Understanding The Fair Credit Reporting Act

The openness of our technology has made genuine privacy impossible. With this being said, how can we be safer in the modern world? Jonathan Kraut of Net Check Investigations and Bill Stierle drill down how comprehending the Fair Credit Reporting Act can make notable differences to many. How FCRA regulates privacy has been outlined long ago by the congress. Jonathan and bill share how everyone can protect themselves from violations or risk to personal data by following the act correctly. They also touch on privacy information, permissible purpose, and correcting data. Learn more about how the integrity of the system on protecting us and companies from fake, tampered, or leaked data on today’s show.

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Understanding The Fair Credit Reporting Act

The FCRA Provides Requirements And Boundaries Regarding Background Checks And Employment And Tenant Screening

I’m here with Jonathan Kraut of Net Check Investigations, California License 215229. As a part of this show, we want to contribute to the population to understand that information is power. In the world of investigations, one of the important things is to be able to create a quality information that’s in alignment, that is legal, that follows the rule of law, as well as do things that can be used and are validated in the court of law. Jonathan, welcome to the show and I’m looking forward to get going. You have an interesting topic for us.

We do. It’s the Fair Credit Reporting Act, which is important. Every employer, every person with a credit card and a Social Security number should know what that is.

Everybody with a credit card and Social Security number need to know this? That’s like everyone. The main thing with this is that if there are seven things that we need to know about the Fair Credit Reporting Act, and we’re going to drill down into this, it seems like that’s this piece of information and having the power of this information can make a difference for people.

It’s regarding the rights of an individual and the act is supposed to protect individuals who have confidential information, which includes, in some cases your date of birth. Literally, everyone born is covered under this act.

That’s interesting because the need for safety and the need for privacy in our technology age, it’s easier to get away with things a little bit because of the openness that our technology affords us. Am I guessing that right?

Yes, our objective is to help everyone protect themselves against violations or risk to personal data and also to help employers and renter, landlords and other businesses following the act correctly so they’re not vulnerable to lawsuits and other issues.

Privacy is such an important need for us as a human being. How does that FCRA regulate privacy? What are some of the things that go into this?

In 1970, the United States Congress passed the federal act, which is called the Fair Credit Reporting Act, or we call it the FCRA. It oversees who can do what regarding transferring, disclosing or accessing private information. Every state is required by the congressional act to have a similar subordinate act of laws that follow. Every state does. Most of the states say, “We agree with the federal act and everything is fine.” A few states like California, New York, Massachusetts, and Minnesota have a little extra kick here and there and say, “In addition to the federal act, we want this or that.” Although those issues are fairly minor state by state. If you’re in a certain state, you should know what those are.

Even though we’ve got this overarching thing to regulate privacy, each state has a little different element to it if it’s affecting every person engaging in commerce. Tell us a little bit about how does the privacy information gets defined or how does this work?

Fair Credit Reporting Act: The FCRA defines what is private information and regulates the access and denial of that information.

For example, if you write a check, which most people don’t anymore but if you did, it has information in there. Your home address probably is printed on the check and maybe your phone number. If you use a credit card, your credit card information is protected under the act. Any commercial transaction other than cash itself and even sometimes cash. If you buy a car and they run your credit. If you are applying to rent a property and they run your background. If you want to be hired in a position and they do a screening on you. All those are related to the FCRA. Even a credit search when you go online yourself and check your own credit score, that’s regulated by the FCRA.

It’s to access consumer information and there can be breaches on these things obviously, but it’s just getting a hold of access to customer information and making sure that the privacy takes place.

Essentially, the FCRA defines what private information is and regulates the access and denial of that information.

Let’s talk about how that applies more than credit. Tell us a little bit about how this second element might work.

Number two is that the FCRA applies to more than just credit. Even though the title is the Fair Credit Reporting Act, it’s not just a credit check. A lot of people think that it is. It pertains to credit card information, for example. It pertains to employment screening and background checks where we’re going to take a date of birth and Social or where you live and find out if you have criminal records anywhere. It’s related to the protection of private information such as your name and date of birth, which is what we need to use to run a background check often. Sometimes there are other things like you want to purchase a car or vehicle and they’ll look at your creditworthiness. Are you in default? Do you have any judgments against you? Are there any bankruptcies? Are there tax liens? It has a great expansive view over all these issues. Bank account information. One thing that’s funny is a lot of times we’ve experienced a man or woman saying, “My spouse that I’m getting divorced from is hiding money. Tell me how much they have in their bank account.” We can’t do it under the FCRA. That’s very restrictive. Only under certain ways can we go in and do that without the other person’s permission.

It’s using the privately gathered information as a part of this too. It can extend to that direction too.

Remember, the credit agencies are gathering private information, like your utility bill, your credit card payments, your rent agreements or lease agreements and your business activity. It’s all privately gathered but even so, it doesn’t mean that it can be given out to anybody. It regulates who can give out what to who.

That leads us to number three. What is a permissible purpose? Tell us a little bit about this third tip to make sure that we know about it.

I alluded to the bank account access. The permissible purpose is a specific definition that basically states there has to be a reason why someone would violate or interfere with someone’s privacy. Let’s say that you’re an employer, you want to hire someone to bring them into your office setting or your business setting. You have a right to determine if the individual will enhance, detract or play safety. You have a right to do a background check because the safety of other people is important or even have clients or customers on-site. You have access to commercial information if there’s a transaction being considered. For example, renting a property, buying a vehicle or even the utility wants to know what your credits are like. That’s a permissible purpose. If there’s a commercial idea of being pursued.

Permissible purpose states there has to be a reason why someone would violate or interfere with someone's privacy. Click To Tweet

I’m looking and the fourth activated my mind a little bit, an active criminal case. That means if there’s a criminal case going on, then there are some permissible purposes to go across the privacy piece and information that might be needed, as well as some of these other six items. The commercial information and the customer’s safety through background check.

You can break the privacy piece if there’s something going on like a domestic, criminal, civil or family case is filed. You can’t go back into someone’s background or into their credit history or bank account information just because you want to. There has to be something going on that meets the permissible purpose definition.

A subpoena could do it too.

The court orders you to go and look, that’s a permissible purpose.

That would lead us to number four. Who can access the private data? Tell us a little bit about number four out of the seven. What happens with accessing it?

Once the permissible purpose is established, which is a primary step, not everybody can go in and check on other people’s stuff. What’s important here is that everyone should know that a credit reporting agency known as a CRA, Credit Reporting Agency, has the right or the availability to go in if the permissible purpose has been established. You can’t do it. You can’t go look up someone’s bank account if you’re suing them. It has to be performed by a certain agency, a CRA, that is licensed to do so.

It sounds like there are other agencies also that they can do it too.

Private investigator firms are licensed. The Credit Reporting Agencies are licensed. There are other entities. Law enforcement agencies can do this. Financial institutions can do this. When there are commercial transactions, there’s something called a due diligence search to make sure the person is who they are sure. The Social belongs to them, that the credit line is there and it’s available. There’s no way of releasing money. When you have this observation of a third party’s private data, there has to be something signed or communicated that memorialized with this. For example, if an attorney calls me and says, “Go look and see what bank accounts you find on this person. I’ve got a case.” He’s now established permissible purpose, but I want him to send that to me by email. I have something in writing or a client will sign a release of their own information that I can go and look at this stuff, even though I can just go on the computer and look at it. My license says I can go get it. I’ve got arrangements with different database companies that say, “You’re licensed. You can look at it,” I still have to have something signed or created that I can put in the file and say, “Here’s my permission to access.” That’s separate from defining permissible purpose.

As I think about this access to private data, it gets me to understand there are people that can’t do it. Family, the curious, potential daters, neighbors. You can’t get access to it. It has to be through these certain institutions.

Fair Credit Reporting Act: We can’t change the data ourselves. We’ve got to let the organization that has the data to do that.

I’ll give you two examples of what the FCRA protects from happening. Let’s say that a mother-in-law doesn’t like her son-in-law. She says, “I’m the mother-in-law. I have a right to know all about his credit, his finance, his properties, his liens and judgments. I have the right to know everything about him. I want to know about all these things.” That’s not meeting permissible purpose. There’s no case filed. There was no case being considered, so we have to say no. Even if the daughter knew about it, it probably wouldn’t matter. She’s married to the guy, so what?

Another example is we had a guy who said, “I think my neighbors are drug dealers. I want to know everything about them. Give me their names, dates of birth and Social. I want to know who their family members are. I want to know where they work. I want to know what cars they own and drive. I want to know about their bank accounts.” He’s a neighbor. Law enforcement can do that. If there’s a civil or criminal case, we could do that. If he’s curious and he wants to know doesn’t mean we have the right to go invade a third person’s privacy and just provide him data. He was very disappointed when we told him no.

That’s bad news but he’s still trying to get his need for either protection or truth met.

If we run a database search using a credit agency, all the credit agencies have ways that licensed investigators can go and tap into that. We can’t just take their word for it. If they say there’s a lien in judgment in a county, in some state, we’re going to go with a county and check and make sure it’s not a mistake. If they find a criminal case, there’s a case number, we can’t assume that there was a conviction. We have to go in with the local law enforcement agency or county clerk and check and make sure. We just can’t assume that we put in a name, get a data report and that it’s accurate. We’ve got to verify that independently to make sure it’s true, which applies to liens and bankruptcy. We’ve got to go back to the source. A lot of times the information is not true. It protects the consumer, the renter or the job applicant from being discriminated against incorrectly. That’s what it does.

Twins, family members, mistakes by the court. The big thing is to clean up the information and how the data’s sitting there.

We have cases where someone’s coming in for a job position, maybe nothing complicated like a cashier’s job. They say, “That’s not me. That’s my twin.” The first thing we say is all right, but then they do have a twin. Once we do check it out, it was the twin. That happened. The court will make a mistake. For example, there was a case where we filed, they somehow input it as a conviction and the case was dismissed. It’s rare, but it does happen. I’d say we might do 100,000 background checks a year at our agency and maybe one a year we’ll come up with a mistake. That’s not a lot but that individual’s entitled to us giving them an opportunity to contradict it. That’s called a pre-adverse letter. The FCRA says you need to have a pre-adverse letter that says, “We might deny you from this purchase, this lease, this job because of this. You’ve got three days to let us know if you think this is an error.” Usually, we give them five or ten. We give an adverse letter that says, “You were not hired, leased or did not purchase the property because of this.” They still have more time to fix the record if it’s wrong and we’ll help them do that.

We’ll tell them what they can do. We’ll provide a copy of the report if they want it of whatever we found. We can give it to them. Maybe not to the person running the background, the lease or the credit check, which is the individual. We can give them what we have and help them fix it. We can run it again once it’s fixed and clear them. We can’t change the data ourselves. We’ve got to let the organization that has the data to do that.

This whole ability to challenge and correct the data, is that a very hard fight for people to do?

