THE MAGAZINE

How to Avoid Hiring Hazards

By W. Barry Nixon

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Applications.
An important step in the hiring process is to have the candidate complete an employment application. The application should ask for basic information, such as the applicant's name and address, as well as education (if relevant) and work history. An application should be completed by all applicants who have been prescreened and accepted into the hiring pool. The application is a legal document and, once signed by the potential employee, should be used as a tool to obtain necessary information.

Among the other important questions that should be on the application is whether the candidate has any felony convictions. The application must also clearly state that an affirmative answer will not automatically disqualify a person from consideration.

Employers should also consider including a question about misdemeanors on the application. In many states, the crimes included in this category are ones an employer would want to know about before making a hiring decision. These could include convictions for battery, drug possession, and driving while intoxicated (DUI), for example.

One point to keep in mind with regard to asking about misdemeanors is that state laws vary, so managers must be sure to consult legal counsel before including these questions.

Another question employers are encouraged to include on their applications pertains to pending trials for a felony or misdemeanor. The primary reason for asking if trials are pending is that a person responding "no" to the query "Have you ever been convicted of a felony?" has truthfully responded. However, that person may be the defendant in a pending murder trial. The question will provide the manager with enough information to question the applicant further.

The application or a separate form given at the same time should let the candidate know that finalists who receive a job offer will have to undergo a background check. At this point or when an offer is made contingent on the background check, the candidate should be asked to sign a release form that gives consent for the background check to be performed. The application should also ask the candidate to provide the names of references to be used in the background check. (More on background checks later.)

Managers should include a statement on the application making it clear that falsification or omission of relevant information is grounds for rejecting the candidate or--if the problem is only discovered after the candidate has been hired--grounds for terminating employment.

This statement is essential for advising prospective employees that they must be truthful; however, it also provides a valuable option should the company later discover that an employee has a felony conviction or some other negative information in his or her background that would likely have precluded that employee from being hired. The omission statement gives the company legal grounds for terminating the employee if this is deemed the appropriate action.

For example, in a well-publicized case in Luzerne County, Pennsylvania, a scandal erupted when a newspaper reporter discovered that the county's new human resource director, who also was an attorney, had been disbarred, was wanted on a charge of obstructing police, had been arrested for shoplifting, and was operating under an assumed name. The new employee was terminated for falsifying her employment application.

To be able to act on a falsification or omission statement, companies should keep all the employment applications and attendant materials until the statute of limitations has elapsed on discrimination claims. Failing to do so could weaken the company's ability to defend itself if a lawsuit was ever brought against it.

The offer.
Based on information from the résumé, interview, and application, a top candidate who meets the requirements for the position will emerge. At this point, the company is ready to make a job offer contingent on a background check.

The background check. Reference checking involves speaking directly with previous employers about the candidate's work history, work habits, performance, and capabilities. The standard response from most former employers is to provide dates of employment and verification of the person's position and salary. This practice has emerged among employers because any negative reference carries with it the threat of a defamation suit.

To help protect companies that want to give candid references, many states have passed job-reference immunity statutes (see box). These shield employers from lawsuits brought by former employees about whom they have given negative information to a prospective employer.

 

For an employer to get the protection of what is called "qualified privilege," an employer's statements about a former or current employee must be truthful, made in good faith, and made for a legitimate purpose. The ultimate benefit of these statutes is that all employers will be able to obtain more complete information about applicants before hiring them.

However, companies must ensure that the conditions of qualified privilege are met. If the company crosses the line, it opens itself up to a lawsuit. For example, in one case (Gibson v. Overnite Transportation Company, Wisconsin Court of Appeals, 2003), an employee of Overnite Trucking resigned to work for USF Holland, another trucking firm. During his probationary period with USF, the company contacted Overnite as part of a reference check.

An Overnite manager advised USF that the employee would never be rehired because he had been late most of the time, regularly missed two to three days of work a week, had a questionable work ethic and attitude, was not trustworthy, and had a problem with authority. Based on this information, USF fired the employee.

After his termination, the employee sued Overnite for defamation, claiming that he lost his job with USF because of the report it had received from the Overnite manager. A jury awarded him $283,000 in damages, which included $250,000 in punitive damages. On appeal, Overnite argued that the verdict should be reversed because a state law provides that an employer is immune from civil liability for providing a job reference unless it acts with malice.

The Wisconsin appeals court found that, contrary to the report given to USF by the Overnite manager, Gibson's personnel file at Overnite contained no reprimands or record of problems with his job performance. Therefore, it affirmed the jury verdict ruling that Overnite's manager had made the statements solely from spite or ill will.

Despite the protections offered by the immunity laws, however, some employers still worry that any reference critical of a former employee will expose the company to some level of litigation risk. Consequently, they continue to minimize the risk by withholding information.

Employers in the states that have job-reference immunity laws should attach a copy of the law to the signed release authorizing the reference check. This practice may encourage the former employer to release additional information.

Another tactic is to diplomatically advise the previous employer that it may be held liable for negligent referral if it does not provide information about illegal activity--rape, assault, extortion--the employee might have committed.

Salary negotiation. When tendering an offer, managers must be careful not to give details of a compensation or salary package unless the company is sure that it will be correct. Making an offer that induces an employee to take the job or to resign another position and then reneging on that offer can be grounds for a lawsuit.

In one case (Agosta v. Astor, California Appeals Court, 2004), for example, Len Agosta left his job at a radio station to work for a competitor based on a compensation package he was promised. A month after Agosta began working for his new employer, the company rescinded the compensation package. Two days after that, Agosta was fired. He sued the company for fraud.

The company requested and was granted a summary judgment--a decision based on the facts of a case without a trial. The court ruled that Agosta could not sue because he was an at-will employee and could be terminated for any reason.

Agosta appealed the decision. The appeals court ruled that, despite the at-will agreement, Agosta could seek damages from the company based on his termination and the altered compensation package.

The hiring process is one of the most challenging chores that any manager faces. How it is handled will affect both the company's prospects for building a good team and the likelihood of future litigation. By working with human resources and legal professionals, security can help ensure that the firm hires talented employees and minimizes its liability risk at the same time.


W. Barry Nixon, SPHR (Senior Professional in Human Resources), is executive director of the National Institute for the Prevention of Workplace Violence, Inc. Nixon serves as the workplace violence consultant for the State of California, as well as many organizations in both the public and private sector. He is a member of ASIS International's Crime and Loss Prevention Council.

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