Companies are Insisting that Staffing Agencies Run Background Checks on Temps

Freddie Mac is all for making Americans feel at home. But when it comes to welcoming contingent workers into its busy offices, the Virginia-based home loan mortgage giant plays by the strictest of house rules.
Currently, Freddie Mac relies on nearly 40 temporary-staffing agencies to fill positions ranging from data-entry clerk to senior accountant. In order to join this roster, however, an agency must contractually commit to subjecting each temporary worker placed within Freddie Mac to a rigorous background check. Not only must these checks be performed by American Background Information Services, Freddie Mac’s consumer-reporting agency of choice, but temporary-staffing agencies must foot the bill for the added service as well.

"It’s the cost of doing business with us," says Patrick Matus, Freddie Mac’s manager of contingent-workforce contracting. Matus makes no apologies for his employer’s non-negotiable approach to vetting temporary workers. With nearly 2,400 contingent employees working for Freddie Mac at any given time, Matus says, the company simply can’t afford to take unnecessary security risks.

It’s a common refrain among businesses today. Never before has corporate America been so vulnerable to the machinations of ill-intentioned temps. For years, companies invested heavily in the screening of full-time employees to ensure workplace safety and business productivity. Temporary workers, on the other hand, were often regarded as fly-by-night helpers, employees who simply didn’t stick around long enough to warrant in-depth investigation. All that has changed.

Easy-to-access computer systems, and the proprietary information stored on them, have expanded the opportunities for a temp to wreak havoc on an unsuspecting company. Corporate governance has placed enormous pressure on businesses to hold employees--temporary and permanent--to the highest of ethical standards. In the meantime, outsourcing has broadened the very definition of temp to include a range of jobs from a mailroom clerk to a call-center manager situated overseas. But all it takes is one unlawful temp to expose a company to legal liabilities, financial ruin and criminal complicity.

"It’s only been in the past couple of years that companies have woken up and said, ‘We’re very diligent about our own employees, but 40 percent of the people that are on our facilities are [temporary workers]. What am I doing about that?’ " says Chris Andrews, chief executive officer of American Background.

Temporary-staffing agencies have been quick to offer an answer. Many are willing to retain the services of a consumer-reporting agency on behalf of their clients. At fees ranging from $20 to $200 per name, these agencies sift through courthouse documents for criminal records, examine workers’ employment history, verify education claims, conduct in-depth reference checks, retrieve driving records and obtain credit histories. In turn, companies can conveniently access this information via the Internet from their desktop computers.

Bill Zavatchin, Manpower’s director of business process design, says that requests for background checks on temporary workers have increased more than 20 percent since September 11, 2001. The Wisconsin-based temporary-staffing agency works with a variety of companies that provide employee-screening services, including those specifically requested by its clients. Whether or not Manpower foots the bill for the added service is negotiated on a per-client basis.

Although it is currently one of the most popular approaches to vetting temporary workers, employee screening is far from being a panacea. Background checks can reduce a company’s exposure to risk but can also come at a cost to productivity. Creating a paper trail that details a worker’s employment, criminal and geographical history can be a lengthy procedure for even the most seasoned gumshoes. In fact, the employee-screening process can take as long as five business days, a veritable lifetime for a company in desperate need of temporary help. "The challenge is getting [the background check] completed quickly because...it’s otherwise preventing someone from actually being on the job," Zavatchin says.

The high price of decent detective work is also dissuading temporary-staffing agencies from making background checks routine. According to Edward Lenz, general counsel for the American Staffing Association, the staffing industry assigns upwards of 10 million employees each year. Screening each applicant on behalf of clients could "conceivably add hundreds of millions of dollars to the cost of providing staffing services," Lenz says.

Nor are there any guarantees that a background check will cover all the necessary bases. Currently, there is no national repository for criminal records in America. As a result, many consumer-reporting agencies rely on researchers known as runners to track down public records at various locations across the country where a temporary worker has lived. This patchwork of information, gathered from various states and culled from correctional databases and sex-offender registries, is all too often riddled with false negatives and dangerous omissions.

The "Byzantine structure of court records," as Andrews of American Background describes it, is only part of the problem facing companies that wish to thoroughly vet their temporary workers. Andrews adds that businesses must also contend with "an incredibly confusing tapestry of regulatory burdens," as well as restrictions regarding what types of information they can gather and how they may use this information. The Fair Credit Reporting Act, for example, requires that subjects give their permission for a background check and receive copies of any records used in employment decisions. The flip side is that performing a background check can expose a company to allegations of discrimination, especially if it then declines to hire a job applicant because of information gathered via the employee-screening process.

To circumvent this legal land mine, many companies are turning to online outfits such as InstantPeopleCheck.com to vet their temporary workers. There are more than 450 companies currently offering background checks on the Internet. But promises of delivering background reports at record speed and with unparalleled accuracy often fall flat.

It’s a problem familiar to Shawn Bushway, a criminologist at the University of Maryland. As part of his research, Bushway recently gathered the criminal records of 120 current parolees in Virginia and submitted their names to an online employee-screening company. Sixty-four of the names came back displaying no criminal record at all.

There will always be temporary workers who slip through the cracks of poorly executed background checks. But companies need not be easy prey, especially when it comes to protecting their computer systems. Sean Martin recognizes the importance of proactively safeguarding one’s proprietary data and intellectual property from today’s tech-savvy temps. Martin, a senior consultant with Deloitte and Touche’s human capital advisory services practice, says that companies should start asking themselves, "How valuable is my data and what steps am I going to take to protect it?" After all, Deloitte’s 2003 Global Security Survey reports that nearly 40 percent of respondents had experienced a security breach during the previous year.

Martin recommends creating an individual profile for each temp who is granted access to a company’s computer system. This profile should include details on an individual’s overall access to a system, what user names and passwords he/she has been assigned, and what controls are in place if the need arises to swiftly terminate access. What’s more, a company’s information technology department should maintain detailed audit logs of network activity so that peculiar behavior can be flagged immediately.

Gathering all the necessary information on a temporary worker, however, calls for enormous cooperation between a company’s human resources and IT security departments, a relationship that has long been plagued by "opposing cultures" and an unwillingness to work collaboratively, says Vince Pascarella, general counsel at HRPLUS, a Colorado-based provider of background reports. "HR is sort of the warm and fuzzy feel-good department. But the security department tends to be more law enforcement and rules oriented," says Pascarella, accounting for the rift that often exists between these two departments.

These barriers must be overcome, however, if a company wishes to safeguard its computer systems. Holding monthly meetings, exchanging information on computer-network vulnerabilities and sharing knowledge of a temporary worker’s access to a computer system can help forge a united front.

The simplest route to mitigated risk, however, doesn’t involve meticulously combing through court documents or keeping tabs on mission-critical computer systems. Instead, the age-old practice of soliciting feedback is sometimes all that is required to assess the suitability and safety of a temporary worker. Companies must be willing to provide temporary-staffing agencies with feedback on a worker’s performance and behavior. In turn, agencies should maintain detailed records of client feedback and ensure that these documents are readily available to their clients.

Detailed background checks, computer-security measures and relationship-building exercises might seem drastic given that the majority of today’s temporary workers complete their assignments without incident. But according to Monica Barron, who recently left her position as research director at AMR Research, the risk of property and identity theft have raised the stakes. "I don’t think you can be too careful about really knowing who’s coming onto your facilities and what they are doing," she says.

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