Negligent hiring rulings impact employers

What, me worry? That's the attitude some print providers have when asked whether they thoroughly reference-check job applicants to ensure they aren't hiring someone with the propensity to injure a coworker or customer.

Adam Newman (not his real name), owner of a Sir Speedy on the East Coast, says that co-workers refer most of his employees to him. Says Newman, "When a worker refers someone to me, I figure that the employee who made the referral will watch that employee because they'll feel responsible for him." Newman is probably right, if you're talking about job performance. An employee is going to be careful about who they refer to the boss because if that person does not work out, it will reflect poorly on them.

However, job performance is not the only thing that should concern an employer. Every employer fears the discontented or "unbalanced" worker who commits a violent act. Yet, quite often, the ordeal continues, even after the enraged employee has been arrested or convicted.

More and more businesses are being held liable for the reprehensible behavior of their employees. Recent court rulings say that if you are contacted by a company that is doing a pre-employment check of a former employee of yours, you must reveal any serious misconduct on the part of your former employee. Although you might prefer not to disclose such information, withholding it could put you at risk. California's Supreme Court recently ruled that employers who give favorable job references for former employees are legally obligated to mention any misconduct that involves violence or other acts that physically endanger individuals. Newman asserts that he doesn't like to "snitch" on a former employee who didn't work out. Says Newman, "Everyone deserves a second chance. Maybe the guy just didn't work out for me but will do fine somewhere else. If I'm asked, `Was he punctual? Did he make personal calls?' I just say, `If he was really sharp, he'd still be here.' I think that gets the message across." Although Newman's attitude might be considered commendable by some, that attitude can create serious legal problems for a print shop owner.

Another California decision involved an employer who gave glowing references for a middle school vice principal despite having knowledge that the man had been dismissed or forced to resign from several other school systems for molesting students. The court held that by deliberately giving this individual a favorable job reference, the employer was negligent and liable for the former employee's subsequent behavior. Now, that might seem harsh, but that is the law, at least in California. And, the majority of court rulings so far indicate that if you fail to disclose past misconduct by an employee, you could be held liable for damages the employee might inflict on someone else at their new job.

Given the choice ...

To comply with such rulings can create new problems for you. By disclosing allegations of misbehavior during job referrals, you are putting yourself at risk of legal action by your former workers.

You have two choices when it comes to handling inquiries about former employees, and neither is very desirable:

1. You can disclose both positive and negative information about a worker - and risk a lawsuit, or

2. You can say virtually nothing and risk similar legal action.

Until now, many businesses tried to avoid legal problems with former "problem" employees by offering little more than routine information about them, including employment dates, job title and salary history. Yet, this "don't ask, don't tell" practice is beginning to look like it could come back to haunt you.

Prescreening

When hiring new employees, most employers know that it is important to conduct some type of applicant prescreening or background check (the recent court decisions mentioned above should underscore that point). The Ohio State Court of Appeals recently upheld a judgment against a furniture rental company that was found guilty of failing to conduct adequate applicant prescreening. The company subsequently hired a delivery driver with a criminal record, who later assaulted a customer in her home. In other words, the court said the employer was liable for the assault of the customer.

As a print shop owner, you could find yourself in a similar predicament if you do not perform background checks on your employees. Newman says that he is more careful when it comes to hiring customer service representatives. He says he carefully checks their references. When asked how he makes certain that the reference checks are valid, Newman says, "This kind of problem has never happened to us. And, besides, all my customer service reps are women." He surely is setting himself up for a major problem.

At a minimum, you should ask applicants if they have ever been convicted of a crime. It is inappropriate to ask about arrests, but it is OK to ask about convictions. In making an employment decision, you must establish a business necessity for use of an applicant's conviction record in your employment decision. The Equal Employment Opportunity Commission says that you must consider three factors to justify use of ajob applicant's conviction record:

1. The nature and gravity of the offense for which the person was convicted;

2. The amount of time that has elapsed since the applicant's conviction and/or completion of their sentence; and

3. The nature of the job in question as it relates to the nature of the offense committed.

Although each case must be evaluated on its own merits, the EEOC guidelines suggest that if, for example, you're interviewing someone who will be going into people's homes, you don't want to ignore a prior conviction for assault and battery. On the other hand, you could reasonably ignore a conviction for writing a check that bounced, because that should not have any bearing on whether the prospective employee is likely to assault a customer. Of course, you will want to consider such a conviction in a different light if the person you are interviewing is a candidate for a position as a bookkeeper or as a clerk who handles the cash drawer.

Verification

Studies show that more than 35 percent of job applicants don't tell the truth when completing their employment application. A leading security firm estimates that nearly two in 10 job applications conceal information - such as a criminal record - that would disqualify them for employment consideration. Thus far, the courts have not ruled that you must verify what an applicant tells you on their application. But, if you don't ask the applicant whether they have had any prior convictions, you have no defense if you hire an employee with a prior assault conviction who subsequently harms one of your customers.

If you want to lessen the risk of hiring decisions, you can hire a firm that specializes in background checks, but, as Newman points out, that costs money. Pre-employment screening and background checks performed by a professional firm can check criminal, civil and federal records as well as an applicant's previous employment, education, credit and motor vehicle records. The Fair Credit Reporting Act governs the activities of consumer credit reporting agencies as well as the users of the information procured from these agencies. A consumer report includes information about a person's character, reputation and other personal data. You can obtain such reports to screen job applicants. The FCRA prohibits you from obtaining a consumer report unless you disclose to the applicant, in writing, that such a report is acquired. This release must state that if you deny employment based on information from a background report, the applicant can request in writing a disclosure of the nature and scope of the investigation.

Whoever does your background check for you will provide a form that meets your requirements and the requirements of all applicable laws.

Prior employer liability

If you specifically ask a previous employer about wrongdoing by a job applicant, does failure to provide that information makes the former employer liable? No easy answer presents itself. As an employer, you should realize that by hiring new workers, you expose yourself to increasingly thorny legal dilemmas. And, claims that result from workplace violence, sexual harassment and other misconduct are expected to increase. This is the reality you are confronting. And, along with this increased litigation, there also will be more employee lawsuits that allege negligent hiring, retention and supervision. A recent study found that between 1983 and 1995, judgments for such lawsuits averaged $810,000. In light of this, employers would be wise to exercise increased diligence to avoid hiring problem employees in the first place.