“ Hiring Right the First Time and Avoiding Costly Mistakes ”

1. “Hiring Right the First Time and Avoiding Costly Mistakes” Presented By: Gurdon Blackwell, Regional Vice President April 19, 2012

2. Who will star in your next big movie? You are a big time Hollywood executive. You need to find the next big star to play the leading role in your upcoming blockbuster! You want to make sure you hire the best leading actor and actress to make your movie a huge success. Can you guess the Star from their resume?

3. Booked for second degree assault, menacing and criminal mischief. Held with no bond. Who will star in your next big movie? Resume: Resume: Highest paid actor on television, earning $1.8 million per episode. Golden Globe award winner. Starred in Platoon, Eight Men Out, Wall Street, Major League and dozens more.

4. Arrested for felony, probation violation and grand theft. Who will star in your next big movie? Resume: She began her career as a Ford Model and appeared in over 60 commercials. Starred in 23 movies Disney’s the Parent Trap to Herbie Fully Loaded. Is a recording artist as well.

5. Arrested numerous times on drug related charges including cocaine, heroin and marijuana. Also for trespassing and a concealed weapon. Spent nearly a year in a substance abuse treatment facility. Who will star in your next big movie? Resume: Nominated for 2 Oscars and has another 20 awards to his credit. Has appeared in 74 movies and is best known for his role in Iron Man, Sherlock Holmes and Tropic Thunder.

6. Industry Facts • According to the Workplace Violence Research Institute, negligent hiring costs U.S. businesses in excess of $20 billion annually. • Nearly 45% of potential employees have either a criminal record, bad driving record, worker’s compensation claim or a bad credit history. • Nearly 33% list inaccurate dates of employment by more than three months. • 9% of job applicants falsely claim they have a college degree, list false employers, or identify jobs that don't exist. Source: www.americandatabank.com/statistics.htmResume Inflation: 2 Wrongs May Mean No Rights, by Barbara Kat Repa, Nolo.com

7. If Background Checking Is Not Required By Law, Why Do It? Accuracy Confirm the applicant is accurately representing him / herself. Productivity Ensure the person is really qualified for and can perform the job. Safety Ensure the person does not pose a threat of harm to co-workers, patients and the public. Legal Minimize the likelihood of litigation and large jury verdicts.

8. Potential Legal Action By Employees • Jury Verdicts • Negligent Hiring / Retention

9. Negligent Hiring / Retention Cause of Action • Hires or retains an “incompetent” employee • Knows or should have known the employee was unfit to do the job • Acts in a negligent manner (or fails to act) by breaching its duty to maintain a safe workplace The injury caused must have been foreseeable, and proximately caused by the employer’s negligence.

10. Jury Verdicts • Employers lose 72% of all negligent hiring suits. • Employee violence • $46 million verdict against Home Health Care Company in New Jersey • $30 million verdict against national retailer • High risk situations where employee has access to customer homes (e.g., deliveries, home care, home demonstrations/cleaning) • Post 9/11: Look at employee’s level of supervision, amount of contact with the public and access to safety sensitive information. Statistics provided by: http://www.americandatabank.com/statistics.htm

11. Best Practices Employment Application Process • Resume / Cover Letter • Employment Application Form • Interview • Conditional Offer of Employment • Background Check Preventive Tip: Background Checking should be narrowly tailored to obtain job-related information with respect to the position at issue.

12. Minimize Litigation Risks By Job Applicants’ Pre- and Post-Adverse Action Best Practices • In Pre-Adverse Action Notice, reveal the nature of the information received from the CRA. • Include with this notice a copy of the report and notice of rights as required by FCRA. • Give a short but reasonable period of time to provide information that would explain the discrepancy, omission or misrepresentation. • If employee is unable to do so, take adverse action and follow FCRA requirements.

13. Best Practices Other Preventive Strategies • Look for red flags in the application process and follow-up on them. • Have job applicants sign statement on employment application acknowledging that providing false information is grounds for disciplinary action up to and including termination. • Consider centralizing verification procedures.

14. Resume / Cover Letter • Recent Studies suggest that more than 40% of all job seekers lie on their resume. • A disturbingly high degree of misinformation concerning past employment and educational background. • Information obtained during the application process must be tested and validated. Statistics provided by: http://www.americandatabank.com/statistics.htm

15. Employment Application Form • Review for legal compliance (e.g., question regarding criminal convictions). • Have good disclaimer language, including language that false or misleading information constitutes grounds for immediate termination. • Require applicant to complete entire form, and sign and date it (don't just allow applicants to attach their resume or leave sections blank).

16. Conditional Offer of Employment • If you offer a position, make sure it is conditional on the successful completion of a background check. • Conduct a thorough background check tailored to the particular position.

17. If You Use An Outside Vendor, You Must Comply with the FCRA • The Federal Fair Credit Reporting Act (“FCRA”) directly affects an employer’s ability to obtain background information on applicants and current employees through contracts with third-party “consumer reporting agencies” (“CRA”). • Vendors that conduct background checks are CRAs. • The FCRA regulates the circumstances under which employers can use CRAs to obtain background information and to rely on that information to make employment decisions.

18. State Laws Create Additional Compliance Issues • Some states have fair credit reporting laws that have more stringent requirements than the FCRA (e.g., California). • States have other laws that also limit the use of information you can obtain and how to use it once it is obtained (e.g., New York, criminal convictions and arrest records).

19. “What Types of Background Checks Are Appropriate for my Company?” Consider the menu of options that are available…

20. Menu of Background Checking Options Includes, but is not limited to: • Social Security Trace • Consumer Credit Reports • Criminal Conviction History Search • Social Media Screening • Prior Employment / References • Educational Verification • Department of Motor Vehicle Reports • Substance Abuse Testing • Sexual Offender Search • Office of Foreign Asset Control (OFAC) • Vigilance / Recheck Program

21. Avoid Cases of Mistaken Identity • Social Security Trace • Check Names Retrieved on Report • Address Information • Make sure the information you obtain is for the correct individual.

22. Criminal Conviction History Search • Applicant’s Name • Jurisdiction • Docket Number • Indictment Number • Arrest Date • Reason for Arrest • Disposition Date • Disposition Type of Information to consider:

23. Criminal Conviction Information • The seriousness of the offense • The date the offense occurred • The person’s age at the time of the offense • Evidence of successful rehabilitation • General lack of “good moral character” is insufficient Factors to Consider:

24. Consumer Credit Reports • Number and List of Accounts • Number of Accounts with Negative Information • Number and List of Accounts that have Placed the Applicant’s Account for Collection • Public Records • Total Outstanding Balances • Outstanding Balances and Payment History by Account The type of information to consider:

25. Why Should A Company Conduct Drug Testing

26. Pre-Employment Substance Abuse Testing Most Tests Screen for the Following Drugs: • Cannabinoids (THC) • Cocaine • Amphetamines • Opiates • Phencyclidine (PCP) • Barbiturates • Benzodiazepines • Methadone • Propozyphene

27. Department of Motor Vehicle Reports • Current status of license • History of speeding, reckless driving, careless driving, DUI, DWI, etc. • All suspensions with dates and causes of said suspensions The type of information to consider:

28. We Live Online Social Media Screening We Screen Online 66 hoursa month on the Internet (not at work) Almost 80% of US recruiters check reputational data online. 66 hrs Source: http://www.dailycognition.com/index.php/2010/03/13/interesting-internet-statistics-from-2010-onwards.html

29. Social Media Screening

30. Social Media Screening • Catch 22 NOT USING SOCIAL MEDIA? • Not using publicly-available information to prevent hiring someone who committed [violence at work] puts the company at risk of being accused of negligent hiring practices. USING SOCIAL MEDIA? • Looking at Protected Class Information risks accusations of discrimination. • Times Have Changed • Used to be that when something happened, “he was a quiet, nice guy – I’m shocked!” • Now: “If only someone had connected all of the dots.”

31. What Can Social Media Tell Us?

32. Conclusions • Employers should get to know the people they intend to hire before making the decision to hire. • Background checks can be conducted effectively without violating employee rights. • Employers that fail to do an adequate background check subject themselves to legal liability.

33. “Hiring Right the First Time and Avoiding Costly Mistakes” Presented By: Gurdon Blackwell, Regional Vice President April 19, 2012