Doing Due Dilligence to Uncover ‘Bad Apple’ Applicants

Entrepreneur’s Notebook

by Rebecca Torrey & Larry Scherzer

Recent scandals in Corporate America give rise to a new damned-if-you-do, damned-if-you-don’t hiring dilemma for many companies.

On the one hand, employers must comply with a dizzying array of federal and state fair employment practices laws when hiring new people or promoting those already on the payroll, with new statutes showing up on the books every year.

On the other, employers brave even worse dangers if they hire the wrong people for example, professionals who lie about their qualifications or managers who harass those whom they supervise.

A few examples illustrate the hidden traps awaiting the unwary.

– You can’t ask prospective employees questions even indicative of age for example, innocent questions about membership in the AARP, formerly known as the American Association of Retired Persons;

– You can’t ask about the marital status of prospective employees, the number of children they have or their plans to have children in the future;

– You can’t ask about medical conditions, including any disabilities requiring special accommodations.

Worse, federal and state laws differ, and you must comply with both.

Federal law, for example, permits you to go back seven years in any background investigation of criminal convictions for employees seeking jobs paying less than $75,000 annually, with no time limit for employees seeking jobs paying more than that figure. But California law limits your investigation to seven years irrespective of salary.

Limiting risk

Your first line of defense against the bad apple employee is a well designed employment application form. At the very least this form should cover:

– Employment history going back at least 10 years;

– Educational achievements;

– Professional licensing.

You also want to know all counties where each applicant has lived and/or worked for the last seven years and whether he or she has been convicted of a crime during the same period. California employers, however, must inform applicants that they need not disclose convictions that have been expunged or marijuana convictions more than two years old.

Your application form should require the applicant certify that the information on the form is true and correct and that nothing of material value has been omitted. The application should also specify that any falsehoods or omissions will be grounds for termination.

But you don’t cover all your risks even with a good application form, since things get even more complicated when you gather information on employees already on the job.

Suppose you interview a promising woman for a mid-level executive position, hoping to promote her to a sensitive, senior-level job later on at a substantially higher rate of pay. Using authority granted on your employment application form, you commission a pre-employment background investigation, turning up nothing untoward.

You hire her and several years later consider her ready for promotion.

Prudently, you decide to conduct another background investigation only to discover that your employee refuses to grant permission for the check. Worse, you discover that your original employment application permits only one investigation, not two.

You’re stuck, of course.

Staying current

A thorough background check is the first step to take in assuring the integrity of the people you hire. These days, at the minimum any background investigation should:

– Verify your applicant’s address, Social Security number, employment history, education and licensing status;

– Check motor vehicle and court records for both civil and criminal proceedings, including vehicle-code violations, misdemeanor and felony criminal charges, uniform business code violations, securities law proceedings and officer and director records, among others.

– Search the Internet and local and national media for mentions of your applicant.

– Call every individual listed on the application as a reference.

None of this comes cheap. But the alternative is worse very possibly ruin for employers who lose their way in the thicket of law surrounding the hiring and firing of employees.

Rebecca Torrey is a partner in the Century City law firm Jeffer Mangels Butler & Marmaro LLP. Larry Scherzer is president of Scherzer & Co., a corporate and personal background investigation firm.