The compliance challenges of government regulations are putting organizations on edge. Outsourcing can help.
By Katie Kuehner-Hebert
As employers have to comply with ever-increasing, ever-changing hiring requirements from the federal government, state government and now even municipalities, screening vendors
are filling a critical need to ensure employers’ policies and procedures are up-to-date to minimize lawsuits, heavy fines, and penalties—not to mention keep their workplaces as safe as possible.
According to the 2013 HireRight Employment Screening Benchmarking Survey and Report, regulatory changes and compliance was ranked as the second top business challenge, and improved regulatory compliance was cited as the third top benefit of conducting employment screening.
“Organizations background screen for many reasons, among others to help ensure the safety of the populations they serve, including their customers, patients, workforce, and the general public, and the security of their data and facilities,” says Jenifer DeLoach, general manager North America for HireRight.
Employers also are concerned about ensuring that they comply with general screening regulations, as well as any applicable industry-specific screening regulation, as failure to do so risks potential liability to the business, including penalties and loss of licenses, among other things, DeLoach says.
“By way of example, before partnering with HireRight, one healthcare organization was subject to a routine federal audit where it was discovered that one current employee had outstanding sanctions that prohibited the individual from working for healthcare providers that accept federal funds,” she says. “In the end, the government fined the organization $500,000.”
The Proof Is in the Pudding
Jana Graham, director of talent acquisition at AGL Resources knows the importance of keeping up with compliance requirements, particularly the energy firm’s specialized requirements.
AGL has a diverse portfolio of companies, including seven natural gas utility companies, a wholesale distributor of natural gas to other utility companies, a unit that develops and operates underground storage facilities for natural storage, and a retail company that sells natural gas and related home services such as appliance repair and line protection plans.
With such a portfolio, AGL has many workers in “safety-sensitive” positions who work with hazardous materials, and many of those also operate specialty equipment or drive trucks that require specialized training and certification to obtain a specific commercial driver’s license, Graham says. As such, there are a number of additional compliance requirements for these positions—on top of the typical hiring compliance requirements that most industries face.
These positions require specialized drug and alcohol testing, which differ from drug and alcohol testing requirements for most other types of positions, Graham notes. Under the federal Department of Transportation (DOT), the requirements for safety-sensitive positions in the field come from the Pipeline and Hazardous Materials Safety Administration, and the requirements for operators of trucks or specialty equipment come from the Federal Motor Carrier Safety Administration.
These two entities have very specific drug and alcohol testing requirements for both pre- and post-employment, and their requirements differ from each other. For pre-employment screening, the DOT requires companies to test for a wider range of drugs, and they have a minimum number of drugs a company can put on a panel to be analyzed. The two agencies also require testing after candidates are hired and on the job for three reasons: random testing on a quarterly basis, reasonable suspicion, and post-accident. The panel of required drugs to be tested can be different, depending on the reason. The reports and audits from both agencies are vary.
“If we don’t comply there could be very severe fines,” Graham says. “We have a higher standard than the general population because if a gas pipeline ruptures and it was determined that the employee responsible was under the influence of drugs or alcohol, there are very serious implications. We want to protect our customers, our other employees, and the general population.”
Moreover, AGL also has to perform additional background checks and driving history reviews on every job candidate applying to drive a truck or operate specialty equipment, and if they are not consistently performing these reviews for all types of employees, they face noncompliance with the Equal Employment Opportunity Commission’s (EEOC) Affirmative Action guidelines, she says.
Both series of compliance requirements are made even more challenging if an employee from another part of the organization—say from a back-office administrative position—transfers to a safety-sensitive, driver or specialty equipment operator position, Graham says. AGL has to make sure they receive all of the additional background checks, driving history reviews, one or both types of specialized drug and alcohol pre-employment screening panels and are also put on the list for quarterly random drug and alcohol testing.
AGL would never have the expertise to perform these screening tests, reviews, and background checks on its own and relies on Aurico Reports.
“Compliance is a critical component of any background screening program,” says Ben Goldberg, Aurico’s president. “It is essential that companies create consistent policies, procedures, and methods to align with federal and state specific rules, regulations, and guidance.”
The feat is made even more challenging, as compliance is an “ever-changing process,” with requirements changing weekly, if not daily, on federal, state, and even municipal levels, Goldberg says. Aurico stays connected with industry organizations, monitoring changes in state and federal rules, and partners with leading employment law firms to support its clients.. The firm communicates these changes via blogs, compliance updates, newsletters, and webinars.
Such monitoring is critical for AGL, Graham says.
“A good vendor partner will help to make sure you are staying up to date on things that are hot off the press, that would possibly make us change our internal practices or policies,” she says.
For example, Graham explains, in February the EEOC and the U.S. Department of Labor’s (DOL) Office of Federal Contract Compliance Programs (OFCCP) determined that employers might be engaging in discrimination if they use criminal background checks as one of the determinants of whether to hire a prospective employee, because use of such screening might be disparately impacting minority job candidates. The EEOC is considering whether to file lawsuits against employers whom the agency believes perform criminal background checks in a way that results in discrimination.
An employer can avoid such a lawsuit, the agencies notes, if it demonstrates that it rejected applicants based upon criminal history because of job-related reasons, and was “consistent with business necessity.”
AHRC New York City, one of the largest voluntary service provider agencies funded by the New York State’s Office for People With Developmental Disabilities (OPWDD) uses Sterling Infosystems Inc. for vetting job candidates, says Sharon Fong, the agency’s director of organizational and employee development.
