checks and hold widely varying policies on criminal background checks. That variability means that looking into regulations in your state before implementing a pre employment screening program is very important, as is keeping track of new or revised regulations going forward.
Asking about previous injuries and illness is technically allowed in a post-offer context by the EEOC and ADA. However, uncovering these skeletons could create some legal exposure for your organization. If you have access to this information and then rescind the offer for other reasons, it might be hard to prove that you did not rescind the offer due to the applicant’s medical history. A much cleaner and legally defensible method of addressing physical or medical issues is to focus on the present rather than the past. Have the applicant participate in Pre-Hire/Post-Offer Physical Abilities Testing (PAT) – with the emphasis on “Abilities.” In other words, test the applicant’s ability to perform the essential functions of the job he’s applying for today. If applicants pass that test, regardless of previous injuries, then they are qualified from a physical perspective. The vendor who provides testing will be asking about medical history to make sure the applicants are safe for testing. These clinicians should also be making baseline measures of the ongoing effects of any previous injuries. In which case, the employer has access to the baseline data should the applicant pass the test, be hired and go on to be injured. If previous injuries make them unsafe for testing and therefore to perform the job – then the offer (that was contingent upon passing the PAT) can be rescinded.
To summarize, post offer pre-employment credit, background checks, and Physical Abilities Testing are appropriate when they are relevant to the responsibilities of the position for which a candidate has applied, and should be done according to clear, consistent written policies to ensure regulatory compliance. Making sure you clearly understand what is permissible under federal employment regulations and those of your state is also essential to a legally defensible testing program.