1. Seven Hiring Mistakes that Could
Cost You Thousands of Dollars
Advanced Research Systems Inc.

2. Former chairperson and CEO of Xerox Corporation, Anne M. Mulcahy,
once said, “Employees are a company's greatest asset—they’re your
competitive advantage. You want to attract and retain the best; provide
them with encouragement, stimulus, and make them feel that they are
an integral part of the company's mission.”
However, before you can worry about retention, encouragement and
stimulation, you have to identify who the best job applicants are. That
requires a thorough pre-employment background screening process.
Without one you have no way to ensure the accuracy of the
information provided on a resume, nor any effective means of reducing
your risk of a potentially devastating negligent hiring lawsuit.
“Going with your gut” is never the answer. A 2010 study by a major
background screening company found that 46 percent of employment,
education and reference checks reveal discrepancies between the data
reported by the applicant and that provided by the source. According
to the U.S. Department of Justice thirty percent of America’s adult
population has a criminal record. Thirty-six percent of driving records
reveal one or more violations or convictions.
Advanced Research Systems 2014 Edition 2
By Brian Hagen
Chief Operations Manager

3. It’s easy to see why thoroughly vetting an applicant is essential.
Unfortunately, it’s also a highly regulated practice at both the state and
federal level. Pre-employment screening of all types is governed by laws
and guidelines restricting the information sources can provide as well as
the data employers can use when making hiring decisions. And the
complexity often leads employers to make mistakes—like the following—
that can cost their companies thousands of dollars.
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4. Mistake 1: Not Using the Correct Criminal Searches
Accidents on the job are costly—especially if it’s determined they could have
been avoided. If you fail to exercise due diligence and mistakenly hire an
applicant with a history of violent or thoughtless conduct who later causes an
injury to another worker or one of your clients, you could be subjected to a
negligent hiring lawsuit. According to the National Institute for the Prevention
of Workplace Violence, these lawsuits often result in verdicts as large as $40
million.
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“ Nearly 2 million
Americans report
they’ve been victims
of violence at
work”.
While a criminal records background check can
reduce your risks, it’s only as good as the records you
use. Because different crimes are prosecuted in
different courts and recorded in different databases, a
single search is very likely to miss important criminal
records.
For best results, experts recommend pulling a full criminal history on all
applicants where allowed by law. This includes a federal court search to reveal
federal statute violations, such as tax evasion and embezzlement, and a 7 year
county court search in order to obtain the most current information.
Search the records in every county in which the applicant has resided, worked
or studied for the previous seven years. In states where the county courts are
further divided into district (or lower) and circuit (or upper) courts, you’ll need
to cover even more ground.

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A state court records search may be inappropriate, as some states aggregate
county records and others do not. Additionally, you must not rely solely on a
national criminal database search; not all states and counties report to the
national database.
Depending on your industry—childcare or healthcare, for example—state and
federal regulations may dictate the types of criminal databases that must be
included in the background check. It’s also important to note that some states
have passed laws limiting how criminal records are used in employment
decisions.
Mistake 2: Using Non-Compliant Forms or Failing to Use Forms at All
Since 1971, the Fair Credit Reporting Act (FCRA) has regulated the activities of
consumer credit reporting bureaus, employers and others (such as banks and
lenders) who utilize consumer reports. The government made significant
amendments to the FCRA in 1996 and 2003, increasing the rights of job
candidates as well as the legal burden on employers who use consumer credit
reports in their pre-employment screening process.
One of the most significant provisions of the FCRA requires employers to
obtain written consent from every job applicant before running a background
check. The process of obtaining this consent must include providing the
applicant with a disclosure document and a FCRA document entitled “A
Summary of Your Rights Under the Fair Credit Reporting Act” as well.

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Fail to do so and you could pay thousands of dollars in fines and court
costs. Each individual failure to follow the FCRA regulation carries a civil
penalty of up to $2,500. A class-action lawsuit, like that filed by thousands
of job applicants against Whole Foods in February 2014, could easily
bankrupt your business.
Note: In early 2013 the government revised “A Summary of Your Rights
Under the Fair Credit Reporting Act” to reference the Consumer Financial
Protection Bureau rather than the Federal Trade Commission. While this
may not seem like a big deal, employers using outdated versions of this
document have also been subjected to multi-million dollar lawsuits.
Mistake 3: Ignoring Adverse Action Requirements
Another significant provision of the FCRA requires employers to notify
applicants if a background check uncovers negative information that will
prohibit them from hiring the candidate (i.e. taking “adverse action”). The law
requires you to send a pre-adverse action letter to the candidate along with a
copy of the background check report and another copy of “A Summary of
Your Rights Under the Fair Credit Reporting Act.”
You must allow the candidate enough time to provide an explanation for the
information contained in the report or to dispute its accuracy before you
officially disqualify him or her from employment consideration. Experts
recommend waiting at least five business days before following up with the
post-adverse action letter stating your decision.

