Negligent hiring: are hospitals vulnerable?

Historically, an employer has been held liable for the criminal acts of his employee if one could show that the employee was acting within the scope of his/her employment. Today, an employer can be held liable for crimes committed by an employee even if those actions are not job-related. Injured

persons are mow claiming that employers are guilty of "negligent hiring." They contend that employers are liable for damages caused by their employees if they fail to conduct a thorough pre-employment background investigation of employees who later commit crimes. Health care facilities and other organizations that invite the public onto their premises have a heightened responsibility to protect their patients and guests from the criminal acts of their employees. Yet one study shows that only one in five hospitals checks the criminal records of job applicants. In many instances, employers who attempt to investigate the background of job applicants are thwarted in their efforts by previous employers who refuse to divulge vital information. More and more, employers who provide "damaging" information on job applicants find themselves being sued for invasion of privacy.

Since 1979, when Avis Rent-A-Car was judged guilty of negligence for failing to discover that an employee who committed rape and had previously committed other crimes, employers have been wrestling with the issues of negligent hiring, negligent supervision, and negligent retention. In recent years, a growing list of employers have been found guilty of inadequate pre-employment screening.

* In Rhode Island, a security company was held liable for employing

an individual who was judged guilty of conspiring to

steal gold from one of them firm's customers.[1]

* A Florida appellate court ruled that a condominium manager (employer)

could be held accountable for the negligent employment

of a maintenance person who entered one of the company's condos

with his pass key and attacked a woman there.[2]

* A Forth Worth, Texas cab company was held liable for the negligent

hiring of a taxi cab driver who raped, sodomized, and

robbed a female fare.[3]

* A Virginia court ruled that a church could be held liable for the

negligent hiring of a worker who was charged with raping and

sexually abusing a child. In this case, the appellate court stated

that the church knew or should have known that the employee

was on parole for a conviction of sexual assault at the time he was

employed.[4]

* An Indiana motel was ordered to pay compensatory and punitive

damages of $750,000 to a guest who was beaten and severely injured

by a security guard whose violent reputation was known by

the employer.[5]

These case succinctly illustrate the importance of carefully and thoroughly screening job applicants. Hospitals, religious institutions, and other employers who invite the public onto their premises must be particularly careful. In fact, courts have bound that hospitals enter into an implied contract with their patients whereby the hospitals assures the patient that it will employ competent and reliable employees.[6]

The Development of the "Negligent Hiring" Doctrine

Historically, an employer has been held liable for the criminal acts of his employee if one could show that the employee was acting within the scope of his/her employment. Consequently, lawsuits were frequently brought against employers under the theory of respondent superior, a doctrine that holds the employers liable for the negligent, on-the-job actions of his/her employees.

Recently, a subtle change in the law has occurred. Today, employers can be held for the criminal actions of their employees even if those actions are not job-related. More and more, injured persons claim the employer is guilty of "negligent hiring." This theory appears to hold an employer liable for damages - to employees and others - if the employer failed to conduct a "reasonably proper" pre-employment background investigation of an employee who later causes damages. Legal theory also seems to hold an employer liable for an employee's actions if the employee is kept on the payroll when the employer knows of - or reasonably can suspect the employee of - criminal or tortious behavior in the past, present, or future.[7]

Are Hospitals Guilty of Inadequate Screening?

In July, 1989, a nation-wide survey of human resource managers was conducted to assess the degree and type of screening that health care institutions use to detect "high risk" job applicants. The research instrument was designed, pre-tested, and mailed to 395 randomly selected human resource managers listed in the 1987-88 membership directory of the American Hospital Society for Healthcare Human Resources Administration of the American Hospital Association. Responses to the survey totalled 93, representing a 23.5 percent response rate. Fifty-eight of the respondents work for private hospitals; thirty-two are employed by public facilities; and three failed to indicate the type of facility for which they work. A breakdown of the respondent by size of institution appears in Table 1.

Table 1
Side of Hospital Represented in Survey
No. of Beds   Respondents   No. of Employees   Respondents
  0 - 199        33            0 -  399            23
200 - 399        32          400 -  799            28
400 - 599        19          800 - 1199            16
600 - 799         5         1200 - 1599             7
800 - Over        4         1600 - Over            19

The data in Table 1 show that hospitals of various sizes are represented in the survey. The smallest hospital included in the survey employs 130 people and houses 27 beds; the largest included in the survey employees 15,000 people and houses 2,789 beds.

Each survey respondent was asked to indicate the various screening devices used in checking the backgrounds of job applicants for 14 selected positions. A summary of the findings appears in Table 2.

