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Facing an unprecedented labor shortage, staffing firms and their clients are seeking to ease background check requirements in the hopes of successfully casting a wider candidate net. In addition to eliminating some disqualifying convictions, temporary workers are often permitted to start a new assignment while background results are pending. Such changes in practice have far-reaching ramifications and any policy changes should be carefully considered.

Background checks are fraught with risk and employers face injury and discrimination claims, as well as class actions for technical violations under the Fair Credit Reporting Act. Just last year, a Florida jury returned a verdict of $1 billion against a trucking company  for failing to verify that its driver had a valid commercial driver’s license when he struck and killed an 18-year-old student. The case was pursued under the theory of negligent hiring, in which an employer is liable for the wrongful acts of its employee if it “knew or should have known” the individual was unfit for the job and hired them anyway.

To avoid such claims, employers have to demonstrate that they exercised due care — including evaluating each specific position, the nature of the worksite and the tools used to perform the work — to determine if a background check is required when hiring. And simply doing a background check won’t eliminate risk, as the scope and depth of any screen varies greatly by vendor and by price. Skimping or working with the wrong vendor may lead to missed convictions one should have arguably known about. The reality is negligent hiring claims don’t arise often — but when they do, they are usually extreme. An employer’s actions (or inactions) will always be judged in hindsight, and jurors will look for just about any reason to compensate a sympathetic victim.

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Given the risk, requiring a background check for all positions might be tempting; however, you are likely trading one lawsuit for another. Screening policies with blanket disqualification criteria (e.g., “no felonies”) can lead to claims of discrimination, as the Equal Employment Opportunity Commission requires — and many jurisdictions have passed laws mandating — individualized assessments before denying employment based on a candidate’s criminal history. Illinois has gone so far as to require employers to play the part of probation officers in that, before denying employment, they must consider whether the candidate would pose an unreasonable risk to property or safety. If so, then the employer must then also consider additional factors including the facts of the case, the nature and severity of the conviction as well as any rehabilitation efforts the candidate demonstrates.

The dynamic interplay between the risk of negligent hiring and the risk of violating individual rights forces employers to play social scientists, handicapping the likelihood that a past criminal act is or is not a predictor of future behavior. The risk is compounded for staffing firms given the fact that we fill thousands of different roles at as many different locations. Moreover, clients are often unaware of rapidly changing regulations, forcing staffing firms to adopt potentially unlawful adjudication standards.

To protect against large verdicts and class action lawsuits, in the short term, staffing firms should dust off their background check policies and have them reviewed by competent counsel. They should be prepared to make difficult but necessary changes and have hard conversations with clients. If a client insists on using screening criteria that creates risk, staffing firms should insist on contractual  indemnification.

In the long-term, staffing firms and all employers should band together and demand legislators pass a law providing some relief from negligent hiring and discrimination suits arising from background checks. If a staffing firm can demonstrate that it followed a consistent, fair and well-defined process in hiring and placing an employee, it should be afforded immunity from suit by way of allowing an affirmative defense to either claim. Such a  legislative solution would satisfy the duty of care owed to the public while ensuring opportunities for those with conviction records are available. While not eliminating the guess work for employers, employers would have a safety net even if — after carefully balancing safety and individual rights — they guessed wrong.

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