3 “Need to Knows” on Negligent Hiring

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avoid a bad hire

Most of us have seen the news headlines—numerous cases of workplace violence which could have been prevented with a simple background check that would have revealed an applicant’s dangerous past. In addition to the harm caused to the victim, these incidents often result in multimillion-dollar judgments against the employer for negligent hiring, severely damage the brand, and lead to decreased employee morale. But there are risks beyond what we typically think of in a negligent hiring case. Here are three issues to consider in mitigating the risk of negligent hiring while managing your employment screening program:

1. Extended Workforce Security Gap – According to a 2004 Workplace Violence Survey conducted by the Society for Human Resource Management (SHRM), more than 80 percent of employers have some form of a background screening program in place. But only a small percentage of those companies screen their extended workforce, less than 45 percent based on recent research conducted by HireRight. Further studies reveal that the average company’s workforce consists of 10 to 30 percent temporary or contract workers.

This creates an enormous gap in security and can expose a company to bringing unsavory workers into their workplace, which could result in negligent hiring lawsuits. Often these independent contractor employees have the same access to sensitive information as your direct workforce, and in addition, can pose risks to workplace safety. Statistics show that contract employees are twice as likely to have a criminal conviction, yet companies are failing to screen this important segment of their workforce.

To help close this gap, ensure that a background check that meets your screening guidelines is being performed on indirect workers before they have access to your systems, facilities and people.

2. Not Just Workplace Violence – Negligent hiring includes more than just workplace violence. Plaintiffs have won numerous lawsuits against companies, including cases for fraud, theft, harassment, and identity theft. A security company was recently held liable for the negligent hiring of an employee who conspired with thieves outside of the company and stole $200,000 in gold certificates. The guard was placed on duty without the company ever contacting his references.

Depending on the potential risk of the position, it may require that you screen for more than just a criminal background. The depth of the background check should be commensurate with the risk of the position. Conduct background checks that are relevant to the position and level of access to systems, facilities, and people. Particular attention should be focused on positions which deal with sensitive groups, such as children, the elderly, or the disabled, or which could potentially have unsupervised access. Conducting thorough reference checks, federal criminal checks, theft databases searches, licensing and credentialing verifications, and civil court records searches can help reveal these risks.

3. Expanded Liability – In recent years, the definition of “scope of employment” has seemingly broadened, making the proper screening even more important. Traditionally, employers were held responsible for an employee’s actions that occurred under the normal scope of his or her job. However, recent legal actions have indicated that employers can be held liable for incidents by their employees that did not occur under the normal scope of their job, even when they were specifically directed not to take those actions. As long as the incident occurred through the employment relationship, the employer could be found liable.

Negligent hiring cases continue to grab national headlines, and companies need to continue to work to reduce dangers to employees, customers, and the public. As the number of negligent hiring cases increases, and the scope broadens, it is critical that companies adapt their screening programs to protect themselves. More than half of the states in the U.S. have negligent hiring and retention statutes. By understanding these three negligent hiring risks, you are on the path towards further protecting your company from negligent hiring lawsuits.

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HireRight is a leading provider of on-demand employment background checks, drug and health screening, and electronic Form I-9 and E-Verify solutions that help employers automate, manage and control background screening and related programs.

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