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.

Listen to the podcast here:

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.

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