By James Wyatt Brannock Jr. and Kelly G. Verberg

Corporate scandal. Workplace violence. Security threats. These issues loom large in the minds of employees and employers alike.

More than 60% of employees say that feeling safe at work is a priority in job satisfaction, according to the Society for Human Resource Management.

In addition, SHRM reports that nearly 60% of human resource professionals are concerned about workplace violence. And to help make their workplaces safer, more than 80% of them investigate the backgrounds of potential employees.

Background checks can divulge the checkered past of a potential employee, reveal any false information, and even detect if an individual has a history of violence.

Why Check?

As more and more staffing firms seek to become full-service employment resources for their clients, more and more are conducting candidate background checks as a routine part of their hiring process. It’s a trend predicted to continue by ADREM Profiles Inc., a ChoicePoint service and ASA Savings & Solutions Partner that provides background screening services.

Here are three good reasons to make background checks an integral part of your staffing firm’s services:

  • Meet clients’ needs. As the emphasis on security increases and the demand for quality employees grows, the need to adequately screen your applicants becomes essential to competing in the marketplace.
  • Limit liability. Staffing firms can reduce the risk of negligent hiring and increase retention of clients and employees while reducing the threat of violence, theft, and abuse in the workplace.
  • Manage risk. Conducting background checks as part of your risk management program can make your firm more attractive to insurance carriers.

Another reason is to generate revenue. Some screening companies have models that enable staffing firms to resell their screening product, allowing staffing firms to create profit centers while increasing value to their clients.

Meet Clients’ Needs

“More of my customers are requesting background checks,” says Mary Jane Barlow, president of MJ Barlow Career & Staffing Services in Waterbury, CT. “I would estimate that over the past two years, we’ve seen a 30% to 40% increase in these requests from clients.”

Background screening is a way to gain greater insight about an applicant to create the best match for your client. Consider these three examples:

  • Employment record discrepancies and gaps in employment may show an inability to hold a professional position. A transient or potentially incompatible candidate may not provide the best solution for your client.
  • When considering candidates for positions that require the use of corporate-sponsored vehicles, it is valuable to review their motor vehicle records in determining their suitability.
  • When dealing with executive candidates and those with corporate fiduciary responsibilities, it’s important to know how they handle their own finances. This will help judge how they may apply their personal habits at work. Bankruptcy or fraudulent activity on pre-employment credit checks could be a good indication that the candidates should not be responsible for your client’s money or its financial decisions.

“In today’s world it is imperative to run background checks to make proper placement decisions and prevent any potential adverse activity,” says Leslie McIntyre, president of the McIntyre Group in Stamford, CT. “We know our clients are getting candidates we can depend on to perform the job we promised without any worry of activity that will affect our relationship with our clients.”

Limit Liability

“To protect ourselves and our customers” is why Barlow’s firm conducts background checks.

Investigating the backgrounds of job applicants comes with its own limitations and risks of liability. But the failure to adequately do so before employees are assigned to your clients’ work sites exposes your staffing firm to liability.

Recent lawsuits against employers whose employees engaged in violence or other wrongful conduct, such as assault and theft, highlight the importance of careful applicant screening, particularly for temporary employees who are not directly supervised or observed by the staffing firm when they are on assignment.

When the staffing firm knows—or should know—that an assigned employee poses a definite risk of harming the client or its employees, the staffing firm may be liable for damages under the expanding theory of negligent hiring—even though the employee clearly is acting outside the scope of his or her employment.

Given the volume of applicants screened by staffing firms, the odds are high that there will be some who do pose risks, making background checks a must for staffing firms in avoiding negligent hiring and costly lawsuits.

Manage Risk

Background screening is a critical component of a strong risk management program. And a strong risk management program can make staffing firms more appealing to insurance carriers—especially for obtaining workers’ compensation coverage.

“After Sept. 11, our workers’ compensation insurance carrier dropped us,” Barlow says. “We were forced to go into an assigned risk pool. To get into the voluntary market, we had to demonstrate how our risk management program could make us more attractive to potential carriers.

“It worked! We were able to get out of the risk pool,” she says, adding, “Background screening is a critical part of our risk management program.”