It is. The courts especially are putting in thousands of cases a day. In LA County, the county processes 10,000 criminal cases a week. There’s bound to be a mistake. Nobody knows who put in the data wrong. You need to show up with your driver’s license at the window and say, “Here’s what this credit reporting agency found on me, their PI firm, you can call them. Is it accurate? It’s not accurate. I was never arrested and convicted.” You’ve got to fight with the court a little bit. Credit agencies, you can send them by email or request to remove something. It takes a few weeks or a few months, but if you don’t fix it, it will still be there and that’s not fair.

You can't go back into someone's background or into their credit history or bank account information just because you want to. Click To Tweet

Our PI firm and this is like a joke, two weeks before Valentine’s Day, early February, we get lots of phone calls from mostly men that say, “I’m trying to find so-and-so. I lost their information. Can you tell me where they live or where they are?” I don’t know why Valentine’s Day, but they’re trying to reconnect with somebody. The first thing we do is we say, “Even if we find them, we have to have them contact you. We can’t tell you where they are. If they want to reach out to you, they can.” Typically we get a hang-up and we never hear from them again. They’re shopping every PI firm in the state trying to find one that will do it. We all know we can’t do that. What we can do is we can find an individual and then have them contact the person if they want to. We stay out of it. We cannot even tell the inquiring person if we found them or not. We’re going to be completely quiet on that and say, “We didn’t find that person.” They’re going to pay the fee and not get a refund because we’re going to do the work. They’re not paying for an address, they’re paying for the search. There are times where we find the person and they say, “We have a restraining order against this guy from doing it and will you provide us his information so we can prosecute him?” We do.

The stalking or the secret most romantic person, it backlashes on them if they come and ask you because the big part of the Fair Reporting Act is about protection and privacy.

If somebody violates an order of protection or restraining order and we are a party to that and we understand what’s going on, that request is a violation of that court order. We’re going to cooperate with the victim, even if the abuser paid us to find them. They didn’t disclose to us that they’re not allowed to do it. We’ve had a few cases like that where we go testify and say, “This guy called us. Here’s his email, here’s the information he provided, here’s his payment.” We found the person and they said, “This guy has an order against doing that,” and we help prosecute. If someone’s out there and wants to do that, PI firms are not the way to do it. We’re not going to help you.

The proper way to do this, especially an employer hiring somebody, is to do every two years, maybe every year, a recheck. It should be automatically done on everybody let’s say the second anniversary of their employment and you’re not targeting as an employer a certain person you don’t like. You can’t pick them out and say, “This person has something on them. I’m going to find out if they do and let them go.” You’ve got to check everybody fairly and equally under the same policy. What we’re doing is reverifying information. The FCRA forbids certain targeted activity and is trying to protect the rights of everybody equal.

When there’s a release of information, it’s predetermined. Tell me what are the predetermined qualities of this releasing information?

This applies to employment. You want their background check agreement as an employer to make sure that they have permission to routine re-verification and rescreening built into their initial agreement. Let’s say if you hire someone at the pharmacy and they’re convicted of embezzlement and drug fraud in another state after they were hired. A live scan only handles the one state you’re in. You would not, as an employer, know that they were convicted in another state. Let’s say it’s across the river. We want to rescreen that person probably every year and we find it. You want to have the employee’s permission to do so without having them re-sign an agreement every year to do it.

Let’s say that you have an apartment building and there are children there. Is it reasonable to determine if your potential renter has child abuse charges against them or is a sexual predator? It’s reasonable. You want to look for that. Let’s say you’re in a retirement home. Is it reasonable to make sure that the person that you bring in as an employee is not guilty or suspected of frequent elder abuse? It’s reasonable. You want to try to take a measure that matches what relates to the requests. The request is for safety and privacy or for financial stability. You want to look in that area and not just do a basic search or a data search that has a broad scope that’s not specific.

That definitely leads into the periodic rescreening, the signing of the report and to these other items that you’re having here. There are a lot of failures that are possible if the employer or the individual doesn’t know how this is going to take place.

Ideally, the CRA, which in our case would be the PI firm, would have an individual sign the report so that one it’s admissible in the court. If you have a printout and you printed it, you can’t bring the computer into court and testify. You want an individual design report or at least email with their name on it that says this is the report so that we can go back and ask that person what happened or how did you do the search? The issue is through our federal state and other issues related to reputation to damages like, “I was not allowed to be hired in a position and they turned me down. I didn’t have a chance to challenge it. I didn’t have a CRA contact to call and talk to them about it. You didn’t provide me a report. I asked for it. You didn’t verify the information you found in a database at the site because it’s inaccurate. I never got a pre-adverse letter or adverse letter.” Data breaches, for example, providing private information without permissible purpose through someone other than a CRA could be considered a crime. Sometimes there are civil consequences as well or restricting someone’s rights under the Fair Credit Reporting Act could be a crime and have civil consequences.

Fair Credit Reporting Act: When FCRA was drafted in 1970, nobody knew about data breaches and scamming.

There’s a little bit of subjectivity, but the objectivity to it is that here’s how you color between the lines. That’s a big part of our talk around these seven different things in order to talk about FCRA in a way that’s supportive to the audience.

It’s a protective act. When it was first drafted in 1970, no one knew how big the internet and the flow of information would be. Nobody knew about data breaches, scamming and all that stuff going on. It’s evolved into a great mechanism to protect people to provide rights, limit and restrict access of information. It very cleanly defines a lot of these things that without it, we would be in chaos.

If somebody brings in chaos to your work, you’ve got to have some remedy or some evidence to work with it. It sounds like having a licensed person is to get this established permissible purpose in place with your CRA. Have the signed document on file to keep a confidential copy of the report that you’re protecting. Allow for corrections with different individuals so you can broaden the perspective. Finally, good procedures allows the focus on service, not lawsuits. It’s a very subtle shift. How can I provide service to the clients and customers by doing some form of due diligence and moving forward?

They just walk through the process. The seven steps that we talked about defined what it is, who can do it and what you need to do it. What does it look like when it’s right? What does it look like when there are issues? How do you resolve it? Doing those things will allow an organization to do the work that they’re designed to do, either as a service company, manufacturing, production or even farming. Whatever it is that you need to do, do that. Don’t be strapped by lawsuits. Hopefully, our explanation will help avoid making decisions that are not thought out or that are illegal.

We invite anyone with questions that wants more definition. Obviously, this is a broad overview. I’m not an attorney but after 30 years, I feel like I have a good handle on it. The old joke, there are two attorneys and three answers but still, the guidance that was provided is a good starting point. Anything specific that a client may want to or someone may have a question, call us. If we don’t know, we’ll find out. There are some things that are pretty complex and we need help too. We want to do that and we want everyone to remember that Information is Power. Good decisions start with great information. We’re a resource for everyone, even if it’s just a phone call. We like to help. We want everyone to be treated fairly to be safe, to be prosperous.

The guidelines to get that. If we live all by this, it will tend to go better. Jonathan, this has been wonderful to go through this with you. I can’t wait to go over the next piece that can make a big difference for us. Any ideas on that topic about what you’d like to talk about next?

What we do is we put out episodes based on what clients are asking about. We have two or three possibilities and I’m sure that in time we’ll cover them all.

I look forward to the next step of our journey here on getting the Net Check Investigations information out to the world, as well as providing great service to the reader and to the fellow employees. That sounds wonderful.

Thank you, Bill.


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How To Protect Non-Profits From Risk And Loss

Currently, there is a lot of negative information about non-profits. An example is hiring somebody that embezzles funds and having someone that takes advantage of a volunteer position. In today’s episode, Bill Stierle and Jonathan Kraut talk about how a non-profit organization can reduce risk and loss—be that a religious institution, civic organization, or something else. They discuss creative strategies and ways on how to protect these non-profit organizations through thorough background checks. Find out what Bill and Jonathan have to say as they detail the important things to look at when screening the people in the organization.

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How To Protect Non-Profits From Risk And Loss

Using Background Checks And Understanding How Non-Profit Organizations Are Vulnerable

I’m here again with Jonathan Kraut of Net Check Investigations. Jonathan, you and I have been on this journey of bringing quality information to people, to audiences, inside the industry. They are people that want to engage the industry of having a quality private investigator to provide them support and give them information about how to create safety inside the organization. With this show, information is power because we want people to get in touch with why investigations and safety work is so valid. Tell us a little bit about this podcast that we’re going to get into and then we’ll bring some slides and some information up so people can have the information available to them.

Thanks, Bill. We’re talking about nonprofits in the news and all over the radio and TV. There’s constantly negative information about nonprofits like hiring somebody that embezzles funds, a person takes advantage of a volunteer position and it’s a predatory type person. Lawsuits, this might go to colleges and universities, the Boys and Girl Scouts, churches and organizations, even hospitals, clinics, all kinds of nonprofits. They’re very vulnerable. We’re talking about how a nonprofit can reduce risk and do things right so that these things don’t happen.

Let’s take a look at how this works, the whole part about why nonprofits are so vulnerable. The reason these podcasts are so valuable is that a part of your California license 21529 is that you need to be certified and validated that you are a person that’s qualified to provide this information. Isn’t that correct?

That’s right. A licensed agency needs to do this work. A lot of people are deceived into believing that they can go on the internet and get information, which not only is not admissible and not only incomplete, but it’s also a misting a lot of the key elements. There’s no one behind the computer. The computer is for-entertainment-purposes only exercise.

A computer could get started at poking the stick at something. The thing that’s valuable is that if a problem happens in your nonprofit and you have to go to court, you need validation that you did your due diligence so that you can have a licensed private investigator sit on the stand in your defense. Do I hear that right?

Yes. There are three elements. The first is that a computer or an amateur is not going to know where to go or what to do. The second is there are a lot of rules requiring certain methods to be used so the information is admissible in court. A lot of ways that information is gathered even by people on staff because they don’t know what is admissible and what is not. They’re not going to get what the attorney or the court will need. Finally, when the licensed agency does something, a lot of the liability goes on their insurance and their coverage and it holds the nonprofit free from some of those liabilities.

It’s good to talk about nonprofits because a board member needs to know about this information so that they can provide the level of protection as well as the level of information that it needs. Different nonprofits include a broad scope of entities. These different groups all have different nonprofits in it. Let’s talk about the different groups.

The board has to lead from the top. Board members and executive directors, pay attention. This applies to you. The first nonprofit we’re going to discuss is religious institutions. Another nonprofit is going to be a civic organization or an activity supporting a civic organization, which might be scouting or something like that. Community-based services would be homeless shelters, halfway houses, maybe government-supported or grant-supported outreach programs. Support agencies for needy populations could again be shelters or food pantries, other kinds of support organizations. Fundraising that supports populations or targeted groups. For example, if you make donations to children’s funds or to helping students in school for pets and animals like the SPCA. All those nonprofits are involved in this discussion.

If you ask enough questions, you'll find out what people are thinking. Click To Tweet

There’s a bunch of traps, there’s a bunch of problems and challenges that nonprofits get into. With those, the first one up is whom to trust. When you think about whom to trust, I’m guessing the first thing is can a volunteer be trusted?

