When finalizing a contract with a client and hearing the words “of course we will need a criminal background check done on each candidate”, it will mean to some of you an added expense directly affecting your bottom line. To others, these words will denote an administrative nightmare and delays in making successful placements. Finally to others these simple words will mean the aggravation of dealing with legal issues and ethical dilemmas. Frankly, I am sure that your clients are not part of a cabalistic organization that is intent to cause you anguish and ulcers, regardless if that is the outcome.

Why do clients have the requirement for a background check? What do I do with the information once I have it? Am I even legally allowed to ask for this information? Why can’t I just spend the day golfing? I am sure you have all asked yourselves these questions over and over again. At least once a week I receive a call from customers asking all these questions (except the golfing one – I am just not that good a golfer) and today I would like to give you a brief overview of  what is permitted and what you can and cannot do with the information once you have it.

Although Pre-Employment Screening can consist a multitude of elements **from referencing to immigration checks ** from educational verification to employment history checks** the two areas that I will concentrate on will be criminal record searches and credit searches.

Both Criminal Record and Credit reports are perhaps the most common searches ordered today. Due to their low cost and the information they contain, they provide the client with information useful in making a decision regarding the security of hiring a particular candidate.  I emphasize the word security quite purposefully. Other Background check elements provide for verification of provided information – and the information developed in the course of handling is what we would call qualitative information. How well will they perform on the job? Do they have the education needed?

When it comes to Criminal Record and Credit they obviously provide some qualitative information, but the main question being answered is “will this candidate be a security risk to my organization”?  Imagine if you will, placing a candidate for a customer service position at a large bank. Without the necessary checks for a criminal history or for credit problems to determine the security risk you might not know that the person you are placing has a history of fraudulent activity or because of severe credit problems has a financial motive to commit fraud.

The news is full of articles pertaining to data theft by employees; Morgan Stanley, the well-known Hedge Fund has had multiple cases of customer data being stolen by employees. In 2007 Seattle police have charged a former Boeing employee with 16 counts of computer trespass for the alleged theft of 320,000 files, as well as leaking them to a Seattle-area daily newspaper. Boeing estimated that the potential financial damage if some of the documents fell into the wrong hands could range between $5 billion and $15 billion. At approximately the same time it was reported that financial processing company Fidelity National Information Services revealed that a subsidiary’s employee stole 2,300,000 consumer records containing credit cards, bank accounts and other personal information. And so on, it is not hard to find examples.

Employee criminal activity is not limited to data theft.  In 2007 the Toronto Star reported that Walmart experiences 3 Billion dollars a year in thefts – 48% of that is due to employee theft. In 2008 A 43-year-old former employee of Woodbine Racetrack has been charged with supplying steroids and other illicit drugs to the horse racing industry, on Dec 21^st a janitor of a nursing home was charged for the sexual assault of a nursing home resident.  It turns out the employee had a history of 22 criminal convictions.

Although no amount of background check will guarantee that these events will not occur, the old adage of “the best defense is a good offence” holds firm in this case. From a best practices standpoint it is prudent to, at a minimum, ensure that employees you hire do not have a history of criminal activity or a financial drive to commit a crime.

As a dedicated watcher of Law and Order I have learned that with every crime there are two main elements – Motive and Opportunity. The opportunity is what we need to look at first when we decide to do a credit check on a candidate. Will the person have access to financial data like consumer credit card numbers or saleable personal information? Will the person have access to cash or have signing authority? Will they have the opportunity to generate their own fees? If so the decision to do a credit check is fairly simple, in fact it may be prescribed by a compliance requirement from a regulatory authority (as in the case of Payment Card Industry). Once the decision is made to do the credit check, what should you look for? For motive you need to look at a financial need for money. Most people are honest enough, but sometimes circumstances push them over the invisible line between right and wrong. When people are in serious financial distress, the motivation factor increases substantially. Understandably, we can all look at our bank accounts and feel that we have a need for more money, especially if you have teenage daughters – but in this case we are looking for a real need for money.

When we discuss motive and opportunity we are leaving out an extremely important element to this process – historical information. Corrections Canada reports that he long term recidivism rate for criminals released from a Federal institution is almost 40%. The John Howard Society reports that the recidivism rate for some sexual offenders is almost 77%.  Put in more real terms, hiring a person with a serious criminal record exposes your other employees, your company’s assets, your clients and quite frankly, your corporate reputation to a serious security risk.

Gathering all this information is a fairly simple process. With an applicant informed consent, it is a simple matter collecting the information and you are done. The easy part is complete. Now on to the most difficult part, what to do with the data.

