Focus and Banking & Finance

New business helps clients do background checks

November 7, 2014
| By Pete Daly |
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If there’s a game like Russian roulette that practically all small employers play once in a while, it’s called “hiring.”

LaKhaun McKinley, the founder of Screen Past, likes to quote a statistic from the U.S. Chamber of Commerce: 30 percent of all business failures are caused by employee theft.

That challenge to employers is the basis for Screen Past, launched in Grand Rapids recently as a service for employers, landlords or nonprofit organizations that need to check an applicant’s background but aren’t sure how to go about it legally.

“From the employment standpoint, there are a number of restrictions on what you can ask,” said Bob Stone, a partner at Smith Haughey Rice & Roegge law firm in Grand Rapids and the firm’s expert on labor and employment law.

“You can get into trouble under discrimination laws for (asking for) things like arrest records.”

That’s because nationwide research has shown that certain segments of the population tend to be arrested more often, suggesting some discriminatory bias. However, an arrest is not a conviction.

“Conviction records are a different deal. Generally, you can ask about conviction records,” said Stone.

Conviction records are a public matter in Michigan. Anyone can go online to to find out if a certain individual has ever been convicted of a felony in Michigan. The data includes the date of the offense, where it occurred, the actual criminal charge, and in some cases, a mugshot of the individual. OTIS stands for Offender Tracking Information System; many state governments have something similar online.

Some of the district courts in Michigan, including the 61st in Grand Rapids, have a records search tab on their websites, available free for public use.

Stone noted many employers put on their standard application form a request for authorization from the individual to do a criminal background check. The permission form requires a signature from the job applicant.

“That’ usually the best way to do it,” he said.

Some business owners or landlords will go further and do a credit check, “which opens up a whole new can of worms” in regard to state and federal laws, said Stone.

The federal Fair Credit Reporting Act has many requirements in this regard, including that the employer or landlord must provide the applicant with copies of any third-party credit reports it receives.

“There are pretty serious consequences if you don’t comply with it,” said Stone.

Stone said he suspects that most small employers, when hiring for low-level jobs, don’t go beyond a criminal background check. And the reason they do that much, he said, could be the  fear of being sued later if someone hired without a criminal background check turns out to have one, and subsequently victimizes the employer’s customers or other employees.

According to the Society for Human Resource Management, two federal laws protect employees from unauthorized or discriminatory use of background checks: the Fair Credit Reporting Act of 1970 and Title VII of the Civil Rights Act of 1964.

The Fair Credit Reporting Act specifically authorizes employers to obtain a consumer report for employment purposes from a third-party consumer reporting agency. It requires employers to clearly disclose to the individual, in writing, that a report may be obtained for employment-related purposes and to secure the individual’s written authorization.

The Society for Human Resource Management says that prior to taking any action based on the information in the consumer credit report, the Fair Credit Reporting Act requires the employer to provide the applicant with notice of an adverse action.

Title VII of the Civil Rights Act prohibits employment discrimination based on race, color, religion, sex or national origin. SHRM says it bars employment decisions based on neutral policies, tests or selection criteria, such as credit or criminal background checks — unless those policies, tests or standards are job-related and necessary for that business.

Title VII also prohibits the use of selection criteria such as criminal or background checks in an intentional way, such as subjecting only certain classes of people to them, or evaluating skills differently based on the race, sex, etc., of the specific applicant.

McKinley said Screen Past provides the forms needed by businesses or organizations that are hiring or accepting volunteers, particularly forms requesting an applicant’s permission to do certain kinds of background checks.

He said some small businesses skip the background check. Some don’t want to do the background check because it is tough to find applicants for the job and they don’t want to “scare anyone off,” he said.

But he pointed out that is a big gamble, as Stone also mentioned. Ignorance of the applicant’s background could blow up in the employer’s face later if the individual causes damage, steals from the company, or victimizes customers or other employees.

McKinley said Screen Past ( can perform the background check for its clients, or provide the information on where to search and the necessary forms.

“It’s pretty easy once you have everything you need,” he said.

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