Employers hiring screening firms to avoid migrant-hiring sanctions

By Yvette Armendariz, The Arizona Republic.

The growing spotlight on the role of employers in illegal immigration has some businesses, from restaurants to construction companies and others, scrambling to protect themselves from federal penalties.

They are hiring employment-screening companies to audit employees’ Social Security numbers and doing background checks on new hires. In some cases, employers are turning over all hiring functions to outside firms and seeking help in complying with legal paperwork in hopes that they don’t find themselves at risk of fines or prosecution.

“We’ve found the focus is shifting from wage-and-hour compliance to immigration compliance,” said John Rico, director of human resources for Scottsdale-based National PEO, which provides services including employment screening, payroll and human-resource consulting.

Some background screeners and human-resource consultants report that business has jumped as much as 60 percent in the past three months. They don’t expect a slowdown anytime soon, given U.S. Immigration and Customs Enforcement’s recent announcement to crack down on employers who knowingly hire illegal immigrants. The agency seeks to fine and prosecute businesses that blatantly ignore hiring laws.

In Arizona, as many as 40 agents may be added to help with work-site enforcement, which has been scant in recent years. Just 30 employers statewide have been fined for hiring undocumented workers over the past 12 years.

Nationally, work-site-enforcement arrests declined from 2,849 in 1999 to 445 in 2003, according to an August report by the U.S. Government Accountability Office. Notices of intent to fine employers declined from 417 in 1999 to just three in 2004.

Several employment screeners said they expect to step up marketing of their services or add services to help business make a good-faith effort to avoid hiring undocumented workers.

“What is a good-faith effort is becoming more stringent and time-consuming for employers,” said Anne Caldwell, president of Phoenix-based Outsourcing Solutions, a human-resource strategy firm.

The general attitude had been that if an employer looked at a document and felt that it was legitimate, then that was good enough. But today, human-resource specialists are cautioning that more documentation will be required to show a good-faith effort.

Kevin Klimas, president of Clarifacts Inc., an employment-screening company in Phoenix, is closely watching the U.S. Department of Homeland Security and the Social Security Administration in anticipation of new guidelines for employment verification.

“Employers are starting to prepare for a change,” he said.

Just what that will entail is difficult to say, but he does note that he’s getting more questions about I-9 forms used to determine employment eligibility.

Business groups say most employers make a good-faith effort to comply. The problem is that few have the document experts and systems to check the validity of Social Security numbers.

“You can legally hire an illegal alien because you’ve done everything you are legally required to do because if you take it a step farther, then it’s racial” discrimination, said Mark Minter, executive director of the Arizona Builders’ Alliance, which represents contractors.

“Technology makes it easy to fool even law enforcement agents on what is a real document and a fake one,” he said.

Human-resource experts hope to help improve employers’ good-faith efforts. In many cases, employers simply don’t know or understand their legal obligations for verification and they are often sloppy about record keeping.

Reverse-osmosis company Aqua Chill hired National PEO a few years ago to oversee payroll and keep an eye on employment verification. It’s a good thing, said office manager Crystal Goodwin, because the company’s expertise isn’t in employment documentation. National PEO regularly audits the I-9 forms, which gives Goodwin confidence that the company’s employment-screening efforts would pass muster if they were to face a federal or state check.

State legislators are pushing for increased checks, too. They are working on legislation to penalize employers who knowingly hire undocumented workers.

The increased federal enforcement is unlikely to scare non-compliant companies, said Tom Fraker, executive director of the Arizona Small Business Association.

“The odds of getting caught are (still) remote,” he said. Many employers are desperate to fill labor-intensive jobs paying between $8 and $12 an hour, he said, and they won’t hesitate to hire with minimal checks so that work isn’t interrupted.

But he thinks that last week’s announcement may marginally help improve compliance.

“Even though the number of enforcers are few and far between, they’ll scare enough people to do what’s right,” he said.

By Kevin Klimas, bizAZ Magazine.

The crime of identity theft has reached epidemic proportions. According to the FBI, identity theft is the fastest growing white-collar crime in the United States and Arizona has the dubious honor of ranking first in the nation for the number of incidences per capita.

