Corporate Intelligence Consultants (CIC) is dedicated to helping clients navigate the complexities of background checks and ensuring full compliance throughout the hiring process. Recently, we identified that some employers may not be aware of the importance of thoroughly reviewing completed background check reports. To address this, CIC has implemented changes to the completion emails, encouraging employers to carefully examine the entire report to verify that the information aligns with their established hiring criteria.

Complete, not Clear

While the status of "Complete" may initially seem to indicate that the report is clear of any potential adverse information, it merely signifies that the background check has been researched, verified, and finalized for employer review. There may still be records or other details in the report that do not align with your company’s hiring criteria and require further attention. CIC does not play a role in the decision-making process due to the wide range of requirements across industries and businesses. Employers should evaluate each report in accordance with their own policies and procedures to make the best choice for their company.

Why this Matters?

One potential risk of companies obtaining but not reviewing background screening reports is the risk of a negligent hiring case. Negligent hiring is a serious concern that can lead to significant legal, financial, and reputational damage for employers. One common cause of negligent hiring is the failure to thoroughly review background check reports before making hiring decisions. In today's competitive job market, employers rely on background checks to assess the qualifications and reliability of potential employees, but neglecting to review these reports can have harmful consequences.

The Legal Risks for Employers

When an employer does not review a background check report with potential adverse information and hires an individual who later causes harm (e.g., committing fraud, violence, or theft), they may be exposed to legal action under the theory of negligent hiring. The legal issues involved can be wide-ranging:

1. Vicarious Liability: If the employee engages in wrongful behavior that harms others in the course of their employment, the employer may be held responsible for the actions of their employee, even if the employer didn’t directly cause the harm.
   
   
2. Breach of Duty of Care: Employers are required to exercise reasonable care in selecting employees, especially for positions where public safety, customer security, or financial interests are at stake. Conducting a background check is not enough if there is not a clear review policy to ensure you are hiring within the scope of your policies and procedures.
   
   
3. Discrimination and Fair Credit Reporting Act (FCRA) Violations: The FCRA regulates how employers use background checks in the hiring process. If an employer does not follow the proper procedures when considering the information from a background check (such as failing to notify the applicant before making an adverse decision), they could face legal consequences for not complying with the FCRA.

Negligent Hiring in Action

Consider a situation where a company hires a delivery driver without thoroughly reviewing their background check. The employer's hiring criteria specify that they do not hire individuals with a history of violent crime. The background check reveals that the applicant has a conviction for assault, but the employer fails to review the report before making a hiring decision. A few months later, the delivery driver is involved in a violent incident while on the job, causing harm to a customer. In this case, the company could be sued for negligent hiring, as they failed to consider the relevant criminal history before making their decision. Not only could the company face legal claims for damages, but they could also suffer reputational harm that could impact future business.

Action Steps

Negligent hiring is a preventable issue that can have far-reaching legal and financial consequences for employers. Conducting a comprehensive background check is not enough if employers are not using the information to make informed hiring decisions. To ensure you are prepared to avoid negative outcomes in the hiring process you should:

• Collaborate with your labor attorney to review your policies and procedures, ensuring you identify any crimes or other factors that may disqualify an applicant. Their expertise will help guide your company through various regulations, including those related to the ADA, EEOC, FCRA, and any industry-specific requirements.
• Carefully examine each component of every background check to ensure the results align with your established hiring criteria. If discrepancies arise, it may be necessary to proceed with additional steps such as the Adverse Action process, Individualized Assessments, or other state-specific procedures.

Contact CIC

If you need assistance reviewing and understanding the details of a completed report, CIC is here to provide expert support. We are committed to keeping employers informed and up to date on the latest trends and best practices in background screening to make the best hiring decisions for your company. Let CIC be your trusted partner in ensuring your hiring process is thorough, compliant, and efficient. Feel free to reach out with any questions — we are ready to assist you every step of the way.