backgound checksWhen you grant employers permission to run background checks and credit checks on you, where does all that confidential information go?

Last year we asked Does Human Resources go too far? Now, a subscriber who is an HR professional suggests that Pandora’s Box has been opened. He points out that in their zeal to protect themselves and their companies, HR departments may be covering up illegitimate and possibly illegal practices.

When HR outsources background checks and investigations of candidates, is HR merely doing its job, or is it ensuring plausible deniability while letting loose an investigative demon that systematically violates people’s privacy and feeds the specter of identity theft? Does HR go too far when screening job candidates? Hold onto your seats. We’re about to take a rough ride through a nasty landscape.

I’m not disclosing our insider HR executive’s name for obvious reasons. I cannot confirm every claim he makes, but we spoke and I find him credible. If some of his insider claims seem farfetched, I’d love to hear any rebuttals. Here’s what he has to say.

An HR insider speaks up

Regrettably, all these [background investigation] procedures and processes are advocated by the Society of Human Resource Management (SHRM), as reading its web site will reveal. And, just as regrettably, many HR people fall right in line, like little ducklings swimming behind the mother duck of SHRM. It’s the latest rage, and every HR person wants to be a part of it.

Background checks galore

With thousands of people applying for each job and the jobless rate for skilled and white-collar workers at a recent all-time high, the applicants, like sheep being led to the slaughter, will subject themselves to almost any practice and jump through almost any hoop to get a job. The theory is that any job is better than no job.

The background-check processes are, the majority of the time, being outsourced to security companies that have turned these processes into a lucrative business:

  • background checks
  • personality testing
  • criminal checks
  • educational checks
  • military service checks
  • employment verification
  • reference verification
  • credit checks
  • drug testing
  • searches into legal agreements
  • scanning of your phone records
  • scanning of your Internet activities and e-mail
  • and so on.

This total invasion of privacy beyond your wildest dreams (actually, nightmares) is outsourced. The worst part is that much of the data and information these outsourced security agents collect is erroneous.

Have you been checked without knowing?

HR will narrow the list of candidates down, and then turn the outsourced security investigators loose on that list. Background checks are often done before the first interview, and before any sort of an agreement, authorization, or disclosure is signed by the job applicant.

You will never know about it until you order a copy of your credit report and find all the inquiries (that’s the first sign) and wonder, who in the devil is that who has run checks on you?

The larger outsourced security and investigative companies have started keeping databases of their own. One advertises they have a database of over 1.5 million people for employers to run their candidates against. If you have signed one disclosure for one employer, the investigations company that did the checks will keep the information about you in their database and then just re-sell the results to their next client.

Do you know where your background checks are?

They start with a name and phone number and e-mail address from a resume or application. Then, they cross-reference information until they get a date of birth or social security number and go from there. When an applicant walks into HR for that first meeting, they already may have been investigated. Never mind that much of the data gathered may be erroneous. The “data” was gathered at arm’s length, but the employer will treat it as absolute fact.

Security and background checking has become a lucrative business. The outsourced investigators are starting to sell that information amongst themselves, expanding their databases and increasing their profit margins. The shuffling around of this data only makes its accuracy even more questionable.

This is an industry that is almost totally unregulated. The multiple levels of outsourcing and subcontracting yield enough plausible deniability to the companies themselves, and their clients, that abuses run rampant.

Nick’s comments

The statement above was submitted to Ask The Headhunter unsolicited. I’m grateful for the permission to publish it. Once again, I cannot present it as fact — but I have encountered examples of many of the claims. If anyone in the investigations business would like to comment on these allegations, please do so below or feel free to contact me. This is worth discussing and researching further.

Where is the accountability in background checks?

When HR asks you to provide information that is confidential to you, or to sign permission for your background to be investigated, or to waive liability if your confidential information is leaked or misused, HR must be accountable to you. Whether or not we have hard evidence of abuse, I am convinced there is a serious problem with this part of the hiring process at many companies.