Identity theft occurs when personal information is obtained and then used for illegal purposes. While many of us think of identity theft as simply credit card fraud, it has in fact evolved beyond stealing credit card offers from the mailbox as criminals are becoming increasingly sophisticated in their methods for obtaining private information.

The Greatest Resource for Criminals 

Companies, by the mere nature of being in business, have a virtual goldmine of personal data (i.e. address, social security number, date of birth, etc.) on their employees and identity theft perpetrators are now finding it easier than ever to tap into this resource. One of the more common sources of this personal data is an applicant’s background check report (legally known as a consumer report).

While there are industry best practices for how to properly handle personnel files, including acquiring, storing and destroying consumer reports and other sensitive information, it is important to first understand ways in which criminals get their hands on employee records.

Obtaining Information is Easier Than Ever

Today’s criminals have numerous ways of obtaining information from businesses or other institutions, including:



With so many opportunities to steal this information, and so much at risk, businesses have an obligation to protect personal data from falling into the wrong hands.

Protecting Employees

What can employers do to protect their employees from becoming victims of identity theft?

Given the fact that other employees are often the source of an information breach, the first line of defense is to conduct background checks on all job applicants. Pre-employment screening including, but not limited to, criminal record searches and employment/reference verifications, can provide a clearer picture of your candidates and help protect against potential information leaks.

In addition to hiring candidates with integrity, employers also must put processes in place to control the flow of information. From the employment application to an employee’s departure, HR records, including consumer reports, must be closely guarded.

Following are important tips for Acquiring, Storing and Destroying this information.

Acquiring Information

When acquiring information on applicants from a third-party vendor, such as Clarifacts, the most important consideration is to protect your passwords. Keep in mind these simple guidelines:



Storing Information

Restricting access is the most important consideration when storing employee information. Following are three simple steps employers can take to securely store data:



Destruction of Information

The Federal Trade Commission (FTC) recently issued new regulations governing the proper disposal of consumer report information (which includes background check reports). The “Disposal Rule” under the Fair and Accurate Credit Transaction Act of 2003 (FACTA) went into effect June 1, 2005, and amends the Fair Credit Reporting Act (FCRA), which regulates the employment screening industry and the employers who use consumer report information.

The Disposal Rule requires businesses to adopt disposal practices that are reasonable and appropriate to prevent the unauthorized access to, or use of, information in a consumer report. The FTC standard for the proper disposal of information is flexible and allows organizations to determine what measures are reasonable based on the sensitivity of the information, the costs and benefits of different disposal methods, and changes in technology.

These “reasonable measures” could include, but are not limited to:



The Disposal Rule applies to every business, regardless of size or number of employees. When companies violate the Disposal Rule and compromise the personal information of employees, they are legally exposed. Depending on the type of action and whether the violation was willful or negligent, the FCRA provides for a range of civil liabilities and penalties, including actual damages, statutory damages up to $1,000 per violation, punitive damages and civil penalties up to $2,500 per violation – not to mention attorney’s fees and other costs.

If personal employee information has been compromised, the FTC recommends that you immediately notify law enforcement and the individuals that may be affected.

Help Stop Identity Theft in the Workplace

Being number one in the nation for identity theft is not a distinction any of us want for Arizona, and we certainly do not wish to see this crime proliferated in our own companies. As human resource professionals, business owners and managers, we must be diligent in recognizing identity theft opportunities within our own organizations, and in taking immediate steps to help secure employee information. By properly acquiring, storing and destroying sensitive data, businesses can make significant strides in preventing identity theft in the workplace.

Kevin Klimas is the founder and president of Clarifacts Inc, a privately held corporation focused exclusively on background screening services. Clarifacts provides nationwide service across a variety of industries including legal, healthcare, technology, manufacturing and non-profit just to name a few, with clients ranging from Fortune 500 companies to sole proprietorships. For more information visit

By Yvette Armendariz, The Arizona Republic.

When Jesse Bonfeld launched a shuttle service 2 1/2 years ago, he didn’t hesitate about setting a policy to run criminal and motor vehicle checks on all prospective drivers.

“We’re entrusting them with a fairly expensive piece of equipment as well as with the safety of many people,” said Bonfeld, who with his wife, Linda, operates Timberline VIP Luxury Shuttle between Springerville and Phoenix. “You need people you can trust and rely on.”

