Temp Employees, Contractors and Background Checks: Facts, Consequences, and Accountability

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Did you know that employers often do not screen temporary and contracted workers because it is assumed that the Temp Agency had checked their backgrounds? In some instances, temps are eventually hired as full time employees and are completely skipped in the background check process. This can lead to negligent hiring cases and can ultimately become a financial catastrophe for your business.
For the past 5 years, the staffing industry added an average of 1,000 to 2,000 jobs per day. For 2009, this totaled approximately 8.6 million temporary and contracted employees for the year. Approximately 53% of those who remained in the workforce move on to permanent positions. Temporary and contracted workers make up 10-30 percent of the average work force in U.S. companies. It is estimated that 50 percent of these workers did not have background checks performed on them.
On October 15, 2003, Vtech Communications was not prepared for the ruling by the Court of Appeals of the State of Oregon.
Teena Rodriguez worked as a temporary payroll clerk for Vtech Communications. After 90 days, she was hired as a full-time permanent employee. Vtech Communications assumed that the temp agency, Robert Half, Inc. had done a thorough background check on Teena.  Teena had stated on her application that she did not have a criminal background.  However, one month prior to signing on with the temp agency, Teena Rodriguez had pleaded guilty to aggravated theft based on embezzlement of money from her previous employer.
Vtech Communications did not conduct an additional interview, or check Teena Rodriguez's references or criminal background before making her a permanent employee. Over the next two years, Teena Rodriguez embezzled $1.3 million from Vtech Communications. As yet unaware of the embezzlement, Vtech terminated Teena Rodriguez for unrelated reasons. Shortly thereafter, Teena's probation officer contacted Vtech Communications and informed them of Teena Rodriguez's previous conviction for aggravated theft. An internal audit was performed at Vtech Communications and they discovered embezzlement within their company by Teena Rodriguez.
Vtech Communication sued Robert Half, Inc, alleging breach of contract and negligence. Vtech claimed that the agency failed to check the temp's references, which would have given insight into her criminal record. However, the contract stated nothing about checking references. On October 15, 2003, the Court of Appeals of the State of Oregon sided with the temp agency, saying it didn't owe Vtech communications any duty of care that wasn't stated in the contract.
Background screening is less costly in comparison to the amount that it will cost you if a contractor or temporary employee harms a fellow employee, client, or defrauds your company.  The cost to replace an unsuitable hire averages more than $7,000. Negligent retention cases are growing rapidly across the U.S. and a settlement stemming from a negligent hiring lawsuit averages more that $1.6 million.
You owe it to your company to take the responsibility to make sure your temps check out. What is in your contract? Are you 100 percent sure that the proper background check is being done on your contractors or temporary workers? In many cases, you can dictate what kind of background check is performed on your Temporary employees and which company performs them. HR ProFile recommends a 7-Year Nationwide Criminal County Record Search and Previous Employer History Verification for "standard" checks on all temporary and contracted employees.    Please ask us how we can help protect your company today!

American Staffing Association.  "Staffing Statistics 2010"
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Bureau of Labor Statistics "Economic News Release"
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Business Information Group. (Date not provided)"The Analysis of the FDIC's Guidance on Developing an Effective Pre-Employment Background Screening Process"
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Oregon Judicial Department Appellate Court Opinions. (2003) "Vtech Communications, Inc vs. Robert Half, inc. dba Accountemps, Inc." (Pages1-7)
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Berchem, Stephen P.  " (2008) American Staffing 2008 Uncharted Territory, Annual Economic Analysis Puzzles Through the Data and Explains the Trends" (Pages 2-4)
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Melchiono, Rick. (1999)  "The Changing temporary workforce: Managerial, professional, and technical workers in the personnel supply industry." (Pages 26-32)
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