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Illustration by Andy Martin

Behind the Screen

​Things are looking up for the job market: Unemployment rates are the lowest they have been since the Great Recession of 2008, and 77 percent of human resources professionals surveyed in HireRight’s 2016 Benchmarking Report expect organizational growth this year. This expected growth doesn’t only apply to the traditional workforce, though; an increased reliance on contingent, temporary, and contract workers often employed through a third party make up at least 10 percent of the nation’s workforce, according to the U.S. Bureau of Labor Statistics. However, even though almost 90 percent of companies conduct background screening on full-time, permanent employees, this extended workforce may be slipping through the cracks. 

Eighty-one percent of contract and temporary workers are subject to background screening, often through their staffing agencies, but only 31 percent of volunteers, interns, and unpaid workers are screened, and just 13 percent of vendor representatives are subject to background checks, according to the HireRight survey. Screening of third party employees and vendors is a weak link for many companies, says David C. Sawyer, CPP, the owner of security consulting company Safer Places. 

“To me there’s a gaping hole there, and it’s a lot less common,” Sawyer says. “If I’m using a temp agency or have a janitorial service come in at night to clean, or even a guy coming in to repair the copy machine, do I require my vendors to make sure their people are background checked before they send them on to my premises? To me, those are where the holes are now.”

Employers typically conduct background checks to ensure the acquisition of high-quality employees, achieve consistent safety and security, and improve regulatory compliance. But employers also have a duty to protect others from harm by exercising reasonable care when hiring employees, according to Practical Steps for Extended Workforce Screening, a report by Littler Mendelson attorney Rod Fliegel. A number of federal and state background screening laws, as well as contractual requirements and industry compliance, must be taken into consideration when determining which employees should be screened and how. But these guidelines aren’t as clear cut when it comes to the extended workforce, Sawyer notes. 

Laws such as the Fair Credit Reporting Act, which allows an organization to access an individual’s background reports, typically apply only to “employers” and “employees” and don’t necessarily extend to third-party workers, creating a legal gray area. Sawyer says this can become an issue in negligent hiring lawsuits. 

“Say you hired an individual that was known to have a violent past and they hurt a colleague in the workplace, or maybe you didn’t drug test as part of your background screening and the individual has a drug habit and is involved in illegal activities on the premises,” Sawyer explains. “I’m not sure if a jury would hold you to the same standard if these things happened with a third-party employee. But if you invited a contractor onto the premises and didn’t bother to do a background check, that could be seen as negligent.”

Some cases are more cut-and-dried than others. In 1994, a jury found a Massachusetts home-care agency guilty of gross negligence after a contract employee killed a patient and his grandmother. The agency hadn’t conducted a background check on the contract employee, who had six felony convictions on his record and had lied on his employment application. The jury awarded the victims’ family $26 million, the highest amount ever awarded in a negligent hiring lawsuit.

Although the case can be considered an outlier, the extended workforce does present a unique security threat, according to another HireRight report, The Threat of Indirect Labor on Workplace Safety. Extended workforce employees are 94 percent more likely to have a felony record than a permanent hire and are approximately 50 percent more likely to have a misdemeanor record or drug history, the report states. 

“Since so many organizations conduct background checks as part of the standard hiring procedure, applicants with a criminal history are more likely to search for jobs where background checks are not performed,” the report notes. “This often includes staffing organizations that provide temporary or contract labor to organizations that do not require these types of workers to be screened.”

Sawyer explains that third-party workers, such as maintenance and cleaning crews or equipment repair workers, create a unique challenge because they often have unfettered access to the workplace. Many companies also rely on the agencies that actually employ the workers to conduct background checks, which can be a security weakness if both employer and agency have not contractually agreed to specific screening practices. It’s important to be on the same page with the agency about what type of screening is required in the workplace because they may have a different standard of screening, Sawyer says.

Companies also need to take into account more than just the physical presence of a third-party employee in the workplace. How outside companies handle an organization’s digital data—especially third-party vendors and outsourced IT specialists who have access to digital communication and network credentials—is imperative to preventing leaks. The risks of this were made clear when retailer Target announced that hackers were able to collect information on 40 million customer accounts by stealing network credentials from a third-party HVAC company.

“The background check needs to fit the position,” Sawyer tells Security Management. “It really is case by case, and there is no standard. If I were writing a contract for one of my vendors, I’d specify things such as looking at criminal records going back 10 years, checking all jurisdictions at the county court level where the individual has lived, and checking all aliases.” He encourages employers to be as specific as necessary—for example, if a third-party employee will be driving on the premises, the agency should also inspect the employee’s driving history.

Some companies may want to go to the extreme and screen all third-party employees themselves, Sawyer notes. He says he has a client that uses several temp agencies around the country and requires the agency to conduct a background check on potential employees. However, the client feared that the temp agency wasn’t doing a very good job, and, when a second background check was conducted, issues emerged that were missed in the first screening, he says.

Every company should have an established background screening policy for third-party employees, and it should ideally align closely with the screening policy for permanent employees. 

Employers should also familiarize themselves with national, state, local, and industry employment law and compliance expectations by conducting a compliance audit to recognize the differences in workforce sectors. 

Finding trusted staffing agencies that will agree to company hiring policy can be helpful in the long run so contracts and negotiations can be agreed upon early on. In his report, Fliegel suggests that employers “negotiate key compliance requirements in your agreements, including necessary background checks, safety requirements, antidiscrimination pledges, and procedures, including record keeping and wage and hour requirements.”

Sawyer emphasizes that one aspect of background screenings companies often don’t think about is what to do if a background check does reveal an item of concern. The Equal Employment Opportunity Commission (EEOC) encourages employers not to automatically deny someone a position if a felony or misdemeanor shows up in their screening, but to consider the individual case, he explains. (See box on page 62.) 

“I think it’s good for a company to have general guidelines for this situation,” Sawyer says. “You try to avoid that absolute, like saying any felony committed in the last 10 years is an automatic rejection. You’re looking at the circumstances, and the EEOC is pushing hard for employers to do an individualized assessment and make a decision on what the employee says—maybe they say they were young and stupid, or they had a drinking issue and have been part of Alcoholics Anonymous for 10 years and are clean and sober and can demonstrate these things.”