[TABULAR DATA OMITTED]

Analysis of Data. The figures in Table 2 show that hospital HRMs primarily rely on four screening tools in checking the backgrounds of job applicants: information contained in the application form, the pre-employment interview, letters of reference, and phone calls to previous employers. For some positions, the scrutiny of licenses, diplomas, and certificates is a significant factors in screening job applicants. Only about 20 percent of the respondents routinely check the criminal records of job applicants, and relatively few require drug testing as a part of the application process. Interestingly, applicants for security jobs are much more likely to be subjected to drug testing than other job applicants, and there is a greater tendency to review the criminal records of security job applicants than applicants for other positions.

Nine hospitals included in the study require each applicant to provide a health history and pass a physical examination. Three hospitals require a tuberculosis exam; one requires rubella screening; and three routinely administer personality tests to applicants for jobs that have direct contact with patients. One respondent routinely checks each applicant's drivers license through his/her State's Division of Motor Vehicles.

Shortcomings of Traditional Screening Tools

Traditional screening tools such as letters of reference, personal interviews, data sheets, and application forms are generally inadequate in preventing liability for negligent hiring. In fact, these instruments are not designed to detect tendencies toward violence or other antisocial patterns of behavior.

Although the personal interview is the most commonly used screening device, it is often the weakest. While it allows the interviewer (employer) to assess the interviewee's (applicant) social skills and communication abilities, it cannot detect honestly or trustworthiness. Application for employment forms have their limitations too. Often the applicant will omit details, fail to list brief stints of employment, or give a nebulous reason for leaving a job. In short, the application form is designed to create a favorable impression rather than raise red flags.

Since the applicant is usually allowed to select references to be contracted by the prospective employer, s(he) will always list individuals who will provide a positive - if not glowing - recommendation. Even when names are not provided by the applicant, references tend to be positive because they don't want to be charged with libel or slander, or because they are unaware of an applicant's criminal background.

Like the application form, a resume is designed to elicit a positive response from the prospective employer. But should an employer assume that an applicant's resume is accurate? Probably not, according to Equifax Services of Atlanta, Georgia, a company that specializes in checking the backgrounds of applicants for its clients, an audit of 100 resumes submitted to Equifax Services by one client revealed that 68 of them contained 129 items of erroneous information, this single audit showed 41 incorrect dates of employment, 26 incorrect dates of education, 11 instances of incorrect salary, 11 nonexistent employers, and 7 incorrect grade point averages.[8]

What information Do References Provide?

In some instances, employers make poor hiring decisions simply because they don't have enough information. Previous employers, in particular, are often reluctant to provide detailed information to a prospective employer because they fear that the applicant will file defamation charges. In some states, the law does not protect the rights of an employer to respond frankly to a request for information about a former employee. For example, in Carney v. Memorial Hospital, a former hospital employee claimed that he had been "terminated for cause." Although the hospital argued that its statement was not defamatory, the New York Court of Appeals said the plaintiff was entitled to a full trial in which a jury should decide whether or not the statement "terminated for cause" was defamatory.[9]

Similarly, a Pennsylvania court ruled that a former employee had a legitimate defamation claim against his former employer who said that the employee had "suddenly resigned." In this case, the court found that the language suggested that the employee resigned under a veil of suspicion or scandal.[10] Because employers lack legal protection in many jurisdictions, and because courts permit jury trials on defamation charges, some employers have adopted a policy of providing little, if any, information on previous workers. As a result, prospective employers are hindered in their search for information that might call attention to "high risk" applicants.

Hospital References: Survey Results. Hospital HRMs not only seek information on job applicants, they also are asked to provide information on previous employees to prospective employers. Consequently, this survey of hospital HRMs sought to determine the kinds of information that healthcare institutions normally provide. The data in Table 3 show the number and percent of survey respondents who routinely provide various types of information to prospective employers.

Table 3
Information Provided By Hospitals to Other Employers
(93 respondents reporting)
                               Number of   Percentage of
Type of Information            Responses     Responses
Dates of employment               93          100
Reason for leaving                48           52
Willingness to rehire             48           52
Rate of pay                       37           40
Attendance record                 36           39
Performance appraisal rating      25           27
Cooperation with supervisor       18           19
Attitude toward work              17           18
Discipline problems               16           17
Overall strengths/weaknesses      16           17
Character                         11           12
Health                            10           11
Garnished wages                    0            0

These figures clearly reveal the types of information that hospital provide when contracted by prospective employers. All survey respondents provide the dates of employment; non provides information on garnished wages. Thirty of the respondents provide only the dates of employment and job title unless the applicant (former employee) has signed an authorization to release other information. Relatively few respondents release any type of information on a former employee's health, discipline problems, or character. In short, the information needed by prospective employers is not made available to them. In all likelihood, refusal to provide more information can by attributed to the risk of incurring libel or slander lawsuits brought by former employees.

