Screening Contingent Workers
Why Screening Contingent Workers Should Be a Best Practice
Every individual who performs work for an organization introduces a certain measure of risk into that organization regardless of the individual’s work classification. Background screening is an essential risk mitigation tool to help protect the organization from direct and indirect business liabilities. Background screening of all workers helps to defend against claims of negligent hiring.
The composition of the workforce has changed significantly within the past decade or so. There is a marked shift away from a traditional employer-employee relationship to non-traditional non-employee alternative work arrangements. Non-employee alternative work arrangements through the use of contingent workers offer many benefits to employers including reduced labor costs and administrative expenses, flexible work scheduling, and shortened time to productivity intervals. Utilizing contingent workers allows the employer the opportunity to access “on demand” talent from a broad pool of experienced, skilled, and specialized workers with subject matter expertise for special projects and assignments.
Contingent workers can be independent contractors, part-time workers, temporary workers, freelancers, seasonal workers, leased workers, contract workers, on-call workers, interns, consultants, or other types of non-employees performing work for an organization.
The size of today’s contingent workforce varies by definition of the term “contingent worker” and the data source used for collection of information. Using the broadest category of contingent work as those workers engaged in temporary employment, it is estimated that contingent workers make up one-third of the total U. S. employed labor force. Within the next decade the number of contingent workers is expected to significantly increase as more employers turn to alternative workforce solutions for their work needs. The growth of this segment of the workforce and the complexity of issues in managing a contingent workforce requires all due diligence by the organization.
Organizations conduct employment screenings for permanent new hires as a risk management best business practice. However many organizations do not extend that best business practice to background screening their contingent workforce. These organizations fail to recognize the business risk posed by contingent workers as they perform work for the organization. Contingent workers may have the same access to an organization’s facilities, systems privileges, proprietary information, and customer data as does a direct employee of the organization. If contingent workers are not screened to the same standards as direct employees there can be significant potential liability risks for the organization.
An employer may be as equally liable for the harmful acts of a contingent worker against a member of the public or another worker as the employer would be if a direct employee committed the harmful acts.
Negligent hiring doctrine holds a business liable if, in the exercise of reasonable care, the business knew or should have known that the vendor, temporary worker, independent contractor, or other contingent worker was unqualified, posed a danger, or was otherwise unfit for employment or engagement.
An organization has the responsibility to provide a safe and secure work environment and to protect the safety of direct employees and the indirect workforce. Due diligence for workforce and workplace safety and protections extends beyond direct employee responsibilities to encompass all contingent workers. Background screenings serve to protect both work populations.
Employers should also understand their responsibilities when utilizing a staffing agency to provide contingent workers. While the staffing agency is typically considered the primary employer of the worker, under certain circumstances the employer (as the client of the staffing agency) can be held liable under the legal doctrine of “co-employment,” for any misconduct by the contingent worker. In other words, even though the worker is on someone else’s payroll, the business that uses and supervises the worker can still be legally liable for any harm caused by the worker.
Some employers may mistakenly assume that staffing agencies conduct background screenings on contingent workers and therefore the organization is protected against potential liability. However staffing agencies may not have a firm policy for screening contingent workers. The staffing agency may selectively conduct screenings on some workers or for some positions. Additionally the screenings standards used by the staffing agencies may not provide adequate protections that some organizations require or are required to provide. Employers will need to be aware of potential issues and conduct due diligence with staffing agencies to provide the appropriate screening standards that must be used.
Within an organization the nature of the work and the required access to company resources (systems and data) to properly perform the work will need to be evaluated by the employer for potential risk and monitored accordingly. A contingent worker performing such work should meet the same standards and screened appropriately as would a direct employee assigned that work.
Enforcing background screening practices for contingent workers can potentially reduce the risks of negligent hiring lawsuits, workplace violence, theft, fraud, embezzlement, data security breaches, malicious property damage, and negative public perception of an organization, its products or services.
Legal Requirements
Employers should be sure that they understand all legal requirements when utilizing alternative work arrangements. Due diligence may require consultation with legal professionals specializing in labor and employment related issues.
Background screenings may be a requirement by federal or state law for certain jobs, in certain industries, and for security clearances.
Specific industries related to national security, government contracts, security clearances or other security sensitive work generally require employers to conduct background screening on all individuals who will perform work for the employer including contingent workers.
There may be federal or state screening requirements for certain industries such as financial services, insurance services, and healthcare services to provide protections for the safety and security of consumer private and personal information. There may be specific requirements by law for workers employed in services to sensitive populations such as minors, the elderly, or the disabled.
Some states have more stringent requirements on certain issues than do federal laws. Additionally some states or local municipalities have passed legislation that may prohibit or restrict certain background screenings when used for employment purposes. Employers are held responsible to comply with all applicable statutes.
The employer’s due diligence extends to legal compliance with a number of requirements under federal, state, and local laws applicable to employment, consumer protections, anti-discrimination protections, taxes, workers’ compensation, unemployment insurance, and other labor-related issues. Employers should understand their obligations and responsibilities for engagement of a contingent workforce under applicable federal and state statutes. These laws and statutes may include the Fair Credit Reporting Act, the Equal Employment Opportunity Act, The Fair Labor Standards Act, the Internal Revenue Codes, The Occupational Safety and Health Act, The Family and Medical Leave Act, The Americans with Disabilities Act, the Age Discrimination in Employment Act, the Employee Retirement Income Security Act and various federal and state government agencies’ contract requirements. Of particular importance for understanding employers’ use of background screenings for employment purposes are the Fair Credit Reporting Act and the Equal Employment Opportunity Commission guidances.
Key Considerations
Employers conducting background screenings for workers – direct employees, independent contractors, consultants, and other contingent workers – should ensure that the screenings are consistent with business necessity, are job-related to the work in question, and are non-discriminatory and consistently applied per the employer’s background screening policy in order to ensure compliance with applicable laws and to defend against potential claims of discrimination and unfair practices.
Contingent workers with access to facilities, computer networks and systems, company or customer’s records, or have direct contact with employees or customers are in a position to harm the organization’s performance and reputation. Screenings of all workers whether a direct employee or contingent worker will help reduce the threat of potential business liabilities while protecting the company, employees, workers, clients, customers, and the general public from foreseeable harm.
Due diligence in background screening practices is a priority task for the employer’s duty of care obligations. Employers cannot afford liabilities of negligent hiring, workplace violence, employee theft, fraud, harassment, injury or other cause for action that could arise from the employer’s failure to adequately screen workers.
Background screenings of all workers are best business practices within the organization’s risk management model.