ThinkTank

Be concerned and careful when using criminal records as part of the screening and hiring process.  You could end up becoming one yourself.

Criminal records . . . we’ve been hearing a lot about them in the news, from business associates and it has caused us some concern.

The Department of Defense declares that criminal history record data is the single most important piece of background information about prospective applicants. (The Police Chief – the official publication of the International Association of Chiefs of Police).

Let’s set the record straight – about as straight as it can get. The perception that a giant mega-size computer system resides somewhere in this country that houses ALL the records of EVERY criminal offense committed in the last year, or 5 years, or 25 years DOES NOT EXIST.  That is a fact . . . indisputable.

If you think your local law enforcement department, or even the FBI has that information at their fingertips by mashing a few buttons on a computer, it’s time to change your thinking.

The Facts . . .

there are nearly 3,900 police bureaus in this country and structured record keeping is not necessarily the norm.  Some states claim to have multiple counties reporting arrest and conviction records into a centralized repository that in turn feeds data into the ‘big system’.  Actually, most states having such a system may be lagging behind in record reporting as much as 2-3 years! And as we’ve tried to explain, the ‘big system’ is not what you might think it is.

To make matters worse, you don’t want to employ a criminal who could devastate your company or may be a threat to a client because of their position requirements. So what do you do?

Due diligence . . .

As a business owner or manager you do the best that you are able to – what you reasonably can afford to do.  Most courts would recognize a criminal record check at the county level as due diligence. But does a single county check help you if they were convicted in another part of the country?

No one can deny that it may be like looking for a needle, etc., but you conducted due diligence; anything more is going above and beyond – although you’d really like to know for sure wouldn’t you?

That’s where the cost can begin to skyrocket.  Take a look at yourself. Write down the names of the places you’ve been since the age of 18 – OK, that’s plenty enough — you can stop now.  It could get very costly to try and confirm that someone is totally clean of any criminal wrongdoing. What if you heard through the rumor mill that the applicant may have been involved in a pyramid scheme, or a drug bust?  Regardless of guilt or innocence, there’s a big chance that Federal agents made some of these arrests, and the person(s) would have been prosecuted in a Federal court.  Bad news . . . this is yet another series of courts that retains their records separately.

Now the predicament is not getting any better.  In a perfect business world, this would be an easy task to face.  But actually, it ranks alongside of I-9 forms, Social Security number verification and employment referencing. You must do what is reasonable to protect yourself, your company’s assets, your clients and your employees.  Experts recommend that you check the county of residence as well as three of the surrounding counties, especially in metropolitan areas.

So why check criminal records at all?  Finding good employees is one of the toughest jobs business owners and managers face, especially in today’s tight market.

If you are not checking criminal backgrounds on prospective applicants, here are some of the reasons why you should.

1. The workplace is the scene of almost a million violent crimes each year – that’s one every 31 seconds.
2. An estimate of more than 875,000 workdays are lost annually to workplace violence, a total of about $25 million in wages.
3. In lawsuits citing negligent hiring, courts are now deciding in favor of employers that can show a bona fide effort to investigate prospective employees’ backgrounds.
4. Two-thirds of negligent hiring cases that go to trial convince juries to award more than $600,000 to plaintiffs.
5. Currently, criminal activity is found on more than 15% of requests.
6. Employment applications are falsified or ‘puffed’ nearly one-third of the time.
7. In most instances, my coaching and consulting clients reject an applicant who has lied about criminal records when filling out an employment application.

Fraud Alert . . .  bad or misinformed hiring decisions can cost business owners a great deal – sometimes it may mean losing their company.

_Small-business owners, traditionally known for relying on instinct and good feelings when it comes to hiring, are being forced to take a tougher approach to the process.

That’s because smaller, less sophisticated companies tend to be victimized more frequently by employees committing theft or fraud and suffer greater losses than larger firms, according to a study released by the Association of Certified Fraud Examiners.

It doesn’t matter what kind of business you own – you can be a victim of employee wrongdoing. The vice president of a small computer document imaging company in Skokie, Illinois, has his own horror story.

No one thought to check the background of the woman hired as an accounting assistant at the company, a couple of years ago.  She was on the payroll for six months, but it took only 90 days for her to forge $120,000 worth of company checks and deposit the money in a bank account opened under an alias.  An internal audit revealed the missing funds, but the money was gone.

“We found out that she was on parole for check forgery and substance abuse when her parole officer called because she violated her parole,” said the executive.

At the same time she was stealing money from her employer, she was trying to defraud an insurance company on a claim involving personal belongings.  Two fraud investigators set up a sting and arrested her on multiple charges. She was eventually sentenced to serve eight years in jail without parole.

The computer company is suing the bank that allowed the woman to cash the forged checks.

Closer to home, an attorney I am associated with, hired a receptionist and bookkeeper to fill that role at his collections company.  After several years of solid performance, he decided to promote this employee to manage the entire collection office — after all, she was running it already.  The company grew for another year and became quite profitable, however a confidential internal audit determined that money was being diverted.  An undercover investigation revealed that the woman had scammed the firm for more than $205,000 in less than two years.  She was immediately terminated.  

But wait, there’s more . . . the woman filed a wrongful discharge lawsuit against her former employer stating that she was never charged with a crime and therefore, was fired without cause.  The attorney represented himself in the suit and fought successfully, but the point is, if he weren’t able to be his own lawyer, it would have cost him thousands of dollars to fight the lawsuit brought against the person who allegedly stole nearly a quarter of a million dollars from his business.  How rude!

Okay you say — what can I do to protect myself or my employer?  Start with a thorough pre-employment reference report, whether conducted in-house or by a professional third party (you can email me for a referral to one of the best in the country).  For just a few hundred dollars, you will be able to have some peace of mind that your prospective employees are who they say they are and can do the work you want them to do.  Although there is no guarantee, you’ll have taken reasonable steps to assure you won’t be the victim.

Next, I recommend using an extremely detailed application process.  Now, I know you small business owners will freak out about how much TIME this will take, but if you had your choice of investing a little time and money or losing thousands of dollars, which would you pick?

Finally, while I know today’s business gurus say you should work on your business instead of in it, your gut (aka common sense) should tell you to find ways to check on the financial transactions in your company.  Absentee owners are the most likely to get fleeced.