Employers Focus on Applicant Backgrounds

The job interview, that timeless, nerve-wracking rite of passage for employment seekers, has gotten considerably tougher in recent years. As a rising number of employers utilize background checks to vet the criminal and credit histories of their applicants, it's no longer enough to spit-shine the résumé, pick out the perfect suit and rehearse a detailed five-year plan.

While a few large corporations have for years spent time and money checking the backgrounds of employees and potential hires, the practice is gaining popularity with smaller businesses and even individuals looking to hire help in their homes.

Critics have voiced concerns that the increased access to personal and financial records leaves individuals open to privacy violations. Some say background investigations should focus only on jobs related to security, such as airline screeners or bank employees, and leave other applicants out of the process.

"There really needs to be a middle ground. There should be a line drawn between jobs that are security sensitive and those that are not," said Chris Hoofnagle, associate director of the Electronic Privacy Information Center, a nonprofit research center.

So far, the privacy concerns have done little to slow the trend.

ChoicePoint Inc., a data collection firm in Alpharetta, Ga., says it mines a database of 19 billion public records to conduct more than 6 million background checks a year. The company says its clients include 40 percent of the companies on the Fortune 500 list.

Background checks have increased steadily as companies like ChoicePoint and IMI Data Search, a California firm that uses county courthouse records to check individuals' pasts, make it easier and faster to access public records. And the practice is also expanding among smaller groups that historically have not been concerned with pre-employment screening.

"Middle-market companies are asking for checks more than they used to, and nontraditional organizations like nonprofits and religious groups that haven't run checks in the past are doing it now," said James Lee, ChoicePoint's chief marketing officer. "People want to know who they're hiring."

Fear of Terror

In the post-9/11 world, the fear of terror increased the scrutiny on many aspects of life. Along with beefed-up screening at airports, most Americans have grown accustomed to an increased level of suspicion in their daily activities. As a result, pre-emptive screening has become accepted practice and often even expected.

Many companies are also concerned about liabilities related to employee behavior. Earlier this year, a Florida department store chain agreed to pay $9 million to settle a lawsuit after an air-conditioning repairman subcontracted by the company raped and killed a woman. The repairman, who was registered as a sex offender in Florida, had not been through a background check.

With the increased emphasis on corporate accountability and the risk of huge financial settlements, background checks have become good business. And industry members say the trend is growing.

"Right now, only 40 to 50 percent of companies are actually doing background checks, and that's going to change," said Laura Russell, president of IMI Data Search. "People are becoming more aware of the value of knowing the history of their employees."

To drive home the uncertainty employers face during the hiring process, Russell said 23 percent of the applicants IMI checks — nearly one out of every four — turn out to have criminal records. She said IMI will perform about 500,000 checks in 2004 and expects that number to climb by 50 percent in 2005.

ChoicePoint has experienced similar growth. The company has acquired 50 companies since its inception in 1998, rapidly broadening its database and its client list.

Privacy Protections

Most privacy advocates accept that pre-employment checks will continue to spread. But some fear the increased scrutiny is turning all job interviews into inquisitions.

"We're really turning into a background-checking nation, and there's nothing that can change that. But companies should be held responsible when mistakes are made, and there should be some severe penalties," said Pam Dixon, director of the World Privacy forum, a nonprofit research group located in San Diego.

So when does the flow of an applicant's criminal and personal information between the employer and the checking firm violate the applicant's privacy?

Dixon conceded that most large companies strictly follow privacy laws in conducting background checks. Under the Fair Credit Reporting Act, companies can run a check on any potential employee as long as they disclose their plan to do so and the applicant agrees to the check.

For the most part, larger companies have access to lawyers that understand those rights, Dixon said. But as firms like ChoicePoint make background checks cheaper and easier to access, private information is increasingly ending up in the hands of companies or individuals that are not as secure.

"It gets dicey when smaller companies do the checks or when the checks get delivered to a desktop via the Web. If the checks get printed out or saved on a desktop, it could lead to identity theft or privacy concerns," Dixon said.

Security Checks

ChoicePoint's Lee said the company's security measures prevent that from happening. ChoicePoint says it puts all clients through an extensive vetting and documentation process to confirm their intentions. The company refuses service to anyone who does not participate. ChoicePoint also refuses to sell Social Security numbers or allow individual consumers to run checks on other individuals.

"You can't come in and check up on your neighbor or your daughter's boyfriend," Lee said. "We have a high degree of confidence that our customers, once they enter into our system, are going to use the information appropriately."

Russell said IMI also makes sure that its clients are not going to use information improperly: "We explain the FCRA [the Fair Credit Reporting Act], the privacy acts, and any state employment laws they need to know, and we have them read it and sign it."

Both companies also use extensive security software to protect the information they collect and prevent hackers from stealing sensitive information.

"We have the Cadillac of security systems, and we're constantly upgrading our security software. We have to make sure we stay ahead," Russell said.

But even that high level of security doesn't rule out occasional mistakes.

Applicants’ Options

So what are the options for those seeking a job who are concerned about their privacy? Can someone refuse a background check and still expect to be hired?

The privacy experts doubt it. As background checking becomes more commonplace, they expect it will become impossible to avoid a check and remain a viable candidate. Companies are increasingly unwilling to take risks on candidates with unknown pasts. And for those who admit criminal histories, advocates say their past activities will brand them and keep them locked out of the job market.

"What we need to be careful of is that we will end up with a scarlet-letter society where people can't find employment," said the Electronic Privacy Information Center's Hoofnagle.

For most applicants, the reality is that finding a job has become a less-private venture. The companies running the checks advise those applicants to be up-front about their pasts. Lee said 9 percent of all potential employees ChoicePoint checks turn up with criminal convictions they failed to document in their applications. It is the issue of honesty, he says, that prevents them from getting hired.

"Most of these people don't get turned down because of their records, but because of their failure to disclose their records," he said.