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Background Checks: More Important Than You Think

November 20, 2018 | Blog

Making sure that you are hiring the right candidates is more important now than ever. It’s difficult to calculate the costs of replacing an employee. Studies on the matter don’t much agree. However, it’s safe to say that replacing a bad hire can cost you at least 16% of that hire’s annual wage. The more advanced the position, the higher the cost to fill it, and that doesn’t take into account the hidden costs that can accompany an awful hiring decision. A bad decision can cost you in stolen cash and property, legal fees, and damage to your company’s reputation that you may never be able to recover from. Let’s take a look at some recent examples.

Uber

Black digital print over white

The odds are good that you have seen a news story about an Uber driver behaving deplorably. The headlines are so frequent they are hard to miss. Perhaps you read about a driver outside of Atlanta raping a 16-year-old on December 11, 2017. Maybe it was the Lebanese driver that murdered a British Embassy staffer in Beirut a few days later. The UberEATS driver that shot someone to death in February of 2018?

Uber is a company that has actively opposed regulations on background checks, actively campaigning against a proposition to require fingerprint-check for drivers in Austin, Texas. Indeed, as the bill passed, Uber ceased its business in the city until the law was overturned.The PR record is bad, and frankly, there isn’t any way to tell how many of these could have been avoided by better background screening. We know that the driver in the Beirut incident had a criminal background, but sources indicate that background screening might not have uncovered this. However, the Beirut occurrence is one of many.

 

Uber preferred to employ their own background check system. However, that system has clearly left things to be desired. Multiple reports indicate that Uber has recently begun to alter their screening process. Hopefully, this will help them avoid future disasters.

JP Morgan Securities

We expect financial institutions to hold themselves to a higher standard. Fortunately, the government holds them to a higher standard for us. A report from November of 2017 states that JP Morgan, one of the most powerful and storied of all financial institutions in America, failed to properly screen 95% of the non-registered employees for its securities division for a period of nine years. This oversight has cost the bank $1.25 million in a claims settlement brought by federal regulators.

Hand about to bang gavel on sounding block in the court room

 

University of Kentucky

This is a unique case of an employer who didn’t fail to perform a proper background check but rather performed their background check improperly.

C. Martin Gaskell was a lead candidate to head the observatory at the University of Kentucky. However, in the process of searching his social media posts, the school found incidences of his opinions on creationism. This potentially led to them offering their post to another candidate, which ultimately led to Gaskell suing the University for religious discrimination. The school settled the suit for $125,000.

The background check landscape in this country isn’t easy to navigate. There are often narrow passages of legality that require a deft hand to maneuver. In addition, laws are different from one state to another, sometimes from one city to another. To avoid missteps like those detailed here, consider hiring someone to perform pre-employment screening for your business. You cannot afford the potential fallout.