A single negligent-hiring lawsuit can cost millions of dollars, and construction companies must be proactive to avoid such litigation. Even if a poor hiring decision doesn't result in a lawsuit, the subsequent negative publicity can cause irreparable damage to a company's reputation with other key stakeholders.

Very few industries face as many risks and exposures as the construction sector. Construction employers, contractors, and engineering firms have a duty not to hire individuals whose criminal history indicates they are unsuitable for the job. Knowing as much as possible about employees before they become intimately familiar with a business is crucial. New hires must be able to interact successfully with contractors and coworkers. Construction companies need qualified workers operating machinery and heavy equipment. Furthermore, a number of positions may not be directly supervised constantly, leaving the door open for potential liabilities.

Preemployment screening is one of the best risk-management defenses against workplace violence, drug abuse, accidents, and theft, especially when it comes to hiring reliable and trustworthy workers. Not only is it possible for an employee to cause an accident operating machinery or equipment while drunk or using drugs, a malevolent employee with access to critical company information could potentially inflict serious financial damage to a construction business — putting jobs and key stakeholders at risk. Moreover, liability for negligent hiring and retention can occur if an employer fails to conduct comprehensive background checks on employees. Simply stated, the potential for lawsuits and corporate liability for negligent acts reinforce the importance of due diligence in hiring practices.

Construction companies can also use the screening process to determine whether an applicant has been honest through the initial application process. Supplying false information on an employment application may indicate a potential hiring risk and can be a justifiable cause for termination.

Tips to Lessen Liability Concerns before Hiring

It's important to investigate a candidate or employee thoroughly and evaluate the information received from a background-check provider. Companies should ensure that the information used to select or deny an individual candidate is based on established facts relevant to the position. In addition, a thorough background check should include a combination of national database and single-county searches.

When conducting background checks, companies must adhere to the Fair Credit Reporting Act (FCRA). The employer must obtain written authorization from the applicant that allows the company to perform a background check, obtain past education or employment references, obtain professional license reports, and so on. Additionally, if a background-check report produces negative or adverse information, the applicant, under FCRA guidelines, has a right to dispute the report.

Tips to Reduce Liability

• Develop internal policies and mandate n companywide commitment to mitigate risk and promote a safe work environment.
• Develop a preemployment screening policy using background-check products and services to ensure safe hiring practices.
• Follow all FCRA rules and regulations.
• Perform due diligence in selecting the right screening supplier for your construction business.
• Use multiple screening products and develop position-specific standardized searches.
• Establish criteria to evaluate information. For example, what will constitute disqualifying information?
• Incorporate applicant background information and release forms in an application or prehire package.
• Eliminate subjective opinions to ensure consistency when interpreting results.
• Conduct a periodic program review to ensure that all applicable policies are being adhered to.
• Conduct periodic screening of employees to maintain a dependable workforce free of unlawful behavior.

Although preemployment screening and background checks are important, periodic screening is also vital to mitigating unlawful behavior and maintaining a dependable workforce. For example, an applicant may pass an initial criminal background check but, after being hired, commit a criminal offense justifying termination. Since such actions could be imputed to employers, it is imperative that businesses periodically screen employees to identify those individuals who may have committed crimes. Additionally, to reduce the likelihood of an employment discrimination action, construction companies and contractors should create a standard screening policy across the enterprise rather than conduct background checks case by case.

The Checks and Balances of Background Checks

Inadequate due diligence and negligent-hiring practices in the construction sector harm not only a business but also can affect every stakeholder involved. Indeed, poor hiring can be cited as a contributing factor in the rise of lawsuits, workers compensation claims, and resultant multimillion-dollar settlements. An employer's obligation to maintain a safe working environment arises from legal principles. By implementing a consistent screening policy, construction companies and contractors will avoid costly hiring and recruiting mistakes, mitigate exposure to risk and litigation, and reassure employees and other key stakeholders that the individuals working with them have been properly investigated.

William F. Hauswirth is president of IntelliCorp Records, Inc., an ISO Company based in Beachwood, Ohio. IntelliCorp (www.intellicorp.net) helps businesses and organizations reduce exposure to fraud, workplace violence, and negligent-hiring lawsuits.