Criminal Background Checks vs. Integrity Testing

David Arnold discusses the pros and cons to criminal background checks and offers an alternative that can help employers screen out a higher portion of non productive employees.

Employers commonly use criminal background checks based on two reasons. First, the employer is interested in screening out individuals who have a criminal history, to help ensure that they’re hiring individuals that aren’t going to engage in on-the-job counter productivity. Secondly, employers utilize background checks to help ensure or help insulate against negligent hiring liability.

Criminal background checks are useful for screening to some degree. However, an employer needs to realize that criminal background checks generally only come back about 5% of the time with what you might call “a hit,” where an individual actually has a criminal conviction that shows up. So only 5% of your applicants can be rejected, if that many, based on a criminal background check.

Now, if we look at research in the area of employee counter productivity, we find that about 25% of all employees engage in some form of counter productivity. As a result, you’re screening very few individuals, proportionately, that will actually engage in workplace counter productivity. So the 5% that you’re screening out, you’re minimizing the number of individuals that come into the organization that might engage in counter productivity, but on the other hand, you can assume that there’s probably 20% of those individuals that you’re hiring that will still engage in some type of on-the-job counter productivity.

Parenthetically, if you are hiring in jobs where you have a lot of individuals applying that are minors, you will get no information on a criminal background check with respect to them.

When an employer goes out and seeks information about an individual’s criminal background, they’re generally going to enlist what is called a consumer reporting agency to get that information for them. As a result, the use and the procurement of the background check fall within the Fair Credit Reporting Act. As a result, the employer is going to need to seek written authorization from the applicant in order to procure the consumer report, also what you might call the criminal background check, and also, if they decide to utilize the information to deny employment to the prospective employee, they need to provide them with what’s called a Pre-Adverse Action Notice. This indicates to the prospective employee that they may be denied employment on the basis of the criminal background check, and it also provides them with a copy of that criminal background check as well. Subsequently, when the employer actually decides that they will not hire the employee, they need to provide what is called a Post-Adverse Action Notice to the individual to let them know that they will not be hired.

One of the major problems with criminal background checks is the fact that they tend to exhibit adverse impact on the basis of race and sometimes gender. This is frequently noted, especially by the EEOC, and in fact, on April 25th of this year, when the EEOC released some guidelines regarding criminal background checks, that information was documented therein. Also, the EEOC now requires new and significant restrictions and hurdles that an employer must go through in order to procure and utilize a criminal background check to deny employment.

When using criminal background checks, a way of minimizing the degree of disparate impact would be probably to move them to the latter part of the hiring process, rather than utilizing them up front as one of the first few steps in the process to screen out applicants. This is a good practice, and in fact is consistent with the laws that affect private employers in some jurisdictions throughout the United States. In fact, Hawaii, Massachusetts, and Philadelphia mandate that private employers not inquire about criminal backgrounds until an interview has transpired or a conditional offer of employment has occurred or something further in the employment process where the individual actually makes contact with the employer. Also, employers need to ensure that, if they’re utilizing criminal background checks, they’re denying employment on the basis of only criminal convictions that are job-related and consistent with business necessity.

If an employer is going to utilize a criminal conviction to deny employment to an applicant, what they need to look at is the job-relatedness of the conviction and how recently the conviction occurred. For example, let’s say we have an individual applying for an accountant position. That individual was convicted of embezzlement 25 years ago. This is probably not job-related because the conviction was so long ago. Now let’s say, in contrast, we have an individual applying for a cashier position, and they were convicted of theft four years ago. This is job-related and consistent with business necessity. It’s relatively close in time to the job application, and it’s obviously related to the job. Now finally, let’s say we have a stockroom position opening and the individual has been convicted of theft 20 years ago… here again, the conviction was probably too long ago to be considered job-related and consistent with business necessity. On the other hand, if the conviction were three years ago, then it would probably be acceptable to deny employment on the basis of that conviction.

While I certainly recommend that employers consider criminal background checks at the end of the hiring process to protect against negligent hiring liability and help them with screening, I think a good alternative to their use is integrity testing.

An integrity test is a scientifically developed, validated assessment that is typically developed by industrial psychologists, and they’re developed to predict a large variety of various forms of employee counter productivity.

I recommend integrity tests because, first of all and very importantly, they do not have disparate impact on the basis of race or gender. Hence, they do not raise the issue like criminal background checks of adverse impact.

Secondly, integrity tests tend to screen out about 25% of applicants that are applying for a position. This is consistent with what we find in terms of counter productivity in the workplace. The test is screening out the percentage of individuals that we would likely find to be non productive, problematic workers in the workforce, unlike just 5% as we’re screening out with criminal background checks.

Finally, they are job-related and consistent with business necessity. A well developed test is going to have extensive documentation regarding its validity, reliability, and other technical aspects that an employer can utilize to show that it is an effective and legal tool to be used for screening.

As an aside, another important aspect is that there is no Federal Fair Credit Reporting Act compliance required. An integrity test does not fall within the purview of the Fair Credit Reporting Act, and hence, you do not need advance authorization from a job applicant to conduct such a test, nor provide them with follow up notices.

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