While some employers may be innocent, we need to ask whether they are being responsible. Others are overstepping the bounds of what is legitimate and ethical – and possibly legal — when conducting aggressive background checks on job candidates. Worse, employers may be putting you at risk because they presume to entrust sensitive information about you to third parties with whom they have only an arm’s-length relationship. Where is the accountability?

Do you know how your confidential information is being used?

Job applicants need to be aware of the risks they take when divulging information about themselves – any information. It seems that even your name, address and phone number might be enough to allow an employer’s investigator to access every nook and cranny of your life without your knowledge. If the law is being circumvented, then the law needs to be enforced – or our legislators need to start working on laws that will protect our privacy.

In this day of heightened sensitivity to security, it’s important to recognize that the problem lies not in checking people out. The problem lies in unethical, unwarranted and possibly illegal procedures conducted at arm’s-length from employers by third parties. In some cases, there’s a cascade: An employer outsources reference checks to Service A, which in turn outsources criminal and credit checks to Service B and Service C. (Read about one third-party investigations company that’s so “arm’s-length” it conducts automated background checks.) Who’s accountable — the independent investigative service, or the employer?

Time out for questions

A responsible employer should have good answers to these questions, and a job candidate should not hesitate to ask any of them before submitting even a resume. If this list seems over the top, perhaps it is. I think every item is legit, but you must decide which ones are important to you.

  1. What kinds of checks does the employer conduct? Are they legal?
  2. Is the candidate notified in advance and given the opportunity to decline to be investigated? Is the permission form clear and easy to understand?
  3. Who is conducting the checks — the employer, or a subcontractor who in turn subcontracts the investigations to yet another firm?
  4. What information is gathered? How is its accuracy determined? How valid and reliable is it?
  5. Does the candidate have an opportunity to review and confirm or contest the information?
  6. Is the information secure? Who has access to it? Is there a risk of identity theft?
  7. Who owns the information and what rights do they have to it?
  8. Is the information maintained in data bases not directly controlled by the employer? For how long?
  9. Is the information made available to any other parties at any time for any reason? Is the information re-used or sold?
  10. Does the candidate have the power to limit or rescind rights they have granted for use of the information?
  11. What responsibility and liability does the HR department accept regarding the collection and use of your private information?
  12. Last and most important, is the employer prepared to sign an agreement to protect you and your private information?

What are the risks if you apply for a job without answers to these questions?

Time for less invasive practices

Maybe the biggest question we’re left with is the one we originally asked: Does HR go too far when screening candidates? It seems that HR routinely abuses the job seeker’s frame of mind — often that of a terrified supplicant — when it indiscriminately demands all plus the bathroom sink before it consents “to proceed with your application.”

Does anyone seriously contend that HR doesn’t ask for more private information than it really needs? Having immense power over relatively helpless applicants is no justification for unnecessarily abusing them. I’ll echo our HR insider’s implied challenge to the SHRM: When’s the last time your august group recommended less invasive practices?

Until HR owns up to its responsibilities, maybe the job seeker’s best protection is to lay their own confidentiality agreement on the table – and decline to divulge anything until the employer signs it and makes itself accountable.

What’s your experience with background checks when you apply for a job? Have you encountered any of the issues our insider enumerates? If you work in HR, can you confirm or deny what he presents? What can job hunters do to protect themselves?

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  1. The entire BG check is a huge invasion of privacy. I long for the days when a person could simply fill out a job application, get an interview in person, and start within the next week with no drug screen or BG check to clear.

    I feel badly for those who’ve made some mistakes in the past, such as a DUI, and years ago made amends but still cannot get hired (for roles not involving driving/transportation) because of the judgment/arrogance of HR policies that deem the candidate “ not suitable” for hire.

    Credit checks for non-finance positions make assumptions which are speculative and not at all relevant to a candidate’s ability to perform the job well.

    All these BG checks do is create a persona of someone’s character which simply isn’t a true picture of the candidate, who often gets no recourse to dispute their negative findings.