As with most things in life, analyzing the credit information can be a simple process or more complex. A simple approach is to use the credit score. The credit score is a numerical expression based on a statistical analysis of a person’s credit files, to represent the creditworthiness of that person.  A score is assigned based on scientifically established criteria and is based on the likelihood that a similar person will have financial difficulty in the foreseeable future. For example, 60 % of people with a credit score less than 550 will experience serious financial difficulties whereas only 23% of people with a credit score over 600 will experience financial difficulty in the same period.  Some companies assign a benchmark credit score – for example 600. When applying the score – anyone with a score exceeding 600 is a pass, anyone below is a fail. This type of process does present some inherent issues. A credit score can be  affected by external factors, such as inquiries or address changes. For example, let’s say a person lost their job while living in BC and decides to move to Ontario to look for work their credit score would be adversely affected by the change in address. To worsen the situation they may hunt around for a mortgage causing a number of credit inquiries in a short period of time. These events could push an ordinary credit worthy individual into a position of having a poor credit score.  This brings us to the most complex process of actually analyzing the credit file. Unfortunately, within the confirms of this presentation we do not have the time to go through all the factors that should be addressed during this review, I would be pleased to discuss this with any of you on how to analyze a credit file.

As with the credit information, criminal record information can also be either a simple or more complex process. In simple terms, if you do a search and the report shows no criminal record – then the process is simple. Unfortunately, when you consider that 10% of the general population of Canada has a criminal record then you are going to have to deal with the results of a criminal record check with conviction information.

So, what do you do with the information? Should any criminal record conviction immediately disqualify a candidate from a position? I am pleased to stand here before you today and unequivocally tell you the answer to this question is a simple yes, no and maybe.

Yes, because a criminal record search is also partially an honesty check. When an applicant filled out the application and they were asked if they had a criminal record – more often than we would like to see, people answer no and the results come back that they do indeed have a criminal record. Why? Because they simply do not believe that anyone will check – and unfortunately, in a lot of cases they are correct (remember the janitor referred to earlier?). Dishonesty like this should be an immediate no to proceeding with the candidate.

The no and maybe position of the answer stand together – because each position carries with it various degrees of security risks. Let’s use the example of Peter a 33-year-old office administrator. When Peter was 20, he was convicted of impaired driving. Should this conviction stand in the way of a job today as an office manager? Perhaps not, but what if we change the situation and he has been convicted three times in the last 5 years of the same offence? What if he will be driving a company car? What if instead of impaired driving it was assault? To avoid the possibility of accusations of discriminatory practice, the application of criminal record information must be applicable to the position being applied for.

What is the Bona Fide security risk for the position you are filling? While this may be a relatively easy process for some offences, For example, you would not want people with a history of sexual assault to work in position with vulnerable people or for those with a history of fraud to work in positions requiring high levels of integrity. Most offences are not quite this cut and dried.

How do you determine the security risk to your organization and whether or not there is a  Bona Fide Occupational risk. In 1999 in the case of British Columbia (Public Service Employee Relations Commission) v. BCGSEU the Supreme Court of Canada set out the process to determine a requirement was a BFOR and with a little alteration to be more specific to our situation it provides a framework that can be used to ensure the application of criminal record data to a set standard is free of any discriminatory processes.

a) You need to Establish a rational connection

Is there a reasonable connection between the conviction and the position? You need to identify the general connection between the convictions and the role and responsibilities of the position to determine if it is rationally connected to the performance of the job. For example, a person with 22 assault convictions probably should not work as a janitor in a nursing home.

b) Establish good faith

Did the employer adopt the standard in an honest and good faith belief that it was necessary to the fulfillment of a legitimate work-related purpose?

This step looks at the subjective element of the standard. You need to consider whether the standard was adopted with no intention of discriminating against an employee or group of employees. Just because you don’t like people who drink and drive does not give you a legitimate cause to use that information to deny a person a position based on an impaired driving conviction  in a position not associated with driving.

c) Establish reasonable necessity

Is the rule reasonably necessary to the accomplishment of that legitimate work-related purpose?

In this step you need to examine whether the standard is reasonably necessary. After examining the elements of a position, the level of security risk and the seriousness of a criminal offence is the denying of a person a position a reasonable necessity?

Here are some questions to ask in considering whether the standard is reasonably necessary.

• What level of responsibility does this position carry?
• Will this person work with others?
• Does this person have access to money or signing authority?
• What are my client’s risks?

Although this may seem to be an onerous test, it is actually a fairly simple process. We have developed and are happy to share with you the framework of a matrix that can assist you with this process.

I would like to finish this presentation right back where we started. Although criminal record searches and credit searches may increase your costs and may cause delays and aggravations, the end result is clear – a safer work environment for you, your staff and your clients.

By Daniel Fallows

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