Bonfeld, who employs three drivers, is far from alone.

Even small companies like his are turning to criminal, credit, motor vehicle and Social Security checks to make sure the people they hire don’t create unnecessary liability risks.

Ninety-six percent of businesses surveyed last year report they conduct reference and background checks on job applicants, according to the Society for Human Resource Management. A separate report on workplace violence showed 66 percent of employers were doing similar checks in 1996.

Most are checking

Larger companies conduct checks 99 percent of the time, while small companies report doing them 92 percent of the time, according to the latest report. Also, criminal checks are done to some degree by 87 percent of companies. Another growing area is credit checks, with 61 percent reporting always or occasionally doing them. Education records, military-discharge information and motor-vehicle checks also are growing.

Drug checks are not considered part of background checks. But roughly 30 percent of small companies in Arizona have drug policies in place, compared with 87 percent of companies with 500 or more workers and virtually all of the Fortune 500 companies, according to Drugs Don’t Work in Arizona!

The growth in background checks has raised debate about how much privacy employees can have and the accuracy of the reports.

It’s also resulted in a number of publications, including one from the Federal Trade Commission and the Privacy Rights Clearinghouse based in San Diego, explaining the rules of consumer credit and background checks when using agencies.

“Accuracy is one of the big issues,” said Tena Friery, research director of the clearinghouse. She said calls to the group’s hotline have increased dramatically regarding concerns about privacy and inaccuracy of the information on these checks. “It’s devastating to someone who is trying to get or keep a job.”

Concerns about privacy, however, have been superseded in court by concerns about employee safety and company liability.

“It’s like the practice of preventive medicine, where the doctor wants to be overly thorough,” said employment law attorney Lawrence Rosenfeld, a shareholder at Greenberg Traurig in Phoenix.

Increasing scrutiny

The majority of growth in background checks has come in the past four years, said Cedric Dave, vice president of human resources for Phoenix-based Merchants Information Solutions Inc.

“9/11 really made us say, ‘Hmm, we better look around and see if we have the right people on board,’ ” he said, adding that checks have been growing more than 10 percent annually. At Merchants, the most popular requests are for criminal and credit checks as prices decrease because of growing databases and technology.

Companies generally will charge $25 to $300, depending on the scope of the investigation, company operators said. Most will average $60 to $80.

Kevin Klimas, president of Clarifacts Inc. in Phoenix, said drivers and money handlers are increasingly getting scrutinized, as are people who work with children and people older than 65.

“There’s a significant increase in sex-offender searches,” he said.

Wal-Mart was sued for negligence in South Carolina related to a minor’s accusation that a worker fondled her in July 2004. The lawsuit says Wal-Mart failed to check that the accused employee had two convictions for indecent exposure.

In August 2004, Wal-Mart rolled out a policy to conduct criminal checks on all qualified applicants.

Almost all of Klimas’ clients hiring at day cares, hospitality companies and health care providers are now adding the sex-offender search.

Small companies that may have resisted using checks are finding they often are required if the company wants insurance or aspires to do federal contracting work.

Bonfeld, for example, found the checks became necessary to get liability insurance.

Chris Hernandez of the Hernandez Companies in Phoenix must have all his contractors working at the airport screened for a criminal history.

Small firms not exempt

Businesses are limited in their searches in that they are supposed to get written permission for job prospects to run the checks through an agency. But they don’t have to be upfront about checks done privately by in-house staff, attorney Rosenfeld said.

Many companies will seek permission for the check during the application process, he said.

Companies, under the Fair Credit Reporting Act, are supposed to inform job prospects if they lose a job offer because of something found in that check.

Policies needed

Human-resource professionals say policies on searches need to be created, so they don’t find themselves in a lawsuit alleging selective discrimination.

For example, an employer may set a policy that all job prospects who are expected to handle money or sensitive customer information undergo a credit check. But general staff may have only a reference check.

Karyn Howard, human-resource manager for the Arizona Theatre Company, checks out job prospects primarily to uncover whether they are inflating their résumés and to get a better idea of what kind of person they might be hiring.

“There are clues out there that tell you when you need to keep digging,” she said. “You as an employer have a responsibility.”