Unfortunately, a lot of nonprofits believe that if someone volunteers, you can trust them that they’re volunteering to help us out. How many sports coaches who volunteer after school programs end up being sexual predators? Think about that. How many volunteers who help with the church and collect money embezzle the funds? You have to think about that. You can’t necessarily trust someone because they’re a volunteer.

The volunteer has that experience of this person who is altruistic. This person is giving freely of their services and their time. There’s no ulterior motive for what they’re doing, that they might have started out in a good place but all of a sudden their lifestyle circumstances have shifted and changed and then, therefore, they start to embezzle the money the way you want or the way you think about. It’s not to say that somebody’s volunteering at a church is going to embezzle money. It’s saying concentrate on trust but also verify them with their behavior. Pay attention to. It’s not that the guy that’s volunteering to be a coach has this thing that is deep, dark, but you got to do some checking and some validation about what they’re experiencing so that you can keep reinforcing trust. Are we framing this in the right way? I don’t want to scare everybody.

We don’t have to breach trust in someone by checking on them. You want to check everybody the same way and thoroughly. That way you’re not having an issue.

Socially-conscious employees can be trusted. 

That’s part of that same trap if somebody is on your side and agrees with you and buys into your message and supports your hard work and your effort. That does not mean that you can have faith in them necessarily or that you should trust them necessarily.

There’s a group of people that we extend trust to, but if we’re not paying attention, then there are some real problems. 

Another example would be they’re a family member or cousin or my next-door neighbor, I can trust them. It’s that trap of whom to trust. Just because they’re related or you know them or they’re a friend of a friend, does not mean that you don’t have to look into their background more deeply.

Protecting Non-Profits From Risks: A lot of people are deceived into believing that they can go on the internet and get information, which not only is not admissible and incomplete, but also a misting a lot of the key elements.

This brings up all kinds of problems because if a parent invites a family member or associate or somebody from the church to live in their house and then all of a sudden they have a sexually molest one of their children. The parent doesn’t know about it because they’ve extended trust. Meanwhile, the kid is traumatized over there. They don’t even trust their parents because of this. We’ve got to look at trust as something that’s not to get it up to a level ten where everyone is distrustful but at least get it to a level four, I’m checking everybody. Am I scaling this correctly?

Yes, we check everybody just to be fair. It doesn’t take that much time. It’s not that expensive and you have more certainty of who to trust. We want to avoid trap number one. Another issue is a director, let’s say someone who worked at another nonprofit can be trusted. They worked there for five years. They’ve done well there and we’re hiring them here or brought them on here or they’re volunteering here and now all of a sudden we can trust them. That’s not true. You, as a nonprofit and having sat on boards, you need to check everybody out and assume that they may have had problems there. If there are any issues, you want to bring them up. Maybe they’re not serious and maybe they are.

Somebody could have a heck of a resume. It doesn’t mean that they left the job once they got caught and then they went to another job and the organization was glad to get rid of them.

We’ve seen that. We’ve picked up lots of dirt on people. I hate to use that term but they’ve left a nonprofit organization with lots of issues. The nonprofits are not going to tell us openly that they were discharged or whatever. They say, “No, they did great and they left.” They don’t typically want to give information that’s negative about people. A PI firm will find that out. That’s what we do.

The scary honesty is that human beings make mistakes. We are human by nature. We have and make tragic choices in all different ways. It’s up to more of the adult mind, the sober mind, the mind that wants to have truth to say, “They are human beings, but it doesn’t mean I want them in my organization.” We have good intentions as people, as human beings but it doesn’t mean that they’re not bringing their ball of wax with them.

A good example is about between 10% and 15% of those that we do background checks on have a serious criminal record. It means about 10% of the population that we come into contact with have issues and do not have good intentions. If you imagine waiting in a line at a grocery store and there are 10 people in line, one of them or more of them has bad will or/and bad intentions in their heart. They all look fine in line. Everybody is willing to pay for their goods. It’s not like you see anything wrong on the outside. What a PI firm should do is identify who that one person is in line and tell you why that you should not bring them on.

That is one of the best metaphors ever. It lands because the person can say and make statements and looked good but finding the truth takes that next level of investigation. I could see that. Do the statements people make reflect the truthful? Not all the time. 

I’d say a lot of people misrepresent themselves commonly. In fact, in American Society, we’ll see that there’s a lot of flash and bang and a lot of things people say and they can’t back it up or they’re completely untrue. In our culture, we accept it. It doesn’t mean that you should fall into trap number one of trusting the wrong people. You should be careful about who you trust.

Finding the truth takes a higher level of investigation. Click To Tweet

That makes a lot of sense about trust. That rolls into trap number two that the board executes oversight, that the board will be able to catch some of these trust things, some of this information. They know what’s going on. The board might miss things, that’s what I’m thinking. 

I’ve sat on a number of boards and I’m very honored to have that opportunity, some for years and years. I pride myself on educating them as to what we need to do as a board to make sure that we’re running things right. Our board members are selected for a lot of reasons. Very few of them relate to the knowledge of oversight. They may be politically connected. They may be very inspirational. They may be leaders in their field. They may volunteer and work many boards, which is appreciated. Few board members are selected because of their ability to manage an operation, to oversee a business, to plan ahead, do financial planning or a fiduciary examination.

The board members are the key to this whole thing are the ones that need to know what their duties and opportunities and tools are. We should do a lot of things like employee internal audits. Boards tend not to want to do that. They want to be nice and friendly and show a great representation. Board members don’t investigate conflicts of interest where a vendor may be owned by or run or operated by a family member, of another board member, of a director or someone or a controller, somebody with the ability to write themselves checks. Boards rely on the outside. Let’s say the annual audit done by an auditing agency is sufficient. In fact, that’s a very narrow scope. An internal audit is a different audit and boards think that an external audit is sufficient, but they typically don’t detect fraud. Not only they can find it, but they’re primarily looking at the practices and the processes of keeping track of money. Board members also can have trust issues and could be motivated by a lot of other things like personal needs, by gambling. Who knows what’s going on in their minds? Just because they’re nice, competent and volunteer or are privileged to serve on the board doesn’t mean that they’re the right match for that board.

It’s a huge difference right there. I can see that it’s important for a PI to be brought on board to take a look at what the real motives are and to consistently bring trust and honesty and truthtelling in front. It sounds like that they might not do a great job in screening, just look at this. Tell us a little bit about how screening works and what some boards do or nonprofits do to cut costs. 

A board thinks they’re doing the organization a favor by spending $15 or $20 on instant search, which is of no value and is not valid in court. It’s missing 80% of the cases, they’re not looking in the right place. They think that that static phone book of criminal cases represents real cases. They’re missing millions of cases. They think that a live scanner instant search is sufficient. Boards often don’t know what a comprehensive background check is or how to screen for new employees. It’s not their fault. They don’t know, that’s why. Board members, I hope you’re reading.

The whole thing about screening during the job process is they don’t have that expertise. 

I’ve served on a number of boards and never have they, before I got there, considered running a rescreening periodically. They may have someone with them for 5 or 10 years like the controller or payroll clerk. Once they were background-checked in the beginning, they thought they were done. In fact, about 3% of the population will have new stuff that appears after they were hired. You want to check people at least every other year.

The leadership, they don’t know how or don’t know what the screening information is. It’s outside their view set, even the information. 

Protecting Non-Profits From Risks: The board needs to be ready to respond to an allegation even if it’s very uncomfortable, even if it’s a board member or a key person.

Boards leave it to directors to decide. Directors may not know either without proper guidance as to what’s admissible and not admissible. What can you discharge someone for? What do you have to do to meet your requirements?

Are they looking at the twelve indexes for misconduct? 

Sometimes boards believe that if you do a criminal record search, which covers about three different indexes or four, that they’re sufficient. They’re not. You want to look for civil misconduct, harassment, order protection, a file against stalking, restraining orders, elder abuse, child abuse. Rarely are any of those things in the criminal system. You’ve got to look elsewhere to find that information. If someone had a domestic violence history and you are working for domestic violence organization, you would be looking in the index that has domestic violence history and instead they look only in the criminal record and they don’t even know that those records are kept somewhere else.

All of these different traps that nonprofits fall into, it’s fascinating to see the level of awareness that’s needed by that nonprofit director, by what the board might need to be able to get the level of trust and safety met for the organization. Tell us a little bit about the mechanisms part.

Trap number four is that boards do not believe or know that there are mechanisms to protect the organization. Mechanisms could be either personnel requirements or protocols or physical mechanisms like cameras or remote video access to watch what’s going on when they don’t know if someone’s there. Saving data for two years, a lot of data erases itself in 15 or 30 days. If you want to go back, this is common. The police department will be working on a case and we’ve got to try to find a video recording of an event that is maybe 3 or 4 weeks old. Believe it or not, all the cameras are erased. There’s got to be some backup system. You can take your camera data and migrate it to a hard drive or something every couple of weeks in that way you preserve data or moving to the cloud or do something. There’s something that happened three months ago. I don’t know of any cameras unless you back them up the carryback date of three months. That’s something you need to do.

Passcodes to enter and depart. 

Let’s say a restricted area might be even something like daycare, where people cannot drift in and drift out. If everybody has the same passcode to go in and go out, you don’t know who was there and who wasn’t there. There are a lot of ways to do this. You could maybe set up 99 different passcodes for someone to come in and go out, to log in and log out, and only that person has the passcode and maybe the executive director who gives them out. That’s it. You can track people. It also keeps people from being falsely accused. If you get in at 10:00 and leave at 10:15 and something happened at 11:00, you are now exonerated because you were not there at 11:00.

This whole thing about cash, credit cards, it looks like a no-brainer but from mechanisms to protect the organization, you’ve got to have a place that’s going to make a difference. 

You can't necessarily trust someone because they're a volunteer. Click To Tweet

One thing that turns my stomach is watching on the news at night how the donation box was stolen out of the church or out of the organization of the temple. You collect money there and you don’t leave it there. Anybody knows that you take your cash and you take it out of your donation box and put it somewhere else where no one can get to it after hours or even after collection. You don’t need credit card information, receipts in your top drawer unlocked. It’s got to be kept in a locked container that nobody would know to look for unless you work there. Another example is let’s say you have children and that means eighteen and under eighteen, seventeen and under, there should never be one adult alone with those children unfilmed or unescorted. To have two people there protects everybody especially the volunteers who were with them. You need two adults at all times.

You’ve got to pair them up and make sure that they’re covering the bases. The gates and fences are difficult to climb and bypass. That seems like a pretty easy mechanism.

It would seem. We worked a lot of cases and issues with a daycare center and what we corrected was you could reach over the fence and unlock the gate from the inside. The kids can’t reach it, which is fine, but any adult can. The passcode they had on the gate was of no value because you could walk in. We had to put a lockbox on both sides. Even so, you could still climb the fence which is only six feet high. They had to put in a higher fence, which is eight feet. That is pretty good. You don’t want to make it so easy that your obstacles are passable by any adult.