Kyle Hutton, executive vice president of Risk Control Services, a risk management consulting firm for the staffing industry, says, “Staffing firms assume risk, or the possibility of loss, with every job placement. Therefore, establishing a solid risk management program is directly associated with the profitability of the company. By qualifying employees, staffing firms will be providing clients the most marketable employees.”

One component of the RCS model for effective workers’ compensation risk management is the identification of “predator applicants,” whom Hutton explains can be classified as conscious predators, semiconscious predators, and unconscious predators.

Conscious predators are intentionally fraudulent. They have one purpose for employment: to file a workers’ compensation claim.

Semiconscious predators have been legitimately injured but have been educated by someone else on how to handle a claim—and are misinformed as a result.

Unconscious predators are physically unable to perform their duties, and it is simply not safe for them to return to work. They are workers’ comp claims waiting to happen.

So how do staffing firms weed out these predators?

Hutton suggests a telephone prescreening, in which candidates are asked the following question: “Our clients require that the people working in their workplaces submit to drug testing and criminal background screening. Are you willing to work for these clients, even if it means that you will be required to take a drug test or allow a background check to be conducted?”

Hutton says, “If they don’t come in for an interview after you’ve asked this question, your prescreening worked.” And if they do come in for an interview and submit to a drug test and background check, Hutton says, “A failed drug screen or a background check that uncovers a criminal history not disclosed on a candidate’s application could indicate a conscious predator.”

Check What?

In conducting background checks, it is important to obtain as much of applicants’ personal history as possible. All background checks should include three elements:

  • Verification of Social Security number
  • County-level criminal investigation (all places lived and worked in the past seven years)
  • Employment verification

But not all positions require the same level of screening. Following are recommendations from ADREM for additional checks for various types of positions.

Entry level:

    • Education verification
    • Five-panel drug test


    • Education verification
    • Pre-employment credit check
    • Five-panel drug test


    • Motor vehicle record check
    • Five-panel drug test regulated by the U.S. Department of Transportation


    • Education verification
    • Licenses and certifications
    • Pre-employment credit check
    • Five-panel drug test

Health care:

    • Education verification
    • Medical license verification
    • Pre-employment credit check
    • Nine-panel drug test

Know the Law

To protect their employees and job applicants, staffing firms that use third-party agencies to conduct employee background screening must be familiar with the federal Fair Credit Reporting Act as well as applicable state laws.

Under FCRA, staffing firms may request “consumer reports” to evaluate persons for employment, promotion, reassignment, or retention as an employee. Consumer reports are communications received from a “consumer reporting agency” bearing on a person’s creditworthiness, credit standing, character, general reputation, personal characteristics, or mode of living. Such reports would include criminal history, credit history, motor vehicle records, Social Security identification, license verification, and military records. A consumer reporting agency is any organization that charges a fee for obtaining information on an applicant or employee.

FCRA imposes several requirements on employers regarding the use of consumer reports:

  • Employers must disclose to the employee—in a separate document consisting solely of FCRA disclosure—that such a report may be requested and must obtain the applicant or employee’s signed consent before requesting the report.
  • Before taking any adverse action based on the report (e.g., refusal to hire), employers must provide the individual with a copy of the report and a description of his or her rights under FCRA. You must then wait for a “reasonable” period after furnishing the report and statement of rights before taking any adverse action based on the report. Five days would probably be adequate.
  • After taking adverse action based on the consumer report, employers must notify the individual (verbally or in writing) of the action taken; the name, address, and toll-free telephone number of the consumer reporting agency; that the reporting agency did not make the adverse decision and cannot explain it; that they have the right to obtain a copy of the report from the reporting agency upon request within 60 days; and that they can dispute the accuracy or completeness of the report directly with the reporting agency.

