Thursday, November 1, 2007

United States

Global Background Checks 

by Donald C. Dowling, Jr.
White & Case LLP

Challenge: Many multinationals use robust pre-employment background checking at headquarters, but too often fail to screen applicants adequately for jobs abroad. 

Pointer: Globalize applicant background checks by tailoring a global template to company needs. Then localize the template for each country, following a four-step plan.

Overseas, away from U.S. employment-at-will, hiring mistakes lead to complex and expensive terminations ―making background checking yet more important. Multinationals used to relegate applicant screening to their local operations, not bothering with global alignment. Indeed, practices at some multinationals still differ radically from country to country. For example, many multinationals’ U.S. headquarters do applicant drug screening while their French and Brazilian operations require (believe it or not) pre-employment handwriting analysis.

But now, after September 11, strategic multinationals want to approach background checks and pre-employment screening globally. Multinationals seem to think: We require thorough screening in the U.S. because we don't want to hire a criminal, someone with a bad work history, or an uncredentialed resume liar. Isn’t our business case for screening out bad applicants just as strong internationally, where terminations are so complex and expensive? Because our business case for screening is global, why not align practices globally?

Multinationals can indeed align background checking globally, as long as they tolerate local variations and surmount the significant overseas barriers to applicant screening. The laws in this area are surprisingly complex and varied; to oversimplify can be dangerous. Take four steps:

  1. Identify what background checking the company has a business case to do worldwide, in a best-case (no legal restrictions) scenario: Criminal background screens? Prior job reference checks? Credentials/diplomas screens? Credit screens? Full-blown background investigations? Medical tests? Drug tests? French-style handwriting analysis? (Separate out pre-employment pen-and-paper tests, such as skills tests and personality profiles: Those raise a very different set of legal issues.)
  2. Do a comprehensive country-by-country check for how to do the desired checking locally. Get aligned charts or reports that explain local rules and practices. Get applicant consent forms.
  3. Adapt screening procedures to local requirements. If any screening will be outsourced, identify local providers, and ensure they commit to follow applicable law. Rein in over-aggressive investigators who may pride themselves on being able to skirt local requirements.

  4. Engage local HR staff, motivating them to implement the screening fully. Ensure local HR is rigorous about consents, notices, and legal compliance, and informs and consults with employee representatives, where necessary. 

Steps #2 and #3 implicate local background check laws—how local laws affect a company’s desired screening approach and adapting procedures accordingly. Account for the wide range of local-law issues:

  • Releases: In Belgium, China, Japan, the Philippines and elsewhere, applicants should consent to release background check data.

  • Applicant collection: In Finland, France, Germany, Romania, and elsewhere, applicants must collect and submit information about themselves. But asking applicants to submit their own records raises quality-of-evidence issues. In Greece, applicants can issue a power of attorney in favor of the employer to collect records.

  • Past employment: South Korean law requires employers to comply with a prospective employer's request for a “certified” prior-job-history reference. However, the UK (like the U.S.) can impose tort liability on sources for untruthful references and for slander.

  • Local criminal checks: In UK, the Scottish Criminal Records Office and the Criminal Records Bureau of England and Wales do national criminal checks at three levels (Basic, Standard and Enhanced), depending on the job position and whether the position is “FSA” (financial services) regulated. Otherwise, in most countries criminal checking gets done regionally or by municipality, not nationally. But collecting criminal records is flatly illegal in Poland, and Spain prohibits employers from possessing criminal records (a Spanish applicant might show criminal records for inspection). In Indonesia and Taiwan, police authorities issue certificates of good behavior ("Surat Keterangan Kelakuan Baik," in Indonesia)—but usually the applicant himself needs to collect these. Netherlands police issue certificates like this, but only where the prospective job position could pose a "risk to the community."
  • Data privacy: Data privacy laws (especially in Europe) can impose severe restrictions on the availability of background check information. This legal issue chiefly goes to the provider of information, and reaches the prospective employer only upon receipt. However, the UK Employment Practices Data Protection Code does expressly reach the “verification” and “vetting” of applicant data.
  • Lawsuits: In Russia, disappointed applicants can contest in court the underlying accuracy of background information supporting no-hire decisions—making no-hire communications critical. 

International applicant screening is more vital than ever in the post-September 11 security environment, and outside U.S. employment-at-will, where hiring mistakes are expensive. Multinationals can align pre-employment screening worldwide by rigorously following a four-step plan.