The process of conducting background checks on prospective employee candidates dates as far back as 1908. Initially, the source of due diligence stemmed from employers being held legally responsible for their employees’ negligence on the job. It soon expanded to include employees ’ behaviour outside of the workplace such as the 1951 case of a delivery man who made an “indecent attack” on a female customer. The court ruled that the employer was liable for the incident because of his “reasonable care to select employees competent and fit for the work assigned to them and to refrain from retaining the services of an unfit employee.”
While not much has principally changed in terms of employers being accountable for their employees’ actions, the future of due diligence seems to be taking some interesting twists and turns. Companies are increasingly investing substantially in background checks both for full time employees and gig economy workers, but the way in which background checks are being conducted and the information being obtained on candidates has been changing these past few years. Let’s take a look at some of the rising trends in the pre-hiring and pre-investment background check sectors.
Social Media Screens
Leaders in both social media and background check sectors have alluded to the increase in employers’ propensity to use social media as a screening tool. According to a study conducted by CareerBuilder, in 2010 twenty five percent of employers were screening their employees’ social media accounts. In 2018, that statistic grew to seventy percent making background checks five hundred percent more common than they were a decade ago. The study, which interviewed one thousand hiring managers and Human Resources professionals, also reported that fifty-seven percent of employers that checked candidates’ social media accounts said they had seen content that led them to eliminate the person as a prospective employee.
Similarly, Bianca Lager, president of social media screening company Social Intelligence Corp. commented that, “Hiring companies know they can’t get away with ignoring social media as part of the background-screening process any longer…” Although using social media to vet candidates has become popular, employers have to be extremely cautious about personal privacy infringements as well as discriminatory predispositions or they can find themselves in a knee-deep pile of lawsuits.
While using social media as an instrument to conducting background checks has remained a gray area due to an absence of FCRA policies and state laws, it will likely be a continuing trend in the coming years.
Gig Economy has Autonomy
While there are many definitions as to which types of workers fall into the category of the gig economy, the general consensus is that it is a “free market system in which temporary positions are common and organizations contract with independent workers for short term engagements.” According to a 2015 study by the American Action Forum, the number of workers in the gig economy grew from 8.8 percent in 2002 to 14.4 percent in 2014. Furthermore, a study by TurboTax maker Intuit estimated that by 2020, gig workers will make up forty-three percent of the American workforce. So what does the rise in the gig economy have to do with future changes in background checks?
Initially, businesses didn’t bother conducting background checks on gig workers. Consuming valuable resources (time, money, manpower) to vet someone who wasn’t even a permanent employee of the company seemed like an unintelligible business decision. However, employers started to realize that freelancers and independent contractors represented the face of the company to the public just like, and if not more than, employees did, and therefore vetting gig workers for the protection and safety of the firm seemed like a sensible thing to do. Businesses are beginning to take a more conservative and stringent approach to the background checks they run on gig economy workers.
Ban the Box Removes the Stumbling Blocks
Legislative movements that have been lobbying for employment reform have been pushing their agenda quite staunchly these past few years. The Ban the Box movement strives to reduce employment discrimination against former criminals by removing the criminal history question on job applications and limiting companies’ ability to conduct due diligence on candidates’ criminal past. The goal is to prevent employment hiring discrimination based on criminal backgrounds. To date, 35 states and over 150 cities have removed the conviction history question from job applications, including mega brands such as Facebook and Starbucks.
The effect of this campaign? According to Terry-Ann Craigie, professor of economics at Connecticut College, state and local Ban the Box policies increased the likelihood of public-sector employment for people with criminal records by thirty percent. In one particular city, Durham, North Carolina, after implementing the Ban the Box policies on a municipal level, the number of people with criminal records hired for public sector jobs rose by eighty percent. While many companies still want to vet their candidates to ensure the safety and security of incumbent employees and customers, we may be seeing a growing shift in stripping away all possible discriminatory criteria to give everyone a fair shot at the game.
Continuous Monitoring Will Continue
Monitoring employees on an ongoing basis is becoming the new norm. Although in 2018 only eleven percent of organizations conducted rescreening reports on their employees according to a HireRight study, this figure is sure to skyrocket in the coming years. “Employee monitoring is one of the biggest trends I’m seeing” observes Jason Morris, an employment screening consultant and industry expert. Similarly, Scott Hall, the COO of screening company FirstPoint noted that membership in the National Association of Professional Background Screeners more than quadrupled from one hundred and ninety five members in 2003 to nine hundred and seventeen members in 2017. These numbers make sense considering your employee can be totally clean today but commit a crime tomorrow.
Uber, the famous ride sharing service, decided to adopt a continuous monitoring policy after it came under scrutiny for sexual harassment and sexual assault accusations. The company wanted to be able to investigate any new information about its drivers, such as a pending DUI charge, which may disqualify the driver from continuing his/her contract with the company. Uber is not the only one who is tightening up their continuous monitoring, as their competitor Lyft is following suite.
Mixing Business and Pleasure
With companies (and customers’) growing demands for transparency and the migration from email to social media making every moment in time ‘instagramable’, the lines between business and pleasure are becoming increasingly blurred- and infinitely more complicated. When a company makes one bad move, it’s no longer a reflection on the firm’s entity itself but rather on the individuals behind the company and more specifically, top management who are ultimately responsible for all of the decisions made by their subordinates. Conversely, when executives engage in suspiciously unethical behaviour, whether work related or not, their businesses suffer tremendously as a result. Take for example, Amazon’s stock declined by 5% following founder CEO Jeff Bezos’ announcement that he and his wife were divorcing. Or, HP’s shares taking a ten percent tumble following sexual allegations of now former CEO Mark Hurd.
With the mix of business and personal, now more than ever companies have to be extremely vigilant in their hiring process to ensure that prospective employees will reflect positively on the company’s image both on and off the job. In the coming years, expect the buzz phrase ‘brand ambassadors’ to be widespread because every employee of a business will be held to the highest standard as they represent the company on a 24/7 basis in every facet of daily living. What’s clear is that one bad hire or one bad decision by a prospective or incumbent employee can cost the company its life.
What the Future Holds
The aforementioned changes in background checks that we are witnessing today are only a glimpse into future trends that we will experience in the due diligence space. While companies are moving towards total transparency, they are also trying to balance that with a reduction in discrimination based on candidates’ past behaviour and circumstances. It seems to be a balancing act with a very thin tightrope at their heels. So while background checks were seemingly becoming more simplified with automation, they are also simultaneously becoming more complicated with the various intricacies that employers have to be mindful of.