Resource Center | Background Checks | Article

“The True Cost of Hiring the Wrong Person”

In recent years, the number of negligent hiring lawsuits filed against employers has increased….

These lawsuits are normally filed by a third party who is injured by your employee.  Most claims are made, charging that the company (you) did not do the proper due diligence of conducting a thorough background check before hiring the employee, and if a proper search had been done, the employee would not have been hired.

By not performing a complete and comprehensive background check, you are leaving yourself and your business open to the following:

  • Unsafe business environment
  • Embezzlement and dishonesty
  • High Employee turnover rate
  • Workplace violence
  • Negligent Hiring Lawsuits

The Average costs of a Negligent Hiring Lawsuit can range anywhere from Thousands of Dollars to Millions.

Courts have ruled that “an employer has a general duty to check criminal records for employees who will have interface with the public, or who could have a foreseeable opportunity to commit a violent crime against someone in the course of their employment.”

Here are a few examples:

  • An Appellate Court awarded $4 million to a woman who was raped by an employee. His employment application indicated no criminal convictions and the employer did not perform a complete background check.
  • A guard service was found guilty for inadequately checking a guard’s references when the guard helped steal from their client. The charge – negligent hiring – as they failed to investigate and the employee had a criminal record. The damages paid were over $300,000.

In addition, 30% of all business failures are due to employee theft and related forms of dishonesty.

Let Marcus Background Investigations help you protect your business. We have been in business for over seventeen years, and we are a Licensed Investigations Company. Please call us at 1-877-685-6691 to speak with us about how we can help you hire the best employee possible.  We can also be reached by email at info@marcusbackgroundinvestigations.com

For more information, visit our website at Marcus Background Investigations, www.marcusbackgroundinvestigations.com.

  • The failure of a hospital to discover that a nurse was discharged by a previous employer because of the unsafe handling of patients. The lawsuit was filed by a patient injured by the nurse.
  • A company’s failure to discover a security guard’s prior record of sex crimes, a lawsuit filed by a customer that was molested by the security guard.
  • An apartment owner’s failure to discover prior burglary convictions of a maintenance employee who had a pass key to all apartments. This lawsuit was filed by a tenant whose apartment was burglarized by the maintenance employee.
  • A real estate company failed to discover a pattern of abusive behavior on a new agent they hired. It was not discovered until after several key employees had left and went to another company with a more friendly work environment. One employee filed a lawsuit against the abusive agent and the company claiming sexual harassment.

NEGLIGENT HIRING LIABILITY

In 1999, Trusted Health Corporation was ordered to pay $26.5 million dollars to the family of a murdered patient. The court declared “prior to the time the employee is actually hired, the employer … should have known of the employee’s unfitness” and are liable if they did not perform an adequate background investigation.
Courts have ruled that “an employer has a general duty to check criminal records for employees who will have interface with the public, or who could have a foreseeable opportunity to commit a violent crime against someone in the course of their employment.”
LAWSUITS

  • A car rental company recently paid $750,000 to an employee who was raped by a fellow employee.
  • A guard service was found guilty for inadequately checking a guard’s references when the guard helped steal from their client. The charge – negligent hiring – as they failed to investigate and the employee had a criminal record. The damages paid were over $300,000.
  • An employee who had previously been convicted of passing bad checks, forged signatures on sales contracts. The court judged his employer negligent and awarded $175,000.
  • After driving for a telephone company for only a week, an employee was involved in a serious traffic accident. The jury learned that the company never saw the employee’s driver’s record which had five traffic tickets within 18 months. They awarded the injured party $550,000.
  • An Appellate Court awarded $4 million to a woman who was raped by an employee. His employment application indicated no criminal convictions and the employer did not perform a complete background check.
  • A hospital was found negligent in hiring a kidney transplant coordinator who was unskilled in reading medical charts. As a result, a patient was given a transplant of a cancerous kidney which resulted in his death.

SAFE HIRING AUDITS

Mike Sankey and Lester Rosen performed a Safe Hiring Audit, in a study done by ADP which shows that:

  • 30% of all business failures are due to employee theft and related forms of dishonesty.
  • The direct and indirect average cost of employee turnover is equal to 150% of the annual salary.
  • 51% of all resumes, applications, and references provided by applicants contain inaccurate information.

In addition, Intangible Costs also lead to:

  • Lost customers or business causing damage to a firm’s credibility
  • Damage to employee morale
  • Brand destruction
  • Litigation
  • The cost estimates of replacing an employee can range from two to seven times his/her’s salary.
  • Hiring and training costs can vary from 25 to 200 percent of annual compensation.
  • The more an employee earns, the more money it costs to replace him/her.

Numerous studies have also proven these facts:

  • 20% to 25% of all employment applications contain at least one major fabrication.
  • 1 in 3.8 assertions of college education is a falsehood.
  • 1 in 3 applicants will over-exaggerate their salary.
  • Less than 1 in 7 persons convicted of a crime will admit the conviction on an employment application.
  • Employees can steal enough to put their employer out of business.  It is estimated that employers lose $9 per employee each day.
  • A study in 1999 surveyed thousands of employees. 42% of retail sector employees, 32% of hospital employees, 25% of warehouse personnel, and 62% of all fast food employees admitted to theft.
  • Part-time employees are 33% more likely to steal from their employer than a full-time employee.

KEY PRACTICES TO HELP REDUCE NEGLEGENT HIRING CLAIMS

The best way to help reduce an unpleasant surprise about an employee is to learn as much as you legally can about an employee before you make an offer of employment:

  • Have each applicant complete an application for employment; make sure the

application is comprehensive in scope.

  • Get explanations for gaps in employment.
  • Use a reputable background check vendor to provide a thorough review of the applicant’s background, criminal, and driving record where applicable to job requirements.
  • Check references.
  • Keep documentation. It is possible that a criminal conviction does not show up on a background check due to timing of the incident and the report. Keeping the background check documentation is essential to show due diligence.
  • For employees working with sensitive groups, a more comprehensive analysis of the employee’s background should be performed.

Below you will find the package we recommend for your screening needs.

  • Search a multi-jurisdictional criminal history database background check searching 50 states plus the District of Columbia, and 50 states and the District of Columbia sexual offender database checking under all names that come up associated with the Social Security Number.
  • Perform real time background searches hand pulled from the local courthouse or statewide court systems.   All counties the applicant has lived in the past seven years should be checked along with any alias or maiden names.  The addresses are obtained through the Social Security Number Trace described below.
  • Run a social security number trace and verification, which shows where the person has resided in the past seven to ten years, and also validates the social security number.
  • Check Federal District Criminal records. Federal Offenses will not show up on a state or county record.

Let Marcus Background Investigations help you with all of your screening needs.  We have been in business for over seventeen years and have done thousands of reports.  We know where to look, what to look for, and we interpret the reports for you and break it down into an easy to read summary.  Of course, we are always available for free consultations.  Please call us at 1-877-685-6691 to speak with us about how we can help you hire the best employee possible.

We can also be reached by email at info@marcusbackgroundinvestigations.com

For more information, visit our website at https://marcusbackgroundinvestigations.com