Scrutinize volunteers with suspicion. I would imagine that you and your team have a way of and have a list of questions that you would ask volunteers and in order to get the information you need.

We’ll get into that a little bit more. If you ask enough questions, you’ll find out what they’re thinking, whoever it is. It won’t take hours, it will take minutes but you have to have the right questions.

As we keep walking down these different traps that nonprofits fall into, people will say things that make it worse or to get you to increase the trouble. To respond to an allegation, you better have the right thing to say back.

My experience so far, twenty years, I have some ideas. The organization denies that it occurred outright. “That couldn’t have happened. It’s not true. It’s a lie.” They don’t know the facts. Maybe it’s not true, maybe it didn’t happen, but you have to evaluate and examine the possibility fairly because maybe it did. It seems obvious but the first issue that seems to be denied outright by nonprofits is domestic violence and abuse. “He’s a great guy, he would never do that. She’s wonderful. How could she have possibly be accused of this?” There has to be a method and a procedure to assume that it may be true. Stalking, how many large organizations like hospitals or the Red Cross or some big entity, how many incidents of stalking would occur? Hundreds a year because there are thousands of people involved all over the country or there’s a large facility with 10,000 employees. It may be occurring every day, five times a day, for all we know.

We want to assume that it’s true. At least make sure that it’s not true or if it is, it’s dealt with it correctly. Another part of this trap is an order of protection or restraining order. What if the nonprofit gets a legal order served by the Sheriff’s Department that so and so has to stay a hundred feet away? Individuals are afraid to provide that to their organization. They’re embarrassed. You want to create a climate where any employee can say, “So-and-so has been ordered by the court to stay away from me.” Everybody in that organization around that person should know. All the security should know. All the front desks should know. All the people that work with that office should know. Everybody needs to come together to protect that person, not to stigmatize them because someone did something bad to them. That does not mean that it’s them. It means that they deserve protection.

Protecting Non-Profits From Risks: If a nonprofit is being accused of fraud or embezzlement or stealing or false authority, knowing what to say next would make a big difference.

They’ve got to get the protection and the court felt like it was enough. Making a solid response to an investigation allegation of sexual misconduct, there are things that you need to say and things you don’t need to say.

A PI firm could walk someone through but the board needs to be ready for that. In time, somebody will say something whether true or untrue and the attorney on-call or the protocols that are established an investigation right away. The board needs to be ready to respond to an allegation even if it’s very uncomfortable, even if it’s a board member or a key director, key person. There should be a system ready to go so that no one’s in trauma. No one has to panic over what to do next. That everybody thought about it, we already decided what to do and we go ahead and do it.

The thing that’s nice about this also is that being able to say the thing that’s the safest thing to say as well as the thing that’s the most productive thing to say can make a big difference. That makes sense because if a nonprofit is being accused of fraud or embezzlement or stealing or false authority, knowing what to say next would make a big difference.

You have to be able to respond and who is going to do the work and what’s almost embarrassing is that when organizations get hit with these allegations, they have no idea. The first question that somebody will ask is how did you prepare yourself to defend against this? How did you protect yourself from this happening? Let’s say that an organization did everything right, did a comprehensive background check, check with references, observe them independently, had video tracking in and out or activity or had an adult escort or coworker, another volunteer. They did everything right. The organization has less to fear because it took every reasonable step to prevent it from happening. Some things are going to happen anyway. What if the organization did not do any of these things? It puts a big blight on the organization. A big stain on the reputation means money is driven away. It ruins the whole purpose of a nonprofit if it’s not prepared for it correctly.

What I’m starting to get ahold of right here with this slide is this whole slide can be a whole different podcast. You and I could go through about how to respond to each one of these things. Using a licensed professional help you with these allegations and create a stronger communication. Take us through the sixth one here that nonprofits fall into, how to identify drug use. How does that work? 

Luckily, this is our last trap. Initial screening is important. If you believe that drug use while working with the nonprofit is important, then everybody needs to be screened. You won’t have to worry about the people who go through it but you’ll be surprised at how many people decide not to go through it. I’d say 20% to 30% who apply for positions say, “I’m not interested. I’m not going to do a drug screening.” That’s fine. You don’t have to worry about it. You’re not losing good people. You’re losing people who you don’t want around.

They’re going to be headaches later. They’re going to be problems later. 

Their personal business can stay personal. It doesn’t drag the reputation and other issues into the nonprofit itself. Re-screening periodically has to be fair for everybody. It could be random every year, 10% or something like that. What if drug use is identified? Labor laws require that you have a practice established to do some form of diversion or rehab. Even though it’s very difficult to overcome drug use, people do and maybe it’s on their own time but at least there’s a method for that to occur. For some volunteers, it may not be relevant. If they’re around cash or money or children or the elderly, you don’t want addiction to be part of their thought processing and influencing how well you serve people.

Socially-conscious employees can be trusted. Click To Tweet

The number seven trap is responding to the cognition of issues. Tell us a little bit about what your thoughts are here. 

I was surprised to learn and working on a book a few years ago that about half of all Americans have a cognitive issue that significantly affects their behavior which means that half of us are crazy. Maybe you’re only a quarter and I’m only a quarter. Cognitive issues are becoming more and more relevant. It could be a lot of reasons. We’re not judging why some of them have an issue. Screening periodically is also a good idea. Not every other year but being aware. Maybe someone goes by and meets with people or if you hear of something. When mental illness is likely, what will the organization do? That’s a big question. Volunteers and staff, before they’re hired, he should be aware of what the protocols are for mental illness, which could be depression, anxiety, Alzheimer’s, all kinds of things. You never know. You want to be able to go back at the time of hire and examine what the conditions were then. At least you’re establishing a baseline. There are some indications of some things but it’s not that serious. You can go back and compare to a newer evaluation and see what changes have occurred and that points you in the direction of what you could do next.

The main thing is to use only a licensed or certified agency for support because these folks are the ones that are going to be professionally trained to identify the issues. These are the ones that are going to be impartial and provide admission to testimony, if needed. 

You don’t want a person working for a nonprofit as a volunteer to say, “I know about mental health and I can tell you who’s crazy and why.” It doesn’t hold up in court and it’s a lay person’s opinion. To make an evaluation that needs someone with some credentials to make an evaluation, a firm determination.

These procedures are about protection to minimalize the risk for reputation. 

It protects some volunteers from others. It’s also the safety of the people involved. We can focus on service and not on lawsuits. Money can be used for supporting people and the great causes that are out there, the great efforts that are a big part of our society and not on the news and court and who’s suing who and what allegations occur. We’re trying to serve people. We should be doing that.

How do we get the acceptance from the board? What do we need to do here? 

Executive directors typically don’t like oversight. They believe they can trust people. That’s because a lot of these people have good hearts themselves. They’re very noble and very caring. It’s hard for them to understand that other people are not like them. Executive directors also don’t like oversight. Somehow it may be a stain on their reputation or ability in their belief. In fact, it would relieve them from that stain, from reputation or ability because they’re going about it with a conscious plan and in advance. We want the board and the directors to know this is a good thing, not a bad thing. I’ll give you an example of an outsider working on a subcommittee. I was appointed to a subcommittee on a board, a nonprofit and we didn’t know what we’re doing. We know our intentions were good. We just didn’t have the expertise. We brought in volunteers from the community that were experts. We formed a subcommittee.

A screening in the organization does not mean you're losing good people. Instead, you're losing people who you don't want around. Click To Tweet

They were good and taught us and showed us and helped us do it right. When that work was done, the subcommittee was dissolved. We had to rely on people that knew more than us. There’s nothing wrong with that. In fact, it brings more people into your organization as a volunteer. Periodic and unannounced audits are great because everybody knows you’re going to have 2 or 3 a year and you’re always ready for them. When they show up, the group being audited should be ready, like proud, “We were ready, we passed, we did a good job.” In a way, that’s a preventive measure. Anyone with misconduct on their mind would be not so willing to do that because they know they’ll be audited periodically. The atmosphere is very helpful.

The atmosphere of the good intentions and openness and it’s to ensure the conditions for working with your nonprofit. Get focused on this dedication to service, this transparency and how do we bring greater cooperation forward. 

The board can set the tone. The board and the directors can say, “Now that you’re here with us, we’re dedicated to service. That’s why we’re here. We’re transparent, meaning we’re going to ask you questions and we should look into everything and you have nothing to hide, don’t worry. Cooperate, don’t resist, don’t put up walls, don’t move information, don’t delete information. If you’re of that mindset, this is not the right organization for you.”

Getting that mindset is a big part of it. If we focus on the following, what is the greatest recap in this thing? What’s the action step here?

The board, the staff and volunteers all should be screened and rescreened. It’s fair for everybody. The screening should be comprehensive, not an instant search or live scan. It should be a real search. There should be financial audits, internal audits, checks and balances, and conflicts of interest should be examined. The third point is we want to prevent misconduct by identifying it early or inappropriate early, behavior early like drug use or cognitive issues so that they don’t manifest into something greater.

This whole thing is getting the truth. When you start asking for truth, you’ve got to anticipate how you’re going to answer each one of these things. How do you answer for misconduct? How do you answer drug use? How do you answer embezzlement? How do you answer fraud? How do you answer cognitive issues?

Part of the challenge is to be ready. Not only do you have to be willing to prevent it from occurring but assume that something will happen one day and you’re already for that to happen. It’s not a surprise. It’s not demoralizing. Your protocols are in place.

People tend not to pay for this because they don’t want to pay for safety. What’s the reason why people get stuck on this? It seems like a no-brainer.

Our argument as a PI firm is you can pay a little bit now or a ton later. A lot of people say, “I’d rather pay later. It may not happen to me. Why should I worry about something that may or may not happen?” Our advice is it will happen. What if your organization is in the news, your donations dry up? You lose your clientele. You can’t get a grant or a loan. You can’t get any support or government funding. What if that all happens because you didn’t do a $50 background check? It happened because you didn’t do an internal audit which may be a few $100 or $1,000, but it’s $1,000 or $1 million that would be embezzled if you didn’t look. The issue is that people rather than being long-term thinkers are thinking about today, “I don’t want to write a $50 check. I rather risk millions tomorrow.” It’s like gambling where you cannot win. Good boards and good directors budget to do things right from the beginning in the long run, not only reputation but funding and resources are still there and it’s the right way to do it.

For the last part of it was more like a recap. This part is like a summary. This is more what the board or the audience needs to look at and live into. Nonprofits take on a tremendous exposure to risk and harm to the clients they serve because of poor planning. Is that a big takeaway that you would see? 

The boards need to plan. The right planning is simply watching or listening to this podcast or reading the blog is a good first step. Doing something about it is very good too, especially with what you know you’re doing. In summary also you want to use licensed agencies to do this work. The organization should not take the burden or risk on themselves but hire an outside firm or outside agency to do what they’re experts in doing. My firm is not going to be a nonprofit. We’re not designed to do that. Your organization is not designed to be a PI firm. Let everybody do their job.

