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Freelance and Contract Workers: Why Comprehensive Background Checks are Important

April 23, 2019 | Shannon Shoemaker

With the growing number of contract, gig and freelance workers globally, many companies are shifting to a more fluid staffing model. While this impacts talent acquisition and management, one question keeps coming up: Should companies screen temporary or contract workers? In short, yes. As employers, we’re responsible for a safe workplace for our employees and customers, and that means doing our due diligence whether it’s for a full-time employee or a contractor.

Temporary positions are more common and more organizations contract with independent workers for short-term engagements than ever before. Contractors and temporary workers may be supplementing their full-time income or working odd jobs to get by. Regardless, the number of these workers continues to grow. By the year 2020, Intuit predicts the gig economy will represent more than 40 percent of the U.S. workforce and that slice of the labor market will grow by 18.5 percent per year over the next five years. In the United Kingdom, France and the Netherlands, freelance growth has outpaced overall employment growth. The number of freelancers in the European Union doubled between 2000 and 2014, making them the fastest growing group in the EU labor market, according to the Association of Independent Professionals and the Self-Employed (IPSE).

 

Where Background Checks Come In

Until recently, many companies have skipped background screening for contract employees, relying on agencies that recruit contract staff or on-demand gig recruiting platforms to perform due diligence. However, many on-demand gig jobs platforms only require that candidates are legally allowed to work in the United States. In order to close this gap, we must look at established companies for gig workers and learn from their mistakes.

Background checks built around the sharing of human and physical resources fall outside the traditional employer-employee situations but are nevertheless critical as users of these services are concerned with the integrity of the service providers. Background checks are part of this reputation and integrity.

Online platforms like Uber, Lyft, and TaskRabbit get a lot of media attention. While these companies, which connect workers with specific types of gigs, only represent a small portion of independent workers, companies hiring in and outside of the U.S. can use their successes (and failures) as a guide on how to handle background screening for a large contract workforce. And they’re not just hiring in the U.S., we can look to these companies for best practices when hiring globally.

In April of 2018, MSNBC reported that, after a stream of sexual misconduct allegations within the company and more than 100 Uber drivers allegedly accused of sexually assaulting or abusing passengers, Uber announced it would tighten background checks for its drivers. Prior to 2018, Uber, which provides 15 million rides to users across the world every day, followed the traditional approach of running background checks on their drivers upon hire. In a 2018 blog post, CEO Dara Khosrowshahi said Uber is going to “double down on safety” by rerunning criminal background checks on their drivers every year. Will running annual background checks undo the negative publicity about Uber? No, but it will mitigate lawsuits in the future – and make the ride sharing service safer for passengers and drivers.

Given the negative fallout from bad publicity to any firm in the gig economy, it benefits providers and consumers to create some standardized background screening protocols. In the gig economy, there are so many moving parts that it’s difficult to know just how much due diligence a company is using at any given time.

 

Proceed With Caution

While background check protocol is necessary for contract employees, we’d like to issue caution on “discount’ background screening companies and companies that conduct background checks using AI technology without additional oversight.

Uber and Lyft use background screening services that are less expensive than one used by parts of the taxicab industry, a practice that may have contributed to the companies failing to identify some drivers with criminal backgrounds, according to CNET’s Download.com, A 2016 lawsuit revealed that Uber used two background checks of its drivers. Those background checks failed to catch 25 drivers with criminal backgrounds because the screening process didn’t include access databases with complete criminal histories or go back as far as the law allows, according to the lawsuit.

Uber settled the lawsuit, which was brought by San Francisco and Los Angeles, for $25 million. Lyft also settled a lawsuit stemming from lax background checks in 2014. Could it get worse? In 2017, Lyft was required by Chicago to change its background checking service, Sterling, after it failed to catch a convicted terrorist, according to Download.

The topic of artificial intelligence has been a popular one in human resources and workplace circles, and employment screening has been no different. Unfortunately, the use of artificial intelligence technology hasn’t boded well as part of background the check screening process. Several well-known employers and associated screening companies are currently facing (or have settled) dozens of lawsuits for FCRA violations, as well as background check inaccuracies like false felony reports. (Source: Union Leader.)

When it comes to AI, it’s important to have oversight on the tools that allow speedy background checks. While AI tools can be trained to quickly identify and categorize records and spot errors a human might overlook, such as a small difference in the spelling of two names, any negative reports should be evaluated by a human. When working with a vendor company, it’s important to understand its processes and exactly what they have in place to ensure FCRA compliance, as it could put your company in the negative publicity spotlight if these checks are not completely accurate (as well as potentially holding your company liable for legal action).

With a historically low unemployment rate, and high competition for talent, we’re going to continue to see an evolving and growing gig economy. Setting standards early in your hiring process for contractors and using a vendor that is familiar with background screens for a contract workforce from start to finish are the primary keys for compliance and a safe workplace.

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