Annual Employee Background Check Program – Why and How

I expect that anyone reading this article already understands the necessity of running background checks on applicants during the recruitment process… However it is just as important to have policies and procedures in place to perform annual background checks on current employees to continue to protect your organization.

Quite simply – once we’ve on-boarded a good candidate following a clear background check we tend to relax and push on to find the next great new hire; yet statistics abound which should encourage companies to diligently monitor and screen their current employees throughout their term of employment.

Mmm… statistics! In 2008, a Global Retail Theft Barometer report showed that retailers lost $65 billion to shrinkage. (Shrinkage is defined as loss of product between point of manufacture and point of sale.) Other reports show that only 21% of losses are caused by shoplifting… which means that the vast majority of the losses may be attributed to employees or employee collusion with outside partners.  Now you may think, OK, but my company is not in retail; however, the US Chamber of Commerce and Infortal Worldwide © 2009 reports estimate that 75% of employees in all business sectors steal from the workplace and do so repeatedly. In addition, employee theft of personal information is a leading source of fraud. According to the FBI, virtually every company experiences losses due to pilferage; from “the removal of products, supplies, materials, funds, data, information, or intellectual property” to the filing of falsified employee expense reports.

There are a multitude of resources available to implement loss prevention programs for your organization including Integrity Screening, Awareness Programs, Asset Control and Loss Prevention Systems.  These kinds of programs are effective, but can be expensive and complex to develop and roll out.  However, a relatively easy to implement program is an Annual Background Check Program.  This type of program is very effective because from its inception, the program is “employee-centered”; unlike many other loss prevention strategies which focus more on facility and technology security, an Annual Background Check Program is focused on the individual employee, and is a consistent reminder that their personal integrity and accountability is valued by the employer. In addition, this type of program integrates seamlessly with other loss prevention programs to ensure a comprehensive program of protection.

In order to implement an Annual Background Check Program, you will need to address the following:

1. Ensure that the Applicant Release Form, which the applicant signs to authorize the initial background check, is “Evergreen”. Essentially, the form needs to contain a statement which clearly informs the applicant that by signing this form, they authorize the employer to order pre-employment background checks as well as annual and/or random background checks in accordance with company policies throughout the term of employment, should the applicant be hired. Be sure to retain signed forms digitally as part of your program.
2. Ensure that your policy of annual and/or random background checks is clearly defined within your organizations’ Employee Handbook and other new hire information documentation.
3. Ensure that your HR team consistently applies the program to all employees, and that clearly documented policies and penalties are enforced should an employee background check make such action necessary.
4. Check with your background screening services vendor to ensure that their ordering and reporting platform has the functionality to allow you to set a system reminder for annual background checks.  Most vendors have this feature as a simple checkbox in which you can enter the applicant’s hire date and on an annual basis the system sends a simple email notification to the primary user.

What checks to run annually?
For criminal due diligence at a minimum, you will want to run a County Criminal Search in the County in which the employee currently resides and an Instant National Criminal/Sex Offender search (keeping in mind that the national criminal report portion of the latter is not truly a nationwide search – not every county of every state uploads information to the database and DE, MA, SD, and WY do not participate in the national criminal database.)  Over and above this, if your employee drives or has the use of a company vehicle to perform their job role, your insurance provider will likely require an annual Driver Report to maintain coverage; this should be part of your on-going Annual Employee Background Check Program.

Again, be certain that you have documented and widely promulgated company policies in regard to what actions HR is to take should an annual or random background screen return with adverse information and always apply these policies consistently to all employees.

Lastly, as a side note, most business insurers offer coverage for employee theft and/or embezzlement… check your coverage.  And, once you have implemented an Annual Program similar to that outlined above, discuss this aspect of your overall loss control approach with your insurer – perhaps a premium adjustment will be in order!

This information is not intended to constitute legal advice and should not be relied upon in lieu of consultation with your organization’s appropriate legal advisors.