More streamlined rules apply to checking employer references supplied by applicants. Under FCRA, staffing firms can obtain and communicate the results of employer reference checks to their clients if they take the following actions:

  • Get consent (oral or written) from an applicant before making a reference check or communicating such information to clients.
  • Confirm any oral authorization in writing within three business days.
  • Notify the applicant in writing of the right to request the nature and substance of information in the applicant’s personnel file at the time of the request.
  • Disclose in writing within five days of a request from the applicant the nature and substance of information in the personnel file (sources of information need not be revealed).
  • Staffing firms that undertake additional investigations, such as criminal record checks, may still be subject to FCRA requirements if such information is communicated to a client or other third party.

Staffing firms should check with their own legal counsel to ensure that the firm is in full compliance with these rules and any state laws that may apply.

Check the Checker

There are numerous companies that provide consumer reports and other advice on background checking. Here are some things that staffing firms should look for when choosing a background check provider:

  • Nationwide coverage
  • Accuracy
  • Turnaround time
  • Legal compliance
  • Delivery
  • Quality

Nationwide Coverage

The process for retrieving information required for background checks is becoming more advanced as databases are linked to allow comparison of county and national data. Obtaining current data from a courthouse in the area the applicant has lived the longest and comparing them to data from a nationwide database can help detect if a record exists in an obscure location.

A nationwide information retrieval network ensures that no matter where the applicant may have resided, your screening company has the ability to access those repositories and report the necessary information. Ask potential providers if they look at county criminal records and compare them to a nationwide database.


After ensuring that your provider can conduct searches on a nationwide level, find out where the information comes from. The accuracy of the information reported is the most important evaluation point you should consider when selecting an employment screening company.

Data can either be accessed directly from the source or compiled and stored in a database. Some databases are updated only quarterly, whereas most courts update their records daily. The danger of database searches is that they can yield inaccurate, out-of-date information. And using that information as the basis for a hiring decision could put your firm in violation of federal law. To get current information on candidates and keep your firm on the right side of the law, select a screening company that obtains information directly from the source.

In addition, find out how many years back your screening company will search. Most will search three to five years; some will go back as far as seven.

Turnaround Time

Because the storage of public records is not standardized, the time it takes to conduct a search can be affected by various factors that may impede the retrieval of information. Some results can be provided instantaneously. Others, depending on the jurisdiction and type of information sought, can take 24 to 72 hours.

Legal Compliance

One area that should not be overlooked is compliance support. Various laws in addition to FCRA govern the information retrieval industry. It’s important to seek the advice of your own legal counsel in conducting background checks. In addition, your screening provider should have a compliance officer to help guide you through the maze of government restrictions and ensure that you use the data only for the intended purposes.

By having a compliance officer on staff, screening companies can help ensure that the methods used to obtain the information being provided about potential and existing employees meet the applicable rules and regulations.

Also find out if your screening firm has sample forms and letters that you can distribute to employees being checked. These forms must be in compliance with FCRA and applicable state laws and should be reviewed by a lawyer familiar with those laws.


So that you don’t need to purchase software that must be continually updated, select a screening company capable of sending and retrieving search requests via the Internet. Look for added features of Internet delivery, such as instant searches, e-mail alerts, and downloadable reports. When working with a screening company that offers Internet transactions, ensure that the company has secure Internet delivery systems. Find out if it has redundancy built into its security measures to protect the privacy of information.


Learn about your screening firm’s quality assurance department—ask if it has a “reverifying” process. This process ensures the accuracy of reports by verifying all negative information before it is released.

Using a company that is certified by the International Organization for Standardization ensures that its operational logistics have been reviewed by a third-party adviser to guarantee that consistent reporting methods are used in the employment screening process.

More Information

No business, regardless of size or location, is immune to risk or legal liability. But conducting background checks as part of your staffing firm’s employment screening process will enhance the services your firm provides to clients, help protect your business, and ensure a safer workplace for your employees.

To learn more about conducting employee background checks, consult Employment Law for Staffing Professionals, published by ASA. For more information on the book, visit the Products & Publication section of the ASA Web site:

To search for an ASA member company that provides background checks and employment screening, visit the Suppliers section of the ASA Web site: Click on Select a Product or Service and choose Background Checks.

James Wyatt Brannock Jr. is an analyst for ADREM Profiles Inc., a ChoicePoint service and ASA Savings & Solutions Partner. Kelly G. Verberg is director of membership for the American Staffing Association.