Safeguards: How to Avoid Negligent Hiring

HRMs face quite a dilemma. If they fail to thoroughly scrutinize the backgrounds of applicants, they run the risk of negligent hiring. If they investigate too thoroughly, they may violate an applicant's right to privacy. In short, the prudent HRM must develop a screening procedure that will protect the employer without jeopardizing the rights of job applicants. The following guidelines should prove helpful:[11]

* Ask you attorney if your state allows you to inquire into police

records without the applicant's permission. If it does, check for

previous crimes.

* Don't employ anyone whose criminal conviction bears on the job

you are attempting to fill.

* If a license is required for the position, make certain the applicant

is licensed. Also, make sure the license hasn't expired or been

revoked.

* Inquire thoroughly into any gaps in employment.

* Ask references if the applicant abuses alcohol or drugs, or is

prone to violent behavior.

* Keep a written record of what references say.

* Don't take references over the phone unless you verify the name

and position of the caller. (Verification can usually be achieved

through call-back.)

* Check several references.

* Always ask former employers why the applicant's employment

ended.

* Consider using an integrity test to detect proneness toward theft,

drugs, and violence; e.g., the London House Personnel Selection

Inventory

* Maintain liability insurance in case you lose a negligence lawsuit.

Summary

Healthcare institutions, like other employers, are increasingly being held liable for the negligent hiring of employees who cause injury to third persons. In fact, because hospitals invite the public onto their premises, they have a special obligation to employ competent, trustworthy employees. Even so, healthcare facilities tend to rely on four traditional pre-employment screening tools when evaluating job applicants: the personal interview, letters of reference, application form, and phone calls to previous employers. All too often, these devices paint a glowing-rather than an accurate - picture of the applicant.

All evidence suggests that employers typically have inadequate information on which to base hiring decisions. Either they fail to thoroughly investigate the backgrounds of applicants, or they are thwarted in their search by employers who refuse to divulge pertinent information. Based on a nation-wide survey of healthcare institution, it appears that a growing list of employers have adopted a policy of not providing complete information on previous employees due to a fear of being sued for libel or slander.

Without question, HRMs must walk a tightrope, balancing the need for protecting their employers from negligent hiring on one hand, and avoiding invasion of privacy lawsuits on the other. To a great extent, this can be achieved by modifying the pre-employment screening process to include an analysis of criminal records (where permitted), proper questioning of previous employers, detailed record-keeping, and the use of integrity tests that detect tendencies toward theft, drugs, and violence.

Notes

(1.) William J. Connelly, "How to Navigate the River of Legal Liability When Hiring," Personnel Journal, March, 1986, p.38. (2.) Jane Easter Bahls, "Your Worker's Crime May Make You Pay," Nation Business, December, 1988, p.38. (3.) Salinas v. Fort Worth Cab & Baggage Company; 725 S.W. 2d. 701 (Texas, 1987). (4.) J.V. victory v. Tabernacle Baptist Church, 372 S.E. 2d. 391 (Virginia, 1988). (5.) Connelly, op. cit., p.37. (6.) Bahls, op. cit., p.38. (7.) Connelly, op. cit. (8.) "A tissue of lies," Fortune, November 9, 1987, p.12. (9.) Lawrence E. Dube, Jr. "Employment References and the Law," Personnel Journal, February, 1986, p.88. (10.) Ibid. (11.) Bahls, op. cit., pg. 39.

Dr Jerry Kinard is Dean of the School of Business and Palmetto Professor of Business at Francis Marion College. He is the author of two textbook: Management, Published by D.C. Health, and Cases in Production and Operations Management, published by chales E. Merril Publishing Company. He has published articles in numerous journals, including Personnel Journal, Health Car Management Review, Long Ranage Planning, Chemical Engineering Supervisory Management, American Business Review, Health Progress, The Healthcare supervisor, Business, Planning Review Journal, and Public Personnel Management.

Stanley R. Renas is on the faculty of the College of Business Administration of Western Kentucky University. He has written numerous articles on management and earned his doctorate in business administration at Georgia State University. In Addition, he has served as a management consultant to government and industry.