You Manage It! 2: Ethics/Social Responsibility Background Checks Can Misfire, Harming Employees’ Career Prospects
Theodore Pendergrass was shocked in November 2006 when the Walgreens pharmacy chain rejected his application for a store supervisor job. The company told him that a background-screening firm called ChoicePoint reported that a past employer had accused him of “cash register fraud and theft of merchandise” totaling $7,313. “I wanted to cry,” Pendergrass said.
The $4 billion background-screening business is booming. Companies large and small are sorting mostly mid- and lower-level job applicants based on information compiled by ChoicePoint, its major rivals, and hundreds of smaller competitors. Some employers have grown more vigilant about hiring since the September 11, 2001, terrorist attacks. Others like the efficiency of outsourcing tasks once handled by in-house human resources departments or bosses who simply picked up the phone themselves. Whatever their motives, employers are becoming more dependent on mass-produced background reports that rely on anonymous—and sometimes inaccurate or unfair—sources.
Pendergrass’ difficulties stemmed from a previous job at Rite Aid, a pharmacy company. In late 2005, when he was 25 years old, he had reached the first rung of management as a shift supervisor in a Rite Aid store in Philadelphia. His bosses trusted him to oversee cashiers, bank deposits, and merchandise deliveries. Then, in January 2006, a store official accused him of stealing goods and underpaying for DVDs. He denied the accusations, but the official said police were waiting outside to arrest him if he did not confess. Pendergrass wrote a statement but would not admit to theft. He was soon fired anyway.
Later, at a hearing for unemployment compensation, Pendergrass was vindicated. A state labor referee ruled that Rite Aid had not proved its allegations and awarded him nearly $1,000 in benefits. However, Rite Aid had already submitted its theft report to a database used by more than 70 retailers and run by ChoicePoint, the largest screening firm for corporate employers in the United States. ChoicePoint says that it checks applicants for more than half of the country’s 100 largest companies, including Bank of America, UnitedHealth Group, and UPS. Because of Pendergrass’ tainted ChoicePoint file, retailers CVS Caremark and Target also rejected him for jobs.
Pendergrass, now 27, makes lattes at a Starbucks in Philadelphia. The coffee chain does not use a screening firm for entry-level hires. Pendergrass earns $17,000 a year—30 percent less than he did at Rite Aid—and fears his career has been derailed. “I worked hard in that store, and none of this stuff was true,” he says. “I would be locked up somewhere if I stole $7,000.”
Rite Aid declined to comment on Pendergrass. A ChoicePoint spokeswoman says the company’s background report merely conveyed information provided by a former employer.
Critical Thinking Questions
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14-13. In this case, an employer’s right to protect its property is at odds with employees’ right to privacy concerning the use of personal employment information and the right to be treated ethically with dignity and respect. Why does there seem to be an imbalance between these conflicting rights, with the employer’s rights appearing to take precedence over employees’ rights? Do you agree that employers’ property rights are more important that employees’ rights to privacy and to fair and ethical treatment? Justify your reasoning.
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14-14. ChoicePoint is the largest company in the $4 billion background-checking industry. Is there anything ChoicePoint can do, as the industry leader, to be more sensitive and respectful to the privacy rights of employees in how it distributes information to employers? What do you recommend? How would your recommendation affect ChoicePoint’s cost of doing business?
Team Exercise
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14-15. The federal Fair Credit Reporting Act covers background screeners, but it has not been aggressively enforced. The law says that screeners must use “reasonable procedures” to ensure “maximum possible accuracy.” It also requires employers to give a copy of background reports to rejected applicants. An applicant can dispute the information in the report, but the Federal Trade Commission has said employers must wait only five business days before hiring someone else, meaning that objections frequently become pointless. Form a team with four or five students and develop an approach to use the federal regulations to protect employees’ employment information in a way that more vigorously protects employees’ rights. Keep in mind that the background-checking industry may have a financial interest in maintaining lax enforcement standards of the Fair Credit Report Act to allow it to have maximum flexibility to pursue its own interests. Be prepared to share your recommendation with other class members when called upon by the instructor.
Experiential Exercise: Individual
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14-16. Consider how you would react to the following hypothetical situation: Suppose you were in a dispute with your manager over your travel expenses on your job. The manager accuses you of charging the company for personal expenditures on your expense report, and you strongly deny the accusations that your manager has made. Rather than remain in your current job, you quickly find a replacement job and abruptly quit without settling the dispute. Knowing what you know about background-checking practices from this case, what preventative measures can you take to protect your reputation and privacy over disputed information so that you are not harmed by potential misinformation provided by a background-checking company? Be specific and indicate what preventative action steps you would take. Be prepared to share your ideas with other members of the class when called upon by the instructor.