Under the mandates of two of the agency’s largest funders, OPDD and the New York State Department of Education, AHRC New York City must fingerprint all job candidates that will be working with individuals whom the agency supports. The agency also receives forensic results should employees have any incidents of arrests while they work there
In addition to complying with requirements mandated by OPWDD and other funders, AHRC New York City goes above and beyond and utilizes Sterling Infosystems to perform additional background checks as a matter of internal policy, Fong says.
“We serve some of the most vulnerable population and for that reason, we take extra precaution to ensure their safety and soundness,” she says.
Sterling Infosystems runs every AHRC New York City job candidate through sexual offender databases and child abuse databases. If a candidate is applying for a position to work directly with individuals with disabilities or as receptionist at one of its facilities such as a school, the vendor also performs a Social Security trace, academic credentials, and a licensing review, in addition to a criminal check. Candidates for administrative positions in the main office, such as human resources, finance, or the mail room, as a matter of internal policy are subjected to a Sterling background check that includes a criminal background, a Social Security trace, academic and license review.
The agency has more than 4,000 employees of which 2,400 are permanent and 1,600 are per diem, predominantly home care staff, and every job candidate has some sort of background check, whether it’s for mandated reasons or internal policy. The negative ramifications for not doing so would just be too great, Fong says.
“Few people in New York City haven’t read or heard about a series of investigative articles about services to people with intellectual and developmental disabilities, most of them about a tragic fire in upstate New York at a state-run facility, in which a significant number of individuals were killed in the fire,” she says.
When the state investigated the event, officials discovered that the facility’s employees had not been properly checked by the state agency, and there were other issues around potential physical and sexual abuse,” Fong explains. As such, there has been “a tremendous amount” of public and political scrutiny of facilities and organizations that provide services to this population, as they often reside in such facilities, and as such, the potential for abuse if very high.
“Because of that scrutiny, the impetus to check potential employees is all the more critical,” she says. “As an agency, philosophically we always want to ensure absolute safety and soundness, but add to that the increased public and political scrutiny, you can only imagine that we dot our I’s and cross our T’s two or three times.”
As a nonprofit providing social services, there is “no way” that AHRC New York City could possibly have the expertise or any access to do criminal and background checks, and because of that, agency “has no choice” but to outsource, Fong says. The vendor has been willing to work with the nonprofit “to think through some of the pricing, which has been valuable to us,” she says. “The additional Sterling checks are not paid by our funders, so it’s an unfunded activity that we do voluntarily.”
Bill Greenblatt, Sterling Infosystems’ chief executive officer, says that companies in some industries are required to do background checks under federal law, but by and large, most companies are not required by statute. However, case law “drives the need.”
“Under the doctrine of negligent hire, businesses must do background checks, otherwise they are considered negligent,” Greenblatt says. “If they hire a worker who then harms somebody at work, the business could have reasonably known they had a violent history if they had checked them out before hiring them.”
While the decision is ultimately up to clients, Greenblatt recommends that every business should screen everybody, “as it’s all about safety in the workplace.”
Not only do employers need vendors that up on the latest changes in their industry’s particular compliance requirements, but also the latest changes in the Fair Credit Reporting Act, which governs how screening vendors must conduct background checks of prospective employees, he says.
While compliance has always been a top concern for heavily regulated industries, recent EEOC guidance and lawsuits have pushed less regulated industries, such as retail and food services, to also have a renewed focus on compliance when it comes to their background screening program, says John Lawrence, vice president of marketing at General Information Services. (GIS).
Greenblatt agrees. “You’ve really got to be totally buttoned up and knowledgeable in every nook and cranny of the FCRA if you don’t want to be subject to lawsuits. Recently K-Mart was sued with over 60,000 alleged class members.”
HireRight’s DeLoach says that screening firms can also provide management and reporting capabilities that employers can use to conduct mandated program audits and produce supporting reports and documentation.
Staying on I-9 Compliance
Another area of compliance where screening companies can assist employers is I-9 management and U.S. employment eligibility verifications, DeLoach says.
“The government is conducting increasingly stringent audits and imposing increasingly stiffer penalties for organizations that have employed workers who are not eligible to work in the U.S.,” she says.
While the U.S. Immigration and Customs Enforcement in 2007 conducted 250 I-9 audits, in 2012 there were more than 3,000 audits with fines totaling approximately $13 million and arrests of 238 managers on charges of hiring illegal immigrants.
“Even for employers not required to do so, conducting through an authorized screening provider an E-Verify check to confirm U.S. employment eligibility can be an important screening practice that can help demonstrate the company is making a good faith effort towards compliance,” DeLoach says. “Also, managing the I-9 process electronically through a screening provider helps employers improve compliance and process management by leveraging technology to confirm that forms are completed, updated and stored correctly, and to be able to conduct audits and run reports quickly and efficiently.”
Multiple states have passed laws requiring different types or sizes of businesses to use E-Verify or a similar program, says GIS owner and CEO Raymond Conrad. State legislation in pre-employment background screening is more active than ever before, a particular challenge for employers with operations in multiple states.
Clients can stay informed through GIS’s EEOC webinars every other month or through its newsletter and website that features a complete list of updates and compliance-focused articles.
“Background screening providers that have great compliance assistance and stay on top of upcoming legislation and regulations on behalf of their clients have always had an advantage, but this is even more true today,” Conrad says. “Between EEOC activity, FCRA authority changing over to the Consumer Financial Protection Bureau, ‘Ban the Box’ proposals across the nation” to eliminate questions on employment applications that ask whether the applicant has been convicted of a crime or been incarcerated, “and enough state and industry-specific background screening legislation proposals to make the everyday HR practitioner’s head spin, compliance assistance is gaining importance in a substantial way. ”