Sunday, October 22, 2017

Negligent Hiring – A mistake can cost more than just money!

Posted by OnCourse Staff December 31, 1969 7:00pm

Photo Credit: Chodra

Every executive I know has a few reoccurring nightmares.  As a Human Resources professional, I have a few as well.  My nightmare is this: I wake up on beautiful sunny morning and head to the kitchen for my favorite cup of coffee.  I still have on my pjs and slippers, and my dogs by my side.  I open my morning newspaper and there it is, right on page one.  It hits me between the eyes, like a bullet, and there is nothing I can do to stop it.  I drop my coffee mug, with the hot liquid burning my leg.  I look again at the first page of the newspaper and, in bold print splashed across the top, the headline reads: EMPLOYEE OF [YOUR COMPANY] ACCUSED OF…… that is when I wake up, in a panic and hoping that it was just a nightmare.  Sadly, for many firms, my nightmare is their reality.  There is a growing number of negligent hiring lawsuits, and the cost to firms is more than just monetary.  Reputational damage and loss of clients is just as big, if not a bigger concern.

The legal theory behind my nightmare is Negligent Hiring & Retention.  In a nutshell, negligent hiring is defined as: an injured party (this can be anyone, an employee, vendor, or customer) makes a claim against an employer claiming the employer should have known their employee was capable of committing the act. Negligent Retention is very similar to negligent hiring; the primary difference is keeping an employee after you have corporate knowledge of their bad behavioral tendencies.   Negligent hiring and retention can be summed up with the following scenarios:

  • You just hired a new VP of Lending.  She comes with impeccable credentials.  Your bank, in an effort to get her hired quickly, ignores its normal background checks and screening because, hey, she has the proper credentials and you need a VP of Lending.  She accepts the position and starts the following month.  One day, while meeting with a difficult client in her office, her temper rages and she causes harm to the client, enough harm that the client had to seek medical treatment.  A month later, the (now former) client sues your bank claiming that if you had conducted a proper background screening, you would have known she had a temper and was quietly terminated from her last two jobs due to violent outbursts. 
  • On his day off, one of your tellers walks into one of your branches and begins to harass customers in line. The teller, your employee, is agitated and starts yelling out libelous comments about the bank, its operations, and staff.  The security guard drags him out of the branch and on the way out the door, the agitated employee knocks over a senior citizen customer that has been a customer for years.  She is not seriously hurt but sues anyway, claiming the bank knew this employee was dangerous.  In her complaint, she states that, over the years of coming to the bank as a customer, she witnessed him verbally abusing other customers at his teller window.

Bringing a suit of negligent hiring/retention has three (3) key elements: (1) the employer did not exercise reasonable care in hiring the working, (2) the employee had/has dangerous tendencies, and (3) the employer placed the employee in a position that interacts in a manner where others can be injured.  Even though you can never prevent someone from bringing a claim against your organization, there are concrete steps firms can take to create a defense.  A central theme in my blogs is the application of any HR program requires application of the policies uniformly and consistently.  This is no different, consistent application is key.  A successful policy to avoid negligent hiring should consist of the following elements (it is advisable that you seek legal counsel concerning your organization-specific issues):

  1. Educate your interviewers to look for potential behavioral clues and on what background checks are required.
  2. Have each applicant fill out an application which is thoroughly reviewed.
  3. Question each applicant about the gaps in employment.  Get an accurate timeline of past employment and what happened during any periods of unemployment.
  4. Check references. 
  5. Ask about criminal convictions – this can be accomplished on the application. 
  6. Perform additional background checks appropriate for the position being sought.
  7. Conduct criminal convictions check on candidates who will be in positions that require access to customers, vendors, and sensitive information.
  8. Document all steps you take to investigate the candidate prior to hire.

Ignorance of past actions and behaviors is going to carry no water should you face a claim in court.  The best defense is to have a good, solid, consistent process that you implement and adhere to.  Your application is going to play a major part in your process because it the one of the first things the candidate fills out, generally before you interview them and it can give good insight into the applicants past.

Your application should be worded in a way to seek out past bad behaviors that will give you a more complete picture on the individual you are considering hiring.  You should specifically ask if the individual has been convicted of a crime (as with credit scores, this has started to become controversial so make sure you are not violating any state/local laws).  On your application, use the broadest language possible and include misdemeanors.  Misdemeanors might seem like smaller crimes but they can give you big clues in a person’s past and help predict future behaviors. Your application should include a disclaimer that conviction does not necessarily mean disqualification. The Equal Employment Opportunity Commission threshold for rejecting a candidate because of past criminal conviction is the nature and gravity of the offense must significantly deter the applicant from performing the duties of the job or put others in danger.  If you interview a candidate for a teller position and they list a recent misdemeanor conviction for assault on their application, you might not want to hire that candidate as they might be a danger to others. Below is a sample application:

 

 

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The application is a good starting point.  You still need to ensure that your interviewers are properly undergoing training to look for behaviors that indicate and/or predict behaviors that might lead to negligent hiring/retention issues.  Those types of questions were covered in my last blog in “Finding the Right Hire.”

I understand that the issues and examples raised in this blog post are somewhat extreme. However, with a growing frequency we read in the newspaper or see a story on the news about an employee that caused harm in the workplace.  Negligent hiring/retention claims can cost more than money; they can also cost you your reputation and clients.  The cost to implement a policy to guard against negligent hiring is much less than the money and reputational damage.  Can you take the risk?

 

Sources:

“4 Tips on How to Avoid Negligent Hiring Lawsuits/FYI Employee Background Screening” Found at: http://fyiscreening .com/4-tips-on-how-to-avoid-negligent-hiring-lawsuits/  Posted on June 29, 2011.

“Commonsense Actions Can Limit Negligent Hiring Claims” Found at: www.ppspublishers.com/articles/commonsense.htm

Daily, Jason.  “The Right Employment Application to Avoid Negligent Hiring Lawsuits.” Found at: http://blog.edpm.com.  Posted on May 31, 2011.

“Negligent Hiring Law & Legal Definition”  Found at: http://definitions.uslegal.com/n/negligent-hiring\

“What is Negligent Hiring?” Found at: http://www.nonprofitrisk.org/articles/employment091008.shtml.

 

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