Palm Beach Daily Business Review

October 22, 1999

A LITTLE CHAT, A LOT OF PROTECTION;
New state law says temp agencies and other employers are protected from negligent-hiring suits as long as they interview job candidates -- who may or may not mention their past crimes or poor driving records

When the Miami-Dade Housing Agency put Lorri Ann Demps, 29, to work with its elderly clients, it had no idea she had an arrest record for credit card fraud and theft. That's because the agency didn't actually hire Demps. A temporary help agency did.

No one bothered to investigate her criminal history. Not the housing authority. And apparently not the temp agency. And so Demps was assigned to run errands on behalf of the housing agency's elderly clients, activities that included shopping and going to the bank. Two months ago, Demps was charged with 25 counts of grand theft, organized fraud and elderly abuse for allegedly withdrawing money from the account of an 83-year-old man.

The county's contract with the temp agency, National Working Force of Miami, called for only a drug test -- no criminal history check -- of prospective hires, says county spokeswoman Sherra McLeod. Reuben LaBrado of National Working Force didn't return phone calls.

Now the housing agency is planning to file suit against National Working Force for failure to conduct the check. The county may be lucky. Had the incident occurred only a few months later, its suit would have had a major new hurdle to overcome. That's because a law that went into effect Oct. 1 now makes it more difficult for anyone who has been harmed by a worker with a dubious past to sue the employer, including a temp agency.

Under the law, an employer can put up a shield against negligent-hiring lawsuits if it does one of two things: conduct a background investigