Here are two questions about hiring:  1) What’s the biggest mistake companies make in hiring employees; and 2) what’s the biggest legal obstacle employers face in hiring?

Answer to question No. 1: Their biggest mistake is in not bothering with pre-employment screening.

Answer for question No. 2: In some cities like my hometown Seattle, employers aren’t allowed to warn job candidates — in advertising, job descriptions or application forms – that they’ll be required to pass criminal background checks.

Such a “ban the box” ordinance is designed to help former criminals get a job. City officials contend such applicants have been discriminated against, and, in effect, tells them to stay away.

The Seattle “Fair Chance Employment Ordinance” also prohibits questions about criminal backgrounds until after a company does an initial screening “to eliminate unqualified applicants.”

Ironically, the ordinance hurts both the applicant and employer. Applicants are misled and waste time in job hunting. Employers are stymied in hiring by an unproductive legal obstacle.

Importance of trust

One truism remains: Trusting relationships are imperative for a business.

If an applicant lies on a resume or application, the person is likely to be dishonest as an employee or is unqualified to do the job.

Either way, you don’t want such a person to handle money.

There are other reasons to consider.

“Your business is legally required to provide a safe place for employees to work and a safe place for customers to patronize,” says Michael Klazema, lead author and editor for

“If you fail to provide this safe environment and one of your employees or customers is hurt at your place of business, you can be held legally liable,” he adds. “This liability can in turn lead to costly lawsuits, public relations nightmares, and other things that you don’t want to deal with.”

Michael KlazemaMr. Klazema has been developing products for pre-employment screening and improving online customer experiences in the background screening industry since 2009. (I’ve also quoted him to avoid the 10 most common background screening gaffes.)

If you don’t run a background check, he uses a typical example in which you could be accused of negligent hiring.

“It soon becomes apparent that the person you hired has something of a nasty temper, and one day, when dealing with a particularly rude customer, he’s pushed past his breaking point,” suggests Mr. Klazema. “He violently assaults the customer, causing serious injuries before you or other employees can stop him.”

There are even worse ramifications for you.

“Because one of your customers is in a hospital bed following the altercation, and is pressing charges not just against your ex-employee, but also against your business,” he surmises.

“It turns out the person you hired had a lengthy criminal record with convictions for assault and attempted murder, and since you failed to run background checks, you didn’t do your due diligence in ensuring that you were providing a safe environment for customers and employees,” he says.

“You were, in short, guilty of negligent hiring, and your business will have no means to defend against a liability lawsuit,” he concludes.

Getting back to the Seattle “ban the box” issue, the implication is that background checks is an invasion of applicants’ privacy.

“Most of the information compiled in background check reports – criminal histories, degrees, professional certifications, etc. – is a matter of public record anyway,” Mr. Klazema points out.

“And since most job searchers these days know to expect background checks as a part of the pre-employment process, there’s no sense in worrying about whether background checks cross a moral line,” he argues.

“Just be sure to get written applicant permission before you go digging around in their past,” he warns.

What do employers – successful in hiring – consider in background checks?

Employers typically review seven items:

  1. Credit history but scroll down to see the caveat caused by the Equal Employment Opportunity Commission (EEOC) and why some companies have had problems
  1. Education claims – what college, when attended, verification of degrees
  1. Employment verification – title and how long a person worked for the previous employer
  1. Criminal history to see for what if any convictions
  1. Licensing and certification to see if it’s valid
  1. Driving record if the position requires driving
  1. Social media to look for good judgment

One truism remains: Trusting relationships are imperative for a business. If an applicant lies on a resume or application, the person is likely to be dishonest as an employee or is unqualified to do the job.

EEOC has been suing employers over their use of credit checks, especially when credit checks were used as a screening tool for African Americans.

The government uses what it calls disparate impact considerations:

  • Does the employer use a particular employment practice that has a disparate impact on the basis of race, color, religion, sex, or national origin? For example, if an employer requires that all applicants pass a physical agility test, does the test disproportionately screen out women? Determining whether a test or other selection procedure has a disparate impact on a particular group ordinarily requires a statistical analysis.
  • If the selection procedure has a disparate impact based on race, color, religion, sex, or national origin, can the employer show that the selection procedure is job-related and consistent with business necessity? An employer can meet this standard by showing that it is necessary to the safe and efficient performance of the job. The challenged policy or practice should therefore be associated with the skills needed to perform the job successfully. In contrast to a general measurement of applicants’ or employees’ skills, the challenged policy or practice must evaluate an individual’s skills as related to the particular job in question.
  • If the employer shows that the selection procedure is job-related and consistent with business necessity, can the person challenging the selection procedure demonstrate that there is a less discriminatory alternative available? For example, is another test available that would be equally effective in predicting job performance but would not disproportionately exclude the protected group?

So to guard against adverse attention from the EEOC, here are some pointers:

  1. Analyze your legal exposure for each position
  2. Make certain you can justify a business purpose for a credit check. For instance, consider if an applicant be handling money or financial records. You might even justify running a credit check on a janitor who would have access to financial records or money via a master key to your facility.
  3. Document policies for your positions. Include your business purpose.
  4. If an applicant has adverse credit items, inquire with the person to discuss the matter. In our tepid economy there might be legitimate reasons.

The EEOC is also scrutinizing employers’ use of cognitive tests for similar reasons.

Hiring is increasingly problematic, but use due diligence and the odds will be in your favor.

From the Coach’s Corner, here are more hiring tips:

Are You Hiring? Advertising Tips to Attract the Best Talent — Whether your business has grown so you need to hire a key professional or you’re replacing person, here are advertising-recruitment tips.

Hiring Impact An Impact Person Starts with Screening Resumes — 5 Tips — If you want to hire an impact person, your hiring process is really important. The place to start is using best practices in screening resumes.

Critical HR Recruiting Strategies for Business Profit — By developing strategic recruiting plans, human resources professionals will make significant contributions to the bottom-line profit goals of their employers. So, it’s imperative to innovate in your recruiting processes and market your strategies to senior management and hiring managers.

Hiring? 4 Pointers on Negotiating Wages with Job Applicants — Some employers have had difficulty in successfully extending job offers to applicants, especially Millennial professionals. It’s not uncommon to interview applicants who aren’t shy in negotiations with their inflated egos and salary expectations. Of course, that wasn’t the case in the Great Recession.

Recruiting an IT Professional for Your Small Firm? 6 Tips for the Right Skills — Are you looking to add information technology personnel? You want to hire for a competitive edge, right? IT is a crucial position for you. The difference between failure and success requires reflection to hire for the right competencies.

“You can’t teach employees to smile. They have to smile before you hire them.”

-Arte Nathan


Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.