Issues in Private Investigation
By John Parker

Several years ago, assigned as a detective sergeant, I received a call from a business owner regarding the theft of $130,000 from her company’s bank account. She suspected her bookkeeper of embezzling the money. During the course of the investigation, we discovered the bookkeeper was terminated by a previous employer for embezzling $60,000.

The suspected thief was arrested, but fled prior to trial. Two years later, when she was finally located and re-arrested, she was working as a bookkeeper, in another state, under an assumed name. She was found guilty and sentenced to two years in state prison. Six months later she was paroled and gainfully employed as, you guessed it, a bookkeeper.

A simple, inexpensive, background check could have saved these two employers, and quite possibly the third and fourth, thousands of dollars. The first employer would have found that his prospective bookkeeper was in serious financial trouble, near bankruptcy. The second employer would have discovered the reason for her termination and serious financial problems. By the way, neither employer recovered a dime, even though the court ordered restitution.
How long would it take for your company to recover from a $130,000 loss? Would you be able to recover from such a loss? Even if your profit margin were as high as 20%, a loss like this would represent $650,000 in gross sales.

Other than helping to screen out dishonest people, why would you, as a business owner or manager, spend time and money on a pre-employment background check? A background check can help with hiring decisions by providing information you can use to select the most qualified, honest, and dependable employees. It may tell you if a candidate will “fit in with the rest of your employees. This can be critical, particularly in small operations.

How extensive a background check should be depends on the position you are trying to fill. For an entry level or line level employee, you may only want a criminal history check and previous employment verification. If the employee is driving your vehicles, a driving history is important. A credit check should be performed on all prospective employees who will be handling cash, purchasing materials and equipment, or entrusted with your customer’s property. Upper management positions should require a rather extensive investigation including, reference checks, professional certification, education verification, previous employment records, etc.

A pre-employment background check should verify the accuracy and completeness of information that applicants provide on their application, and during their interview sessions. It may identify evidence of previous problems of a select nature. Patterns of past behavior are often a reasonable predictor of future behavior. The background check may also provide evidence of positive traits to assure that the best candidate for the job is identified and hired. It is essential that we identify applicants who are not employable, or those who may be employable, but under conditions of closer supervision.

Some employers also run background checks on current employees prior to promotion to a more responsible position. For example, you may not want to expose an individual with serious financial problems to the temptation of handling large amounts of cash. A person having trouble running their private life might not be the one you want running your company.

If you are convinced that pre-employment background checks are a good idea for your organization, there are some things you should consider. First, in order to deter possible civil litigation, you should have a written policy requiring a background check on all prospective employees. This will help prevent claims of discrimination or favoritism. Second, set minimum standards for employment with your company. What will disqualify a candidate? Of course these standards may vary from position to position depending on the level of responsibility. Third, make certain applicants are aware that they will be subject to a pre-employment background, this will actually help weed out unacceptable candidates before you waste further time, effort and money on them. Fourth, unless you have the personnel and resources to perform these background checks, hire someone who has experience in interviewing and investigations.

The investigator should prepare and provide you with a written report of their findings which becomes a part of the candidates personnel record or is attached to the application of those candidates you reject.

Depending on your requirements, a background check may include any or all of the following:

* Criminal history
* Driving history
* Previous employment verification
* Credit history
* Personal references check
* Address verification
* Education verification
* Worker’s compensation report
* Professional license verification
* Interviews with neighbors, family, and

While a pre-employment background check can reveal problems with substance abuse, a pre-employment drug screen should be a part of everyone’s hiring process. This can be done separately or easily incorporated into a pre-employment physical examination. Again, be certain that the medical facility you use is experienced and equipped to provide you with accurate tests and reports as well as competent staff to explain the results.

You may consider pre-employment background checks a waste of time and money, but consider the cost of hiring, training, and firing an unacceptable employee. You will spend far less in the long run by doing a little checking before you hire. Pre-employment backgrounds do not guarantee a problem free employee, however, it never hurts to hedge your bets.

About the Author

John Parker is a licensed private investigator with 26 years of local law enforcement experience and over 15 years experience in electronic security design and installation. John is a member of the American Society of Industrial Security and a lifetime member of the California Organization of Police and Sheriffs.