  2. Pre-screening before an interview is a new one to me. I’ve never heard of a company doing that except maybe for one that has a lot of security by design or is in a sensitive sector of business (defense, natural resources, finance, etc.).

    As someone with a side business that actually does regular background checks (firearms), I can tell you: most people do not have access to true background databases. Almost all background checks are public records searches which can be exceptionally hit or miss. Most court systems do have their information online and do post many cases to various nexus services which can be indexed, but it’s no guarantee. About the only time I’ve seen an employer actually run a true background check is when you are fingerprinted and your information sent to the FBI for a check.

    Access to actual criminal records databases such as NCIC is exclusively within the domain of law enforcement. Even with my side business I have a very limited view into it, with simple proceed/deny answers and no clue as to what triggers either result; someone convicted of 1st degree murder looks the same from my limited view as someone with a bench warrant for unpaid parking tickets.

    With regards to SHRM: it’s no surprise that an advocacy group pushes for fewer restrictions and more power. I’ve seen all kinds that do, including those for recruiters that try and normalize scummy tactics like spamming.

    Lastly, I’d encourage everyone: control what information you give out. I’ve seen too many larger companies want your DOB (usually just MM/DD) and last 4 of your social to get submitted, which is more than enough for identity fraud. That should never be given out before an offer is extended.

    • @David Eddleman-
      You bring up some valid points about background checks. Case in point in your and my world.
      When the NICS was first rolled out, I was clipped with “delayed” every time I made a purchase. Ironically, I knew some local tenured law enforcement officers who faced the same thing. One day I made a phone call to ATF fully expecting a less than positive and productive experience. The lady I spoke with was actually civil and polite and explained that there were some “bugs” they were trying to work out with the NICS. Funny thing was future purchases went smoothly after that phone call. Since this last recession, coupled with financial set backs and a hefty drop in income, my buying in that world is in my rear view mirror now.

      • That’s not really how the system works. Background checks are submitted through to the FBI and the transaction number is recorded on the transfer report. Calling the ATF will do nothing since they don’t run the background check system, it’s all part of CJIS.

        A lot of times what runs into complications in those checks is having security clearances or sealed parts of your file. Because the automated systems and many low-level examiners cannot view them, you can get locked into a perpetual delay because of it.

        • Yeah, I’m not an FFL holder, but it stopped soon after that call. May have been coincidental. I know someone who once made an error on filling out the Form 4473 and that still dings him years later.

  3. The background checks conducted even before interviewing is also a new one on me. I had a recruiter ask for references even before interviewing in more recent times (was a little offputting and unorthodox IMHO). Needless to say, that was a wash and no big lose.
    Anymore, I’m not at all surprised with the bottom shelf level HR and employers will go to in order to “weed out” and disqualify often qualified or “diamond in the rough” prospective workers. And they complain they can’t find qualified workers.
    The article points out that desperate behind the 8 ball workers are supplicating and enabling employers and HR types to pull unethical and even illegal shenanigans. All the more reason for workers to have a “screw you” emergency fund (UI doesn’t cut it) and be connected as best you can.
    A weird story that happened to me a few years back. I had a longer than desired stint of unemployment combined with an exhausting job search and dead end job interviews. One day I interviewed with some company, and was told (rather curtly) in the interview by the HR woman that I was unqualified. Later that day I received an unsolicited phone call from some sunshine hippie sounding lady touting a MLM pyramid scheme. When I asked how she got my name and phone number, come to find out, that very HR woman had faxed my resume to the MLM group. Evidently, the HR woman belonged to this MLM group. I made a phone call to the HR woman and politely told her I had a good mind to report her to the management, or to consult an attorney, and further told her to run my resume through the paper shredder. Knowing she was busted, she sheepishly agreed to do this over the phone (doubt she really did it), but I never heard from the MLM group again. Pretty low class in my book.

    • re BASED BOOMER: The headhunter’s request for references was primarily to get more names and phone numbers to call to add to his employee data base.

      I have aways requested a lot of information about the company and position he was recruiting me for. Inadequate information meant end of conversation.