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In 2012, the Equal Employment Opportunity
Commission (EEOC) released new guidelines for
employer use of criminal history reports. Under
these guidelines, if you determine you need to
reject an applicant based on their criminal
background, you must first consider the nature of
the offense, the time that has passed since the
offense, and how the offense pertains to the nature
of the position for which the applicant has applied.
of businesses still have not adjusted their
background check policies in response to the
EEOC suggestions.
39%
Mistake 4: Not Following the FCRA, Your State Laws and EEOC Guidelines
It seems pretty straightforward, but a survey by a major background screening
company found that 39 percent of businesses still have not adjusted their
background check policies in response to the EEOC suggestions. The reasons
for this failure are many and include assumption of compliance and confusion
caused by conflicting regulations. Unfortunately, EEOC guidelines and state
laws are not always in agreement.

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75%
Did you know
that 75 percent
of adult illegal
drug users are
employed?
As with failure to obtain consent, disregarding the FCRA’s adverse action
guidelines carries a civil penalty of up to $2,500 for every incident. State
consumer protection agencies have successfully sued employers for non-
compliance, as have job candidates and their families.
Mistake 5: Skimping on Your Background Checks
Many factors tempt employers to skimp on their background checks.
They may want to hire quickly to minimize the time they are short staffed.
They may want to reduce the time between application submission and
job offer to beat their competitors to the best applicants. They may
erroneously believe that “people are honest” and “nothing bad will
happen” if they take an applicant at his or her word.
Unfortunately, each time you skip the background
check or opt for an overly general screening, you
increase the risk to your company’s bottom line.
Consider drug and alcohol screening as an example.
According to the National Institute on Drug Abuse, 75
percent of adult illegal drug users are employed. Most
binge drinkers and heavy alcohol users are as well.
Cut drug and alcohol screening out of your applicant vetting process and you’re
more likely to hire one of these professionals. On average, they’re less
productive, more likely to be involved in a workplace accident, and file more
workers’ compensation claims than those who are sober.

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Mistake 6: Conducting Inadequate Reference Checks
Not all job candidates are honest. One study found that 33 percent of
resumes contain fraudulent dates of employment. Some applicants
adjust these dates to cover employment gaps. Others make up fictitious
jobs altogether. Contacting the past employer listed on the resume is the
only way to verify the information. A common mistake HR managers
make is allowing the candidate to choose their references, instead of
requiring the candidate to provide their past supervisors.
69%
According to
Career Builder
study, 69 percent
of employers had
dealt with bad
hire in 2012
Remember, a bad hire carries substantial costs in terms
of hiring and training, reduced productivity, reputation
damage, employee morale and negligent hiring
lawsuits. And bad hires can happen to anyone. A recent
study by CareerBuilder found that 69 percent of
employers had dealt with a bad hire in 2012. Forty-one
percent estimated the poor decision cost their company
more than $25,000.

10. Mistake 7: An Inconsistent Background Check Policy
An applicant who appears stellar on paper and interviews well may still be
hiding something. In fact, another CareerBuilder survey found that 29 percent of
the hiring managers and human resource staff who had contacted applicants’
professional references had caught fakes. A study by the Society for Human
Resource Management revealed that 61 percent of employers “often” or
“sometimes” find inaccuracies on resumes.
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As mentioned earlier, you can’t rely on a “trust your gut” approach to
background screening. Every time to fail to thoroughly vet an applicant you
risk making the wrong decision. You also risk EEOC action. If an applicant
feels that he or she has been discriminated against—perhaps because you
ran a background check on him and did not on another candidate—he can
file a complaint with the EEOC.
The EEOC received 99,922 discrimination complaints
against employers in 2010 alone. Total awards were
in excess of $404 million, or an average of $4,000
per complaint. When lawsuits are filed after EEOC
review, the costs are even greater. Employers
regularly pay upwards of $100,000.

11. Stop risking bad hires, lawsuits and fines. Take steps to eliminate these
mistakes from your pre-employment screening process today. If you need
assistance, consider enlisting an experienced and reputable third-party
background check provider.
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