Beefing Up On Background Checks: Why So Many Companies Have Invested In The Screening Process

Globalization leads to a competitive talent search worldwide due to the borderless nature of employment, and companies have demonstrated an increase in demand to engage in the pre screening process. Protecting company reputation, making optimal business decisions, and ensuring employee and customer safety are among the top priorities for global brands looking to maintain their long term positions in the market. In 2018, for the 11th consecutive year, HireRight reported that the most popular types of background checks include employment, identity, criminal searches, and education verification.
By Ariella Serman
January 15, 2021

Uber, Lyft, and the Wheels Keep Turning

“We will increase due diligence to strengthen our screening process.” This is one of the first decisions Dara Khosrowshahi made as Uber’s CEO. In an interview with the Associated Press, Khosrowshahi explained that prioritizing the background check screening process will not only enhance the company’s image, but will also ensure the safety and security of riders. Under previous management, Uber did not have a uniform policy for rerunning criminal background checks on drivers. However, Uber has claimed that the company started running screenings every two years starting from mid 2017. The surge in focus on background checks followed allegations against one hundred and three Uber drivers involved in sexual misconduct and assault.

Taking similar steps, Uber’s biggest competitor in the U.S., Lyft, has announced the introduction of two new features to their background check screening process: continuous monitoring and enhanced identity verification. Continuous monitoring will oversee drivers and will immediately report on any changes to criminal convictions. Lyft’s current background checks include a Social Security number trace, federal criminal searches, county court records search, and Department of Justice sex offender registry search. As for the enhanced identity verification, Lyft will integrate drivers’ license and photographic information to prevent identity fraud.

Who Is Providing These Background Checks?

With the increasing number of companies beefing up their background check services and requirements, there are a few screening companies that are rising to the challenge to provide businesses with the information they need. One example servicing the gig economy is Checkr, a background screening company that runs background checks on employees. Checkr’s pricing follows a pay per applicant model, and with the growing number of applicants using their services, Checkr is in for a profitable future—that is if they can keep up with demand. Conducting manual background checks on all of these employees will not be an easy feat—only time will tell if the company can actually hold the fort.

While Checkr may have found this gap in the gig market, it’s not the only company to have done so. Sterling Talent Solutions, another background check provider which had been running background checks for Lyft, was evidently not able to keep up with the gig economy demands. The company is facing a number of lawsuits due to both false negatives and false positives on their background checks. In order to compete effectively in the cutthroat due diligence industry, Sterling off shored a large percentage of its operations to countries including India and the Philippines. But large caseloads led to manual errors, technology issues, and incomplete databases, causing identity verification to take a back seat. Close to two hundred lawsuits were filed against the company, most cases involving criminal records being attributed to the wrong person. Common names were particularly challenging because there could be a large number of matches and lots of files to review.

Another company providing background checks primarily to the financial sector is Intelligo Group. Intelligo’s goal is to transform background checks from a nuisance into an asset. Fueled by the desire to create a culture of trust, Intelligo’s business model is designed to enhance transparency by offering accessible and intelligible information, on an interactive report, which highlights or flags critical information. Intelligo is the first company to offer a Software-As-A-Service based model for businesses to conduct due diligence assessments. The company uses a combination of advanced AI and machine learning capabilities, coupled with human intellect to provide clients with a scalable, comprehensive, and cost-effective solution to clients’ needs, aggregating over one million data points. Learning from mistakes made my companies like Sterling, Intelligo’s proprietary name matching algorithm filters out incorrect individuals with the same name, reducing noise and ensuring accurate identification of the person under review.

The Increase of the Independent Worker

It is also interesting to note that the rise of awareness and performance of background screening mirrors consistent trends in the U.S. labor force. According to a study conducted by Lawrence Katz of Harvard University and Alan Krueger of Princeton University, there has been an increase in alternative work arrangements recorded between 1995-2015. To illustrate, in 2005 only about ten percent of U.S. workers were employed by a temporary help agency or worked as independent contractors. Today, forty percent of the labor force consists of non-traditional employees (contractors, contingent workers). In this new era of independent hires, businesses are taking more precautions by adopting stronger screening policies.

The Background Check Benefits

Performing background checks are not only important for the productivity and efficiency of businesses, but can also help to create safe working environments, enabling businesses and consumers alike to trust one another. With the rise in independent contractors and the increasing demand to vet candidates, companies should hop on the bandwagon and invest in due diligence to ensure optimal business decisions.

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