      • @Wes Richardson-
        It was a female headhunter, and she also pulled the proverbial headhunter “what other companies have you been interview with”?
        That, with illegal questions she asked (what my marital status is, did I own my home, etc.),
        I ended it then and there.

  4. No comment. Just want feedback. No longer an option?

    • same here

    • Sorry! The feedback option somehow got disabled. It should be working now. Scroll to end of comments — you should be able to sign up for notifications again.

  5. As usual a great article forcing all to think at a second level regarding the use of personal info. Scary stuff for the applicant to ponder.
    Does asking legit questions about the process and vulnerability alienate a good candidate for asking HR embarrassing questions they can’t answer?

    • @Mike W: Yes, it is. Scary, and it isn’t Halloween!

      I asked at an interview when presented with documents to sign giving them permission to do a BG check. Interestingly, the document neglected to provide information about precisely WHO would be performing the BG check.

      They didn’t like it when I informed them that I NEVER sign a document without reading first, and if I have questions, then I want to take the time to consult an attorney. That resulted in a lip curl/sneer, and when I asked WHO is doing the BG check, they immediately ended the interview, called security, and ESCORTED me off site.

      I dodged a bullet. If they were ethical, they should have had no problem with me taking the time to read a legal document (so I know exactly what I’m signing away) and they should have had no problem telling me who would be doing the BG check.

      • MARYBETH: Their reaction was all you ever needed to know about the company. If they treat you that way before you are hired, how do you think they will treat you when they think they got you trapped in their employ?!!

      • @Marybeth: Sadly, most job candidates would have caved and signed. Such is the terrible weaponry wielded by HR when the employer operates a gulag rather than a business. Our mission here is to wake job seekers up. Thanks for your story!

  6. I didn’t go through this process when I had to get a NRC clearance. I did meet somewhat these BG’s when I was a Government employee. This is going waaayyyy too far.. In this day, personal information just doesn’t have the same meaning…Perhaps these companies should look up the definition of “Privacy” as defined by the EU

  7. This HR person must work for places that have iffy ethics.

    Most companies are too cheap to engage outside background checking companies for all interviews, and my experience is that many are also lazy and just don’t do the checks unless they are part of a stringent workflow – which is then also carefully designed.

    Our organization is now contracting with a new background checking company and here are some observations:
    1) Each background check is expensive, depending on what you do. Again, I doubt companies are sending information out to a provider before an interview. That said, I could see an HR person searching for someone’s criminal history online – the public data that’s available at least in our state. They aren’t supposed to, but how would anyone know?
    2) Back to our new provider: We cannot submit an applicant to this provider without a signed consent from the applicant.
    3) They made us go through a training about the laws in each state to make sure we are aware and then we attest to the fact that we are aware.
    4) We have clients with different requirements. For example, a healthcare provider can’t hire someone who is barred from federal healthcare programs. We do not willy-nilly put everyone through every check. We wait until we know exactly what position and only do checks that are clearly relevant to the job.
    5) Our clients are all aware that any background checks must be clearly applicable to a job. For example, someone handling cash can’t have a recent theft conviction.
    6) Probably our biggest issue when we find a match: is this really the same person? There are laws about how to resolve this, including talking to the applicant, and we follow them.

    Not saying everyone does this, just relaying our practices.

  8. Another “anti-HR” misleading article. I wish I had more time to point out ALL the false points you mentioned in your article, you can blame it on bad info from your “confidential HR informant” but it’s 90% false info. FYI all information that background companies dig up is considered public information, any John Doe can find the same information. You really have to get over your anti-HR (now boring) rhetoric, it’s become old and monotonous, you dont like HR because they’re gate keepers the folks in your profession must get through but that’s the now and the future so enough of trying to bring back the buggy whip and move on with it because the days of 20 recruiters contacting a hiring managers is never coming back for reasons you know very well but will not discuss on your board. thanks for the laugh…yawnnn

    • @Adrian: If you don’t have time to enumerate the “false points,” there’s no discussion, is there?

      • Sis (I’d wager Adrian is a she) is shilling for HR. That’s low-shelf IMO.

  9. I knew of a situation where an applicant (job required a grad degree and state license) was offered a job “contingent upon the background check”. When the results came back, a legal issue that the applicant had been told was purged from the applicant’s record showed up. Of course, the applicant was terminated because the issue was not disclosed prior to the background check. The applicant took their own life.

    That’s all I’m going to say about that.

  10. We can’t follow this thread unless we comment. Is that a change or a bug?

    • @Tim: That was a bug. Sorry! You should be able to subscribe to comments once again, at the end of the comment thread. Please ping me if you still encounter problems:

      Sorry for the trouble!

  11. I wonder if any companies do proactive BG checks for current employees, those who’ve been there at least 5 years? An employee may have had numerous legal run-ins while employed for 30 years yet those situations may never be noticed/addressed by HR because the employee is no longer subject to a BG check. This begs the question: how important are BG checks in the long-run anyway??

    If such knowledge of a potential worker’s private past history (transgressions) is so important, (as if history will repeat itself, albeit situations that have absolutely nothing to do with one’s work environment) then why aren’t current employees subject to routine BG checks, including all the “gatekeepers” and senior-level people? Who deems the “powers-to-be” as having squeaky clean records? How many things get overlooked in the name of nepotism, favoritism, and “protecting our own”?

    In addition, I imagine that most people have an explanation why something “happened” in lieu of a negative report; sadly, they aren’t usually given the chance to explain more of the circumstances, as per the example of the candidate who committed suicide. Conversely, I doubt there are many accolades and accomplishments noted on a BG check other than maybe a high GPA which, once out of college a few years, is rather irrelevant, IMO.

    • When I have seen these questions about, e.g., a criminal background, drug use, etc., I ALWAYS ask the interviewer, “What kind of people are you hiring?” That has always brought them up short! Depending on their attitude and whether I have learned enough about the job / company to know I am not interested, I also ask, “May I see these reports on you and on each of the executives of the company? … Right now?” None has ever liked that. But turnabout is fair play!

      Another game I like to play, if they say I am too expensive for them is: There are only two reasons that you would say that. Are you saying that because your company policy is to pay below market value for your employees? If that is the reason, then I am not interested. However, if you really “don’t have the money,” that is all the more reason to hire me immediately. The reason for that is that I am the man who brings in the cash, lots of cash to all of my employers. My base salary is (and here I add another $80,000.) Similar escalation to sign on bonus, retirement, stock, etc.

    • @A Face: I never thought about that! We have to renew our drivers’ licenses. Why don’t employers “renew” BG checks for continued employment?

      I wonder if this has ever been tested legally as a form of discrimination.

      • I worked as an executive assistant for many years, and at our firm, executives were background-checked every 24 to 36 months. New executives were also fingerprinted. I doubt that the rest of the ordinary sheep at a company would be worth spending money to reinvestigate routinely, though.

  12. Nick,

    Chilling information this week! I think some writers have touched on this, but my question is, “What does the BG check accomplish?” Clearly, for some positions there are certain personality traits an employer may want to screen out. And any government work requiring a clearance – well, that check will be done outside of the company’s HR.

    From reading your column and the reader’s comments, it seems like HR digs this deep simply because they can. I would like to hear some justification for this level of scrutiny. Does a Business Analyst, Administrator or Technician need to be vetted to this level? Sure, anyone who deals with money in any form should not have a gambling problem, for example. There are federal laws against discrimination for marital status, sexual orientation, disability and a host of others. Are any of these laws being violated? It sounds like there is a least the potential for this.

    Another irony: These days most HR departments will only verify that you worked for the company, and the dates you were employed. Doesn’t that seem just a bit funny when they are asking for so much information about the

    • @Larry B: Yep! You’ve recognized the double standard! “We don’t give references. But we want your references. We don’t give out employee information. But give us information about your former employee.”

  13. I truly see no need whatever for BG checks. Most jobs are innocuous. A very few need theft checks, maybe a few others.