Minimizing Negligent Hiring Liability - Agile Product Solutions
  • Minimizing Negligent Hiring Liability

Negligent hiring occurs when an employee commits a crime (or other wrongdoing) that would have been prevented if the employer had completed a reasonable background check.  In 1998, a college student sued Domino’s Pizza on the basis of negligent hiring after she was abducted and raped by one of their employees.  The Court of Appeals later affirmed the lower court’s judgment that the victim was not a Domino’s customer, therefore there was no obligation to her.  Although the outcome absolved Domino’s Pizza of liability in this instance, it brings to light the importance of exercising a good faith effort in checking the background of your potential employees.

In some cases, negligent hiring can be avoided simply by questioning the applicant regarding items on his or her resume.  Background screening is absolutely critical to protect the company from potential liability.  To ensure screening procedures are applied fairly, consistently, and legally, HR must follow a set of policies and procedures.

My best practices checklist includes:

  1. Written release from applicants that allows company to contact former employers and references, releasing those references from liability in providing said information.
  2. Provide a copy of the company’s policy regarding any criminal background and credit checks (as allowed by law).
  3. Question applicant regarding gaps in employment and look for red flags – such as frequent changes in employment or an unwillingness to identify supervisors at previous jobs.
  4. Document everything – attempts to contact references, etc.
  5. Review procedures regularly to ensure that they do not create a situation of disparate impact.

Dependent upon the position, a company may need to alter the screening process – such as requiring a credit check only when it is necessary for the position (such as someone working with sensitive financial data).  Beware, though, that there it is highly probable the EEOC may ban credit checks completely.

Above all, any policy that is in place must be applied uniformly and consistently to all applicants.  The Equal Employment Opportunity Commission (EEOC) has stepped up its enforcement within the past few years.  Last year, the EEOC reported the highest number of discrimination charges in its 46 year history (99,947).  Pepsi Co recently settled with the EEOC for $3.13 million and voluntarily amended their policy against hiring any individual with an arrest record.  The policy was found to have a disparate impact on African Americans.

If you start with the tips outlined above, you’ll be on your way to creating a safe work environment that will attract and retain top candidates.

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