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Background Blunders

While working at a FedEx/Kinko's store in Fairfield, Conn., Paul Sykes allegedly handed a business card to a customer to promote his freelance PC-repair business. Then, according to a civil suit filed against FedEx in December 2005, Sykes entered the customer's house on Sept. 27, 2005, ostensibly on a computer-repair call, and sexually assaulted the customer's 8-year-old son. Sykes was arrested and pled not guilty to felony assault charges, and at this writing was being held at the Bridgeport Correctional Facility.

As if the scenario weren't dreadful enough, Sykes reportedly had been convicted of several felony sex crimes before FedEx hired him. The boy's family says FedEx should have discovered this in its employee-screening process, which the company says included a background check.

"There is no duty for a corporation to do a criminal background check on anybody," says Neal Rogan, the associate at DePanfilis & Vallerie who represents the boy's family. "But when you take it on as a matter of corporate policy, then you have a duty to do it properly."

The case raises troubling questions for employers who conduct background checks. "FedEx would have been better off if they hadn't done a background check at all," Rogan argues. A jury might get to decide if he's right.

Negligent Hiring

The civil suit against FedEx charges the company with negligent hiring and negligent supervision, among other things. Rogan argues FedEx/Kinko's management was negligent in executing Sykes' background check, and, as a result, failed to satisfy its common-law duty to avoid employing people it might reasonably know would pose a threat to customers or coworkers. The plaintiffs are seeking monetary damages "well in excess of $1 million," according to Rogan, as well as attorney's fees and costs.

FedEx denies that it's liable for Sykes' conduct outside of work. "We are horrified by the allegations, and a thorough investigation must occur," says FedEx Spokesperson Sandra Munoz. "We do not, however, agree with the contention that FedEx was negligent. We did a background check before hiring this employee, and we did not know he was soliciting customers for his personal business while working at FedEx." FedEx has not released details of the background check they conducted on Sykes, but the company's response to the civil suit states it has no knowledge of the plaintiffs' allegations regarding Sykes' criminal record.

Rogan scoffs at this response. "We were able to turn up Sykes' 19-page criminal history in less than an hour for about $25," he says. "If they are conducting background checks, what is the purpose of them? Presumably FedEx doesn't want to hire sex offenders, so we want them to conduct adequate checks that will actually turn up information."

Irrespective of findings of fact in the case, the charges raise at least one interesting legal question that neither statutes nor precedents address--namely, when a company establishes a policy of conducting background checks, does it create a civil duty to do a non-negligent job in executing that policy? And in any case, what are the standards for doing so, particularly given the limitations inherent in the process?

"Employers always have had a duty not to bring someone into the workplace who will cause harm," says John LeCrone, a partner with Davis Wright Tremaine. "Conducting a background check won't raise the duty bar--to the contrary, it's a step toward satisfying the duty you have in the first place. The trick is to do your due diligence carefully and find a reputable vendor."

Screening Mistakes

However, what comprises careful due diligence isn't always clear, and no formal standards exist for certifying background-search vendors.

"The fact is, there are holes in the searches," says Tal Moise, CEO of Verified Person, a New York-based background-search company. For example, checking criminal-justice records only for jurisdictions where an employee has lived will fail to reveal convictions in other counties or states. Sex offender registries, too, vary significantly from state to state in terms of how they are administered and what offenses are included. And people with criminal records know better than anyone how a background check will affect their job prospects, and, as a result, many will falsify personal information on their employment applications.

"If you had a record in your hometown, you just wouldn't give the employer that address," Moise says. "Employers don't know where to look unless they purchase an address history."

The lesson of John Doe v. FedEx is that employers may not be able to rely on off-the-shelf background checks to shield them from negligent-hiring charges. Greater diligence may be necessary, but how much greater is unclear.

The answer depends largely on the position being filled. Some industries have statutory requirements or best practices that offer guidance, and many states mandate certain levels of background searches for certain industries including health care, education and mass transit.

Additionally, employers can gain information and guidance from industry peers. In some sectors, de facto industry standards might exist in the absence of formal guidelines.

"If an employee is going into people's homes, it's more common for employers to conduct criminal background checks," says John Shyer, a partner with Latham & Watkins. "But there is no pre-defined yardstick for determining how much research is appropriate."

What To Do

Beyond some job-specific requirements, little regulatory policy addresses the background-check issue broadly. A notable exception is the Fair Credit Reporting Act, but it primarily addresses the rights of the employee and limits employers use of credit histories in hiring practices. However, the DOJ is working on recommendations to Congress that are expected to include some guidance for employers (see Sidebar). Meanwhile, employers' duties and liabilities remain uncertain.

"I'm not aware of any theory that the mere fact you undertake a background check creates strict liability," says Carey Bartell, co-chair of the employment law group at Sachnoff & Weaver.

That doesn't mean, however, that a plaintiff might not succeed in arguing such a theory before a given jury. The image of a pedophile wearing the uniform of a trusted company is enough to make any parent shudder, and a jury conceivably might decide the nature of a position creates special duties for employers to protect the public.

Given such a possibility, companies that rely on background checks without considering their limitations and making reasonable efforts to validate their processes might be leaving themselves exposed to civil liabilities.

"It is wise to conduct background checks, but one has to recognize the inherent shortcomings," Shyer says. "There is no such thing as a perfect background check, and probably there never will be."



Building a National Rap Sheet

In order to unify U.S. intelligence-gathering activities, Congress passed the Intelligence Reform and Terrorism Prevention Act in 2004. The Act in part requires the attorney general to recommend ways to improve, standardize and consolidate existing systems for conducting criminal-record checks. The attorney general's mandate includes a thorough analysis of criminal-records systems, practices and policies.

In addition to considering how to make national criminal records more uniformly accessible, the proceedings are expected to yield some guidelines for conducting effective background checks. Last year the DOJ moved this effort forward by soliciting comments from interested parties.

What the attorney general might recommend in his report to Congress remains unknown, but he might prioritize support for a state-federal coalition called the National Crime Prevention & Privacy Compact. Among other things, the compact is concerned with managing and developing the Interstate Identification Index, a system for reporting national criminal-record information for employment screening and other purposes.

As such efforts proceed, background checks will become more effective and thorough, helping employers to minimize hiring risks.


Michael T. Burr

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