Integrating preventive ongoing and action plans protect the reputation and resources of the organization. It’s building like a war chest to do it so that you can act with a certain amount of ease to get these things done right. 

A lot of these measures need to be integrated and connected throughout the organization. They’re not an independent top to bottom only. For example, what if there’s an internal complaint? Somebody says, “I saw some misconduct.” There has to be an integrated approach where everybody’s contributing to the organization, to its reputation and resources, not just from top to bottom.

That makes sense. Services and social contribution can be enhanced because people know that you’re on this team. 

It carries through if everybody is on board with serving the clients as they should and supporting them and bringing to them the hope and services that they deserve and need. You’re not worried about who to trust. You’re not worried about when the internal audit is going to come up. Everybody’s ready. Everybody’s on board.

Tell everybody a little bit more about how to get in touch with you. 

First of all, I’d be happy to answer any questions you have. You can go to our website and look up more information. If it’s relevant or if you’re curious, you can call me or my staff. We’re always here to help with information and guidance. Remember that information is power. A good decision starts with great information. Our purpose as an organization is to provide you with the guidance and information needed to make good decisions.

Good decisions start with great information. It’s what our bottom line is working.

I thank our audiences for staying with this. It’s a long podcast but I hope it’s a value.

This has been a great visit with you. I’m looking forward to the next one. Good luck to all of you that are working in the nonprofit industries. I hope this was helpful. Thanks, Jonathan.

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The Duty Of Care Doctrine In The Workplace

When someone is vulnerable, a person has a duty to care to their needs. This is what the Duty of Care Doctrine says. Going deeper into what it really means, Bill Stierle and Jonathan Kraut share what you need to know to comply and provide protection for the people around you. They further discuss the Duty of Care Doctrine in relation to the duties in the workplace, detailing information and due diligence that is necessary to support different people working. They provide examples to further discuss its impact—from criminal charges to prosecution and more. Join Bill and Jonathan as they impart their expertise in care doctrine and laws.

Listen to the podcast here:

The Duty Of Care Doctrine In The Workplace

The Value Of Knowing What Is The Duty Of Care Doctrine When Conducting A Background Check

Welcome to the Net Check Investigation with Jonathan Kraut. Jonathan, how are you doing? I’m looking forward to this next conversation regarding investigations and how a private investigator works to find out information that’s necessary to make decisions in the business world.

I’m doing good. It’s a great topic and I’m very happy to share that with everybody.

I know that this topic is important because when we take a look at the impact of Duty of Care Doctrine, there are some details and some information that people need to know and regards to be compliant as well as to provide protection for the people around them. Could you tell me a little bit about the impact of Duty of Care Doctrine?

A lot of attorneys are not aware of it, depending on their specialty. I’m not an attorney but luckily, we have good ones that we work with so they can take care of it. The Duty of Care Doctrine says that a person has a duty of care to attend to someone’s needs, especially if that person is vulnerable in any way. That’s essentially the bottom line. If somebody is vulnerable like elderly, children, someone who has autism or a cognitive issue, they have Alzheimer’s, there are special things that an employer or caregiver or person caring for them needs to go through or needs to know.

I feel delighted about going through this. I know that as a licensed California private investigator, your license number is 21529, and it is important to have that distinction so that people know that you’re meeting that standard of quality and hitting the regulation.

We want to make sure that our evidence is admissible in court. It would be nice to have a friend help you out or a family member, but it’s not the same. Being a state licensed agency, we have a higher standard and also, we can assure that our work is quality and is what the court wants.

It’s important to hit the letter of the law in regards to this, as well as having a support person like yourself and your agents to be able to sit on the stand and give testimony that is being accepted and verified. Isn’t that correct?

That’s right. If it’s not accepted and verified, then why do we do it?

That’s a good thing that we want to have that next level of safety and protection available. Why don’t you take us through a little bit of this? If we got this Duty of Care Doctrine, a court principal that offers safeguards, talk to us a little bit about how this is defined and what is the required extra consideration.

There are certain populations that require extra care. It is for those who are vulnerable and unable to make decisions for themselves, either because of their age, position or situation. The courts require a special consideration beyond what a normal person would expect.

It sounds like it applies to a whole range of people.

It does and it affects employers, babysitters, nannies, caregivers, others that work in a role where their job is to work with those who need extra attention.

A due diligence search is a higher, more thorough level of checking everything. Click To Tweet

Even with parents and children of elderly people too, I guess.

For example, with my parents when they were alive in their 90s, we had a caregiver and the caregiver had possibly some issues. We did a Duty of Care Doctrines search. We found out some things before we hired them. Nothing showed up obvious, but there were little hints. By focusing on those hints, within a week we let her go. We already could tell something was going on and there was no reason to take a chance.

This allows the person to do their own due diligence to make sure that the caregiver is safe for the elderly person.

It can be for that and it could be for children. Let’s go with the protected classes. Children who are newborn to the age of seventeen. Why seventeen? It’s because eighteen, you’re an adult, at least in California. Anytime there’s a child involved, the Duty of Care Doctrine applies. The elderly, if it’s considered an elderly person with a disability like their walking, their cognitive function, their logic, their setting where they’re isolated, all those would allow that person to apply as an elderly person.

There’s also a physically and cognitively impaired. There are some guidelines for them to also.

Even someone who is wheelchair-bound is protected. Someone with cognitive issues like autism, Alzheimer’s, dementia, schizophrenics and depressants, they should expect or do special consideration.

It sounds like the law does a good job of trying to cover these various different classes.

The challenge is whether people act upon that or not. We’re hoping as of this session, the audience will know and you’ll know that we should do extra things. Other people can become vulnerable, even if someone is hospitalized. Let’s say a woman has a baby and for the next two or three days she is incapacitated or with the baby. During that period, special consideration should be given to her and the child.

Tell me a little bit about the specific duties in the workplace. What are some things that go into that?

The Duty of Care Doctrine also applies to those who work with drugs or pharmaceuticals. You don’t want a drug addict to be working for pharmacy or in a hospital. Cashiers and those handling $10,000 or more in cash per week are part of the Duty of Care Doctrine. Those who use credit cards that have access to credit card information, bank account information and private information like social security numbers, dates of birth, home addresses, phone numbers. A lot of people in the workforce should be searched and examined under this doctrine.

This level of protection is about how the law is looking to provide support for different people in the workplace, so others can’t take advantage of people.

The first challenge is to know that these individuals are in a different class. The second challenge is to do something about it which we’ll talk about in a second. The third challenge is to keep monitoring and observing to make sure that everything is fine.

Duty Of Care Doctrine: The Duty of Care Doctrine says that a person has a duty of care to attend to someone’s needs, especially if that person is vulnerable in any way.

Does not exclude or excuse? Tell us a little bit about this.

One issue that disturbs me is that a lot of nonprofits end up in trouble because they think that a volunteer or a person working at a nonprofit is somehow excluded from being examined, investigated or screened. Especially if they have credit card information or access to cash. You’ve heard all kinds of terrible stories about nuns swindling from their church and nonprofit volunteers embezzling funds. A lot of this could be stopped before it starts.

The main thing here to get ahold of is that we want to take a look at these volunteers. We want to take a look at family members and relatives because they’re a part of having awareness about how these different impacts are going to take place.

Because Billy is a cousin, you know he’s a drug addict and he’s desperate for money, doesn’t mean that he won’t take advantage of your family or someone in your family who is less than fully cognizant or somewhat impaired. Even family members, you cannot excuse them. You can search yourself, but I think you’d know what you’re like. People who have access, you want to make sure there’s nothing in their record that would indicate any tendency of misconduct or being less than a perfect person.

Some mindfulness around that could make a big difference. Even teachers, nannies and babysitters over eighteen are included in this.

A babysitter at seventeen usually doesn’t have a criminal record. There might be a civil record, although it’s hard to use that in court as a minor, but just because someone’s a teacher, nanny, babysitter or report that they are, does not mean that they don’t need to be looked at.

Key company officials, tell me a little bit more about that.

The Duty of Care Doctrine will apply to anyone with a lot of control i.e. a CEO, a Chief Operating Officer, or CFO, Chief Financial Officer, they have access to employee’s records. Their socials, their dates of birth, their bank information, their credit card, who knows what they have. This would apply to somebody with control even to the payroll clerk and the accountant. There should be extra measures taken when there’s sensitive information like financial information available.

The thing that strikes me here is that there’s a relationship with integrity, trust and certainty with these different people that we or a business comes in contact with.

You want to make sure that you’re trusting the right people.

The payroll clerk and the bookkeeper that has that information that’s handy to them, you’ve got to have that level of integrity and trust that’s there or otherwise it doesn’t go so well. What are some of the specific applications that go into this? Tell us a little bit more about this.

The first thing you want to do is identify if the Duty of Care Doctrine applies and you would conduct a different background check or employment screening search for these people. It’s not like a regular, “I want to be a mechanic or work on a roof.” It’s somebody in a role that’s more specific. You want to make sure that you do the right search from the beginning.

When you hire somebody, you want to have authorization to recheck them periodically. Click To Tweet

What’s the range of due diligence that needs to take place here?

The Duty of Care Doctrine, you go back further. In some cases, you do what’s called a due diligence search, which is a higher form of the Duty of Care Doctrine search. You’re looking for more.

Tell me a little bit about the criminal charges. Where does that show up in this?

In some positions, a criminal or conviction may or may not be relevant. For example, if I have an office clerk and I had a DUI a few years ago, I don’t drive a company car, it’s probably not that important. It doesn’t relate to work. I’ve owned up to my misconduct and I said, “I’m good.” Sometimes, let’s say you have 20 or 30 allegations that are still in the system that either haven’t been proven or were downgraded to a misdemeanor from a felony, but you see this constant pattern of misconduct. Even if there were no convictions, you are allowed to use that to evaluate someone’s history or performance.

There’s a criminal charge and whether or not it’s been sentenced, but also when do you consider a civil penalty or judgment? When does that come into play?

Some civil issues you think should be criminal, but they’re not. For example, domestic violence, restraining orders, harassment, stalking are sometimes classified as civil cases and not as criminal. You want to look at the civil and domestic violence and family law activity in their record as well.

How about the medical field for people applying to jobs? How does that work?

It’s not a due diligence search, but it’s a higher level of search where someone handling pharmaceuticals, around drugs, maybe cash and private medical information. There are different kinds of searches that you do for them that are different from any other group of people.

The thing that’s striking me a little bit is the awareness of the range of things that you as a private investigator go through to make sure that you’re turning over the right rocks to find out where the thing is being hidden.

Every day is fun because every day is different. We never have two cases or two clients alike. It keeps it interesting and it keeps us sharp because each assignment is like a new challenge.

It sounds like this whole thing regarding background checks and employment screening then comes to the forefront.

I wanted to go into each of these categories a little bit more in detail. Typically, searches go back seven years for a standard background check, seven years from the end of any sentence or probation. We go back 10 to 12 years to see if there’s anything that might apply. The Duty of Care Doctrine searches usually go back fifteen years or more. There’s actually no expiration date. If we find anything 30 years ago that normally we wouldn’t report under the Duty of Care Doctrine, we probably would. There’s no limit, but usually a fifteen-year search is typical.

Duty Of Care Doctrine: You don’t know what the credit bureaus are saying about you. Believe it or not, even though you get a free credit report every year, it doesn’t always tell you everything.

You as a private investigator are also looking for this civil and conduct search.

We’re looking for orders of protection, violations like that, even why is one issue. Stalking would be civil, not criminal. It could be criminal, but civil. Harassment, domestic violence, domestic assault, abuse, all that could be kept in the civil system.

With the due diligence searches, tell us a little bit more about how you pursue this.

Due diligence search means looking for everything, everywhere. We’re talking traffic tickets, bankruptcy, liens and judgments. We’re trying to find anything that we can find in the public system that would indicate anything out of the ordinary or anything that would alert us.

I’m sure there are all different attributes that you’re looking for.

We want to help develop an idea about their character, their history, the person’s mindset. What habits are we worried about? Traveling overseas every two weeks with a lot of money is bizarre. Do they have vulnerabilities? It’s like doing a background check for the federal government for a secret or top secret clearance. You’re looking at anything that would be an indication of vulnerability of that person.

If anything, that’s exposed with the person. It looks like there are all kinds of ways that this is going to apply to businesses.

Let’s say you want to form a business partnership, you want to bring in a partner or you want to do a deal with somebody. That’s when you’d use a due diligence search. While the Duty of Care Doctrine applies, it’s just a higher and more thorough level of checking everything. We would check property records, foreclosures, are they paying child support, are they defaulting on their child support, things like that.

It makes a big difference because all these different people are going to apply to it. It’s caregivers, medical staff and childcare. Is there any stories that you have around this?

It may apply depending on the circumstance, to some caregivers, medical staff and child care, especially if they have access to money or funds. I would do a typical Duty of Care Doctrine search for a babysitter. It means going back fifteen or twenty years and looking for things that would be of concern. I wouldn’t check their traffic record unless they’re driving. I wouldn’t check to see if they own property or not. You don’t want someone who is vulnerable. Let’s say, somebody who’s running a large company who is in desperate need of cash because they have three houses and they’re all in foreclosure. You don’t want to give them the keys to the register and say, “Take whatever money you want.”

All these different stones or areas to look underneath, it looks like a quite a list here.

Unfortunately, even into many years as an investigator, we know where to look and it’s efficient, quick and inexpensive that we do it. It took a lot of years of training and practice to know what stones to turn over, what doors to open and how to get information. I don’t admire someone trying to do this on their own. Not only will they not know if they were thorough because they may have never done it before, but they’re not going to get any cooperation from the courts and from the data systems. A lot of information that we acquire is private and confidential. Only the police, credit bureaus and investigators can see it. That makes it a lot faster for us to do and harder for you to do.

Good decisions start with great information. Click To Tweet

It’s your information, but you can’t even access it because you don’t have the right license and the right access.

You don’t know what the credit bureaus are saying about you. Believe it or not, even though you get a free credit report every year, it doesn’t always tell you everything.

Periodic rescreening is required. Tell us a little bit about this.

Typically, you want to rescreen your employees every two years. Under the Duty of Care Doctrine, it’s recommended every year. That’s because you cannot miss something that might show up. A terrible example is there was a male nurse who was arrested for stealing opioids after he was hired. We don’t know when he became addicted, but they didn’t rescreen him. Four or five years down the road, he stole millions of dollars of drugs. They finally caught him and all that damage was done. What he was doing was taking drugs from patients. He was in the surgical room. He sometimes would take drugs that were on the IV. He would replace it with the saline solution, shoot up in the bathroom and then put whatever was drugs left back in the person while having surgery. They could have caught that long time ago had they been checking every year. He had a drug conviction history that wasn’t there when he was hired.

It’s a big difference to be able to check and double check the system so that the safety is where it needs to be.

When you hire somebody in their situation, you want to have authorization to recheck them periodically. You’ve got to treat everybody the same so that once they’re onboard, they don’t have to worry about it. You go back and recheck every year and see if anything new shows up. I’ll say that 3% or 4% of those that we recheck, we will find something new.

This is a big thing because when you look at criminal charges and sentencing, you want to be able to get ahold of the information that’s needed. That’s a big part of it. What’s this whole thing about prosecution? We’ll consider if any victims were in vulnerable state. What is this part?

If a crime is committed against a normal person, there’s a guideline for the court. If the person was vulnerable or incapacitated, those penalties can be compounded. Sentences can be increased because someone took advantage of somebody who was protected or should be protected. I wish the courts would do that more. Sometimes they don’t differentiate, but they should. Maybe getting the word out will help.

That’s a big part of doing shows like this. It’s to get the information out so it can create the awareness inside the environment about what employers should do and how individuals best protect themselves in regard to vulnerability. Employers may be charged for ignoring special consideration for the protected and vulnerable. Isn’t that correct?

Yeah, an example is we had a caregiving company who ran an instant background check online, which is not valid or complete. They never checked for civil records, which includes elder abuse and child abuse. There were documented cases of elder abuse in the civil system in several different states. This person was moving from state to state, and people are checking their own state, not where they came from. That employer was held responsible for the embezzlement, the fraud, the misconduct, the stealing, the thievery of the caregiver who robbed this old woman blind. They took her car, changed the title of her property and took her bank accounts. The caregiver had done this before in other states, but because there was nothing in the instant search and it was criminal only, the court came down on the employer, in addition to the individual who was incarcerated. Hopefully, it’ll never happen again.

Do they send a harsh message? Have you seen some harsh messages?

The courts love to use sentencing as a message to the community. What they’re saying is, “We won’t tolerate this. If you take advantage of the vulnerable, we’re going to come down on you.” You want to stop this before it happens if you can. If there is something going on, you want to catch it early and get the courts on your side, not against you.

Duty Of Care Doctrine: Employers and nonprofits have extra exposure and extra penalties they risk for an incomplete background check.

Which is different than a civil liability, severe penalties, fines, sanctions. This Duty of Care Doctrine applies in various different ways.

In the instance I described, the family of the person who is being cared for sued civilly in addition to the criminal charges and got penalties. It wasn’t enough and you want to stop it from happening if you can. It wasn’t fair for the family to go to this whole thing to try to get restitution and to try to get fairness when if somebody like the employer done a duty of care search, they would have been in better shape.

What a difference it could be into the millions. It seems like jurors take heart and look to stand for and by the vulnerable.

Sometimes sanctions could be seven times the actual loss. We’re talking about millions of dollars of penalties and it would put somebody out of business. They don’t want to do a simple search. A Duty of Care search does not cost much more than a background check. It’s just going back further and looking at a couple more things. It’s not that expensive.

How can the reader engage this process differently? What should the firm or the business do?

If somebody wants to contact a PI agency to do a background check, which there has to be an agency with real people involved because otherwise, how do you verify who’s who? How do you put together things? Who’s going to verify with the court that the case belonged to them, that the sentencing is accurate? Who’s going to write a report? A computer can’t do that. If they don’t know what a Duty of Care Doctrine search is, I would move on to another company. If they have no idea what that means, then move on. If you want to engage someone to do your background checks for you, the duties and the function of that candidate or volunteer will determine the search that’s done. It could be a standard background check, a duty of care background check. It could be for medical professionals or it could be a due diligence search.

I could see how establishing a periodic rescreening on the calendar can make a big difference.

Every year, let’s say in February, we send an email to the client saying, “These are the people we screened a year ago. If they’re still with you, let us know and we’ll automatically redo it.” If they’re not with them, we don’t do it. In that way, they’re protected.

Expanding the scope of research can make a big difference too.

Let’s say that you want to promote somebody and you get a basic background check and then you want to make them the office manager, you should now instead of doing the same one again, even if it’s a year ago, you want to do a different kind because the level of responsibility and access to information is greater. You’re going to change your search to a duty of care search.

The FCRA compliance, what do people need to keep in mind?

FCRA stands for Fair Credit Reporting Act. That is the federal and state guideline that says what you must and must not do. A screening agency called a credit reporting agency, we call them CRA, is licensed to conduct the work. If you do an instant search, the computer program is not licensed as a credit reporting agency. It’s basically a database. You want to make sure a CRA does your work. They should be licensed. They should sign the report on letterhead so that you can have a name if you need to call somebody or have them in court who did the work. That way, the person who did the work can testify as to how they did the work in case something comes up.

A lot of people in the workforce should be searched and examined under the Duty of Care Doctrine. Click To Tweet

That’s awesome, just thinking about these different ways that you can cover the FCRA compliance piece and these different things that need to be verified.

Any case that you find by computer, you still got to verify with the court directly. In case there’s a typo, which we get that sometimes. The individual has to sign authorization to do the background search and you also have a duty to the individual to give them a chance to correct any errors that the court might find. There has to be that ability for the individual to contest or to argue with the findings.

In summary, what are some things the employers and nonprofits seem to take away?

Employers and nonprofits have extra exposure and extra penalties they risk for an incomplete background check. That’s huge for them. Using licensed agencies will reduce exposure because now you can pass on the responsibility to that agency. If you and your office did it yourself and you don’t know what you’re doing or you miss something, you or the employer bears the full responsibility. Understanding the Duty of Care Doctrine allows someone to make better decisions and at least select the right background check. If you’re not sure, if you’re an employer or you have a caregiver attend to a child or an adult or you have a nonprofit, you can call and ask, “This is the work that they have. What kind of background check should I do?”

That’s a huge difference to have somebody like yourself there as a private investigator to check in for the employer to get the information they need to make a wise decision.

Background checks typically take three days. The reason is sometimes the searches can only be done in-person at the court. Somebody has to go and we have a network of agents around the country who can go. That’s the only way to find out what they have. We want to give everybody confidence that the work was done right.

What are more information about the ways we can support or your agency can support the reader to get greater protection?

Going to our website will help to at least get some explanation. My staff and I are ready to answer your questions. We’re happy to help out. We can direct you and give you some feedback as to what you’re looking into and what it is that you need to do. Remember that Information Is Power. Good decisions start with great information. It’s like looking through the windshield of a car, the driver is better informed as where to go if he can see out the window. That’s what we hope to do, give people good vision, good information and good data.

If we take a look at the things that we learned in regard to this, it can make a big difference to get people and employers specifically to move into actions so that the Duty of Care Doctrine gets followed and a safety and protection can be met for all.

That’s why we’re doing this. Hopefully, it was helpful and informative.

I feel delighted looking forward to our next one. The world of private investigation is powerful and it provides a lot of safety and information. People need to know who they’re in relationship with and who’s going to provide them safety and trust.

Thank you, Bill.

Thanks, Jonathan.

Important Links:

7 Things You Need To Know About Background Checks

Avoid the common pitfalls of instant searches and the risk that result from incomplete background checks. In this premiere episode of Information Is Power, Jonathan Kraut of Net Check Investigations and Bill Stierle talk about background checks as they highlight the importance of the employee screening process and debunks the myths around it. Join Bill and Jonathan as they unwrap the seven things you need to know about background checks.

Listen to the podcast here:

7 Things You Need To Know About Background Checks

How To Conduct Effective Tenant And Employment Screening And Background Checks

I am here with Jonathan Kraut. We’d like to talk to a bit about Net Check Investigations. We’re going to introduce you to the Information Is Power Investigations Show. Jonathan, tell us a bit about you, how you’ve come into this field and a little bit about your company.

This is about my 22nd year as a private investigator. I used to be a professor at a college. A lot of my students were not finding internship in investigation work. I got a license and put them to work. I got busy so I stopped teaching. Since then, I’ve been running this firm and trying to make sure that people are safe and they make good decisions.

It’s nice to be on this show to share your wisdom, knowledge and experience. A big part of decision making is having the right information. We’d like to share with you some information that’s crucial to employers. You will be able to pick up a lot of valuable information as we talk through the Information Is Power Investigations Show. Jonathan, tell us about the seven things that the employers need to know.

The obvious thing is when you do a thorough background check, you’ll weed out people that could do you, your company and your employees harm. There are a lot of myths that are out there and I wanted to dispel what those are. I wanted to give employers a very logical and easy way to make sure that they’re doing the right thing as far as their background check on new employees or candidates and recheck later on.

I remember that it’s important in the State of California, as well as other states, for people to know what your private investigations license is. Isn’t it a part of the process too to create trust?

The state goes through great effort to make sure that licensees are knowledgeable and follow the law. The worst thing that could happen is somebody like a law enforcement officer, government official or licensed agency uses their trust and their position to take advantage of others. We’re very careful about doing the right thing as much as we can all the time.

Tell us a little bit about the responsibility employers have to keep their people and customers safe and taking the appropriate preventative actions with employment screening.

By creating an environment, employers have a responsibility to their people and customers that the environment that people come into are safe. To do so, that includes not just their employees, but also the safety of their clients, customers, visitors and so forth. We want to protect property, reputation, privacy and physical objects from being misused.

Do they also have other responsibilities?

Besides the physical premises, you’re talking about the welfare of individuals that may be exposed to let’s say you bring in a stalker or sex predator into your workplace. That could have a great impact and negative impact on other people working in your company.

The screening process is important.

In addition to the safety of your employees, employers are responsible for their clients and customers. For example, you hire a cashier who has a drug issue, drug problem or embezzlement habit, they could steal the private information of their clients, their social security numbers and credit card information. You want to make sure that the people you bring into a setting have at least the certainty that there’s nothing in their criminal record that would indicate a habit of misconduct.

There’s a duty to check in with them.

In addition to the initial duty to check-in, you want to have a bi-annual recheck. There are individuals who perhaps weren’t caught, arrested or convicted prior to being hired. Because of the way that they think or behave, maybe after they were hired and entrusted with certain responsibilities in certain information, the history will show up later. They could be convicted or arrested after they were hired. You want to check for that as well.

We’re getting to why proper background checks are critical then.

Doing background checks is weeding out people that could do you, your company, and your employees harm. Click To Tweet

I’ll give an example. In Burbank where our office is located, a property management company hired a janitor. They did a California search for criminal records. They didn’t find anything. They handed to the janitor all the keys to the property. It’s a multi-unit. They have 100 to 200 residents in the property. They didn’t know the true history of the janitor.

Even though they didn’t know the history of the janitor, they’re still responsible for that as a business owner.

In this case, what happened was the janitor, who is a sexual predator, was convicted in another state. He had an arrest warrant from that other state. It did not show up in the California system. Therefore, he had access to all the keys. One day, he entered into a unit where a young girl was alone. She was thirteen or fourteen years old. He assaulted and raped her. A court case arose that finally resulted in a multimillion-dollar penalty and fine charge to the apartment complex. By allowing someone to come in who was known to be from another state, to not check their background thoroughly was an issue.

There are all kinds of challenges here if you’re doing a limited local search. It’s the responsibility of the employer or the business owner to follow the state-licensed screening agency and this whole misconduct search.

If they did a comprehensive misconduct search, it would have taken minutes to realize that the individual had lived in another state. If they check for records in that state, they would have found a warrant. They would have found that he was a sexual predator. They would have found that he was already convicted for the same kind of crime.

Imagine what it would be like then to have one of these events where people show up. We’re interested in getting the protection, the safety and the thoroughness that your company advocates.

It’s very important that employers know what they can do to protect their company, their employees, their customers and defend against liability and risk.

Myths About Employment Screening

As we get started, there are certain things that people believe are true that are not true. Could you take us through the different myths that people have about employment screening?

Relating to the last example that I gave, myth number one is that a state live scan is comprehensive. In reality, the live scan only checks the state that you’re in. It does verify fingerprints and it does go into the FBI system, but it does not check the other states. It does not look for warrants. It does not locate issues or events that are non-criminal that are very relevant.

It is very light and it doesn’t do the thoroughness that you advocate.

It does check the state that you’re in and the FBI records, which is part of it. I’ll give you an example of how a live scan led to the injury of other people. An individual purchased a weapon in Aurora, Illinois. There was a National Instant Background Check through the Brady Bill. It did not locate a relevant criminal case out of Mississippi. The reason would be that a lot of states voluntarily contribute to the system, but there’s not one push-button index where all the criminal records are kept. His name is Mr. Martin. When he applied for a concealed weapon permit a little bit later, after he purchased a firearm, a case was located. The FBI estimates that about 29% of all adults have a criminal record. About 9% are felons. If the National Instant Background Check System was adequate of the 230 million background checks, about 23 million criminal records would have been identified instead of the 1.3 million that have identified. In other words, even the Federal Instant Background Check System for purchasing a gun missed about 22 million criminal cases, which is terrible.

That is not good. The thoroughness is interesting. The first myth is that the state live scan is comprehensive and we’re seeing that not to be true.

When Mr. Martin tried to get a concealed weapons permit, a five-minute skip trace and a hand search found that record in no time. While an instant search through the federal government or the state is good in some cases or partially helpful, a hand search would have found that record instantly in a matter of minutes.

Since he got the weapon, he shot several coworkers.

He shot his coworkers. I don’t know if he killed anybody, but he hit four. It’s because he had access to a weapon that was cleared through an instant state live scan search.

Background Checks: It’s important that employers know what they can do to protect their company, employees, and customers.

What’s the second myth? It says all criminal activities are filed at the criminal index. Tell us a little bit about the first part of this myth.

The criminal records include lots of different statuses. For example, they are dismissed, diverted, convicted. They need interpretation. A person who’s diverted and not convicted due to drug use and who is in rehab, may not show up as a criminal conviction. It’s illegal, in some cases or in many cases, to refuse to hire someone because they’re in diversion. They’re not going to be working for a pharmaceutical company. That would be a mistake and their requirements are a little different from a cashier. We used dates of birth and name to identify somebody. If somebody lies about their date of birth, you may not find it. A lot of the cases that are in the criminal index system are not reportable. It means it may show up through a search, but because it’s been diverted or dismissed, it cannot be used against the person in most cases.

You’ve got to take a look at this myth to make sure that it includes some of these other elements that a person doesn’t want to hire.

Criminal indexes don’t include something related to or commonly related to domestic violence, harassment, stalking, elder abuse and child abuse. Often, those are not in the criminal index. They’re kept in other indexes.

The thoroughness is checking these other indexes, not just one of them.

If you rely on the criminal index only and you use whatever you find, first of all, a lot of it is not admissible. The parts that are admissible may be incomplete.

Take us then through myth number three, the jurisdictions. This is something that I had a little bit of confusion about but after talking with you, I’ve got a little more clarity about it.

Jurisdictions vary by level. You have federal jurisdiction, FBI records, local and county records, stayed incarceration and probation. They’re kept separately. There is no one place where the records of all the counties, all the states and all local jurisdictions are kept. Each jurisdiction that applies must be searched separately. Even sex offenders by state, which may not be kept at the county level, maybe at the state level.

There are a few different indexes to trace down to get the thoroughness that an employer would like. Are medical-related things also separated?

Sometimes, medical records are not included in the other records. There are different systems to check for medical professionals as well.

A little bit of bureaucracy for someone that understands or has the experience of knowing which rock to turn over. You know which rocks to turn over. Is that what you’re saying?

We do. I assume that licensed investigators who make their business as background checks and screening would know. You’d be surprised that a lot of my fellow professionals don’t do background checks. They don’t know what I am disclosing.

Even they would have a lot of assumptions as I did about some of these myths that I would buy into, “They did a background check.” It’s like, “What kind?”

In fact, what disturbs me and one motivation for making this show is I watch on TV and hear on the radio, “Our people were background checked.” What they mean is they did an instant search online. Myth number four would be that an instant search online is sufficient. It is not sufficient.

I was thinking about the database is not sufficient. As I started thinking about it, the fine-point or disclaimer are not necessarily in play here.

It is better to be slow and accurate than fast and wrong. Click To Tweet

If you go online and do an instant search, look at the disclaimer. It usually will say, “Do not use for employment purposes. It is for entertainment purposes only.” It does not meet the Fair Credit Reporting Act, which is our umbrella legislation. Firms gather information from different counties and different states. They compile a phonebook of all the records they have. When they do an instant search, what they’re telling you is any record that we have, we will find. They’re not making a promise that they’re checking every jurisdiction. They’re promising that if you put in a name and the date of birth and it’s in their index, they’ll find it. The sad part is that about 80% of criminal records are not in these databases. New cases aren’t there. Arrest warrants aren’t there. In fact, most county information is not in this index. It’s basically updated every few months, maybe every year. A lot of county information like LA County is not in these indexes. If you’re paying $10, $15 or $20 to do an instant search, know that you cannot be accessing all live and real information instantly. It’s not possible.

It’s not going to cover your employment due diligence.

It does not protect the employer and does not find out valuable information.

Is it because the court is not quite connected to it fully?

Even if you did find cases through an instant search. You need to verify with the court that the information is accurate. You can’t rely on a database.

There’s a big difference. It doesn’t constitute a valid search.

No, the courts have ruled that an instant search is insufficient. The employer can protect themselves from doing a comprehensive search.

This brings us around to myth number five. Once a background check is performed, the employer’s obligation is fulfilled. Tell us some of the time limitations or stamps or things that the employer needs to know to keep themselves up to date.

For many years, my firm has done hundreds of thousands of background checks. Our experience is not only should companies re-screen, but about 3% of those who are re-screened have new cases that occurred after the time that they were hired. Typically, we re-screened every other year, a biannual re-screening. Even then, 3 out of 100 have new cases. New issues include drug use, embezzlement, fraud, all kinds of things that you never think of, assault with a deadly weapon, sex, predatory crimes that occurred after they were hired.

It seems like the employer needs to build a system of reliability to cover their due diligence or their protection and their obligations in this area.

When an employer hires somebody, the original agreement should be something authorizing periodic re-screening so that the employer doesn’t have to go back and get a new authorization every couple of years.

Things To Know About Background Checks

As we went through the myths, it loops us back around to the topic of this show, which are the seven things employers need to know about background checks. Why is a comprehensive background check needed and what they must know? Could you walk us through the seven things so that we can get a sense of what the employers can do? That way at least we’ve got a level of awareness and consciousness about how to get this thing done.

By knowing the myths, our readers understand that there are more than one door to open. On average, there are about twelve different indexes to be searched. If you do an instant search, you open one door. If you do a live scan, you open two more but you’re still missing more doors. Imagine twelve doors to be opened to find out what someone’s history and record is and you open only three. Anything could be behind the other nine doors. Let say you have a twelve-wheeler truck. You need twelve tires. You go into the dealer and you say, “If I buy one, is it cheaper?” They’ll go, “Sure, here’s one.” That’s the same as doing an instant search. You still can’t drive it away. You do a live scan or a state search, you get two more tires, you can’t still drive it away. We’re very excited to share to your audience that to do a comprehensive search, you need to check all twelve places. Number one is the first thing employers need to know is there are twelve different indexes or searches to be conducted.

Tell us about the second thing. The only licensed agencies are authorized. Help me with that.

What distinguishes a private investigations company from others is that we’re licensed to acquire private information, not open to the public. We can assess character. Your computer or your instance search cannot assess character. Who would testify in court as to what they found? The computer? We had the ability to do what’s called a skip trace, where we use confidential means to verify someone’s date of birth, their social, other names that they have used and where they’ve lived. Having access to that gives us a lot of information. Believe it or not, convicted criminals often lie about their date of birth.

Background Checks: Directly accessing the system can often be the only way to access people’s records.

Why would they ever lie?

They know that if you run the date of birth you gave them, they’ll come up clean. A licensed agency is going to find that. They are going to check every date of birth, whether they gave it to us or not. Every name that shows up whether they gave it to us or not.

It is not available to the public unless you have the license.

That’s why an online search is not going to give you a lot of good information. Especially, it may give you lots of names that don’t belong to them. Lots of do it yourself. You’ll see, if you go to one of the online searches about yourself, a lot of stuff is there that’s not accurate. We want to search every date of birth and every known name in every jurisdiction where they’ve been located, which goes back a number of years.

This whole assessment of character, how does that work?

Assessment of character means should you hire them or should you not base on the record that you’ve found? We can make suggestions to employers. It’s is still up to them. Our report is going to be on letterhead and that goes in their file. We don’t decide if someone should be hired, but we’ll provide information. The employers will ask us, “What do you think? This guy has been convicted five times of DUI. Should we allow him to be one of our delivery guys?” We say, “What’s it look like if there’s going to be a six or seven? He’s not learning. It is a great risk. Why not find somebody whose record is clean?”

What is the liability or lower in the insurance? How does that work?

If certain practices are followed and a licensed agency is conducting a comprehensive search, most insurance companies with liability insurance will give you a discount. I’m very delighted to share with the clients if you want to call me and ask me how that’s done. It’s a little bit complicated, but we show them what we do and how that helps them lower the liability risks for the company. Insurance companies are all about mitigating costs.

If they got a thorough search and the validation of that, I could see how the insurance company would then give them a lower rate. That makes a lot more sense to put protections in place. In the third part of this thing, there are many records that can only be accessed locally. Tell us a little bit more about the network.

We do searches nationally. We have access to every court system in every county and every state. Anyone doing your background check should do that. A lot of records only could be accessed locally, meaning someone has to walk into the courtroom, sit down at the computer or hand the court clerk a list. That’s the only way to get a record if that person has something or not that we should be concerned about. Not only can you not access these from the internet, but you can’t access the mystery. It takes maybe two or three days, but usually three days for that information to come back. There are fees associated with that. Some states charge $6, $10, $15 for a comprehensive criminal or civil records search in that state. You’ve got to do it correctly or you’re not going to get information.

Do you also have access to these agents that can do hand searches?

We have a network of agents in every county, in every state that can do a hand search and make sure that there’s nothing in that record or in that file. If it’s reported back to the clients so they know exactly what’s going on.

You know what they’re getting themselves into.

You’ve got to connect with the court data system directly, not through an index, which is compiled periodically or may be completely missing. The only way to know is if we directly access that system.

The fourth tip for employers is the most active warrants are kept by the County Sheriff’s Department. Tell us a little bit about that.

Someone could have an active warrant for their arrest, which is not in the criminal index of the county. That arrest warrant may not be kept in the criminal system. Probably in some cases, it would only be kept by the Sheriff’s Department. Unless you check with the Sheriff’s Department, you would not know if a person has an active warrant in that county. Obviously, that’s an area to be checked. It may not be in the criminal index system.

There are different processes to go about this search.

Let’s say somebody was pulled over and ran off. They know who it is. They’ve got their fingerprints from the car. They have a picture of the person, but since they’re not arraigned, they may not be in the county or local criminal system yet. It’s just an arrest warrant.

That’s a big difference. There is some misconduct in number five. Tell us a little bit about the misconduct that is not in the criminal search.

One of the most important messages of this episode is that a lot of misconduct is not in the criminal system. An example is civil harassment and stalking. They are usually kept in the civil system. Orders of protection, restraining orders may be considered domestic or family law. Domestic violence may not be kept in the criminal system. A tragic story is one of our clients said, “This guy has nothing in the criminal record.” The judge said, “He’s a good guy. There’s nothing to go back on.” The woman had heard of something that had happened in a different county. We checked for family and domestic records and we found that this guy had a restraining order, violation of orders of protection and stalking charges. All these were in the civil system and the family law system. We brought these cases to the court. It changed the whole outcome of the case. That’s because we didn’t depend on the criminal system for finding criminal information.

This is probably the one that bothers me the most. People’s mindset thinks criminal and don’t think domestic or don’t think that there are these different buckets that you’ve got to check or these different tires that you’ve got to put on. They might not be represented by the person that you’re in front of.

That reminds me, elder abuse and child abuse are generally not reported in the criminal system. I don’t know why. A lot of counties put it under family law or domestic. You could choke or take advantage of someone who’s related and that may be considered a family dispute and not a criminal case, although it’s very relevant. Also, you have military records, which are not in any county or federal system. There’s a completely separate index conducted by a different agency, a military agency. Any misconduct or unfavorable discharge might not be in the criminal system. That might be in a different system.

Tell me about this FCRA compliance. Tell me a little bit about why an employer needs to know that.

The Fair Credit Reporting Act, which we call FCRA, has outlined the duties and requirements that credit reporting agencies like us, private investigations companies, which go beyond credit. What they need to do? It gives them some rights or authority to an individual whose background is being checked. A credit reporting agency has to get authorization either from the individual or there’s a court case. We need something to go with in order to look at someone’s private information. We can’t just go run it because we want to. When we file a report with the company, we give them the results of our background check, for example, signed on our letterhead. Why it’s signed is so then the employer knows who did the work and who could be called to testify if it comes to that.

The testimony is important. The signature is that next level of verification because a real live person is doing it.

All our reports are signed by an individual. We know who that individual is. If there’s an issue, we can go back to our agent and say, “How did you conduct it? Where did you go? What agents did you employ to county by county to do the work?” We want to make sure that it’s traceable and that we can go back. You can’t bring a computer to court to testify. There should be an individual who did the work, the research, the hand search, the skip trace that can say exactly what they did.

Do private investigators show up in court and do the testimony thing?

If needed. I’d say that of the 400,000 or 500,000 background checks we’ve conducted, we hardly missed anything. Although, a couple of times, somehow we have. Maybe we’ve typed in something wrong, but we’ve never had a case related to any misconduct or something that we missed. A couple of times, we’ve found that we did on our own when we do a recheck. Not often, maybe 1 in 100,000 that something didn’t show up or maybe it wasn’t in the court system then and it is now. We’re very patient and careful. We’d rather be slow and accurate than fast and wrong. We have to verify with the court an FCRA requirement to verify a case with the court directly that it’s accurate. The date of birth and the name is right.

Once this is a signed authorization from the candidates, it allows you to be in compliance or thereabouts.

The job candidate should sign an authorization and allow us if there is an error to give them the information, which is free, to go back and say, “That was my twin brother. It’s the wrong date of birth. He has my date of birth and my name but it’s not me.” We’ve had that. A candidate has to have the right to go back and challenge your results. At times, the court data is wrong.

Background Checks: Employers take on tremendous responsibilities to risk because the penalties of not doing a complete background check are very high.

We’re coming up to number seven because we are doing the seven things. The employers have a duty to periodically recheck and re-screen. Tell us a little bit about that.

About 3% of those that we recheck have new cases that were filed and convictions that were filed after they were hired. We recommend that all employers re-screened every two years. In some cases like medical facilities, elder and childcare, those who handle money, credit card information, pharmaceuticals, you want to check that annually. You have a duty to your clients for the safety of privacy and the people that they’re caring for that you recheck more confidently and more often.

We’ve run through a whole bunch of wonderful information. Take us through a little bit of the summary of this thing and walk us through what’s at stake here.

First, employers take on a tremendous responsibility to risk and the penalties of not doing a complete background check are very high. We wanted to bring that up and let them know. Using a licensed agency will reduce this exposure for workplace and employer liability. Knowing the myths about that should enlighten our employers as to what they should or should not do, especially when it comes to background checks. Next, we want to say that if you understand how a background check is performed, it gives the employer a lot of choices and a lot of information so that they don’t make mistakes that could hurt them. While a background check only may take three days to complete, we’d rather take our time and get it right than hurry up and get it wrong. A comprehensive search will protect employers and workplace and reduce the risk from liability.

For more information about ways Net Check can help support employers, where should we go? What should we do? Give us a website.

Anyone who wants to ask me questions about this information or others, I’d be happy to share. The more information you have, the better. The information is free, we want to help you. Our website is NetCheckPI.com. There are a lot of valuable tools and information, videos and podcasts on there. To our employers out there, remember Information is Power. Good decisions start with great information. We want to give you great information. We want you to be powerful and be successful and take the steps necessary to make sure your workplace and your future looks great.

This has been great. This has been a journey for us beyond a little bit. I feel grateful that you asked me to ask you questions about it. I sure have learned a lot about this. I’m looking forward to do the next one with you. We’ll be able to provide employers, business owners and individuals that are looking to have a private investigator work for them and support them and getting their needs for protection or privacy or information and ways that you can help them. Are there any closing thoughts or things that you’d like the readers to know?

You ask an expert, I wouldn’t say that I know everything about everything, but I know a lot about background checks. I’m very happy to help out. I want everyone to be safe. I want to hold people responsible for the misconduct they’ve performed. It’s only fair that good people with good histories are given a chance first. If you only knew now what you knew then or you knew then what you knew now, either way. That’s why you want to recheck all the time and why you want to be thorough in your background checks for employment.

Jonathan, thanks for sharing your information with others and more to come.

You’re welcome, Bill. Thanks.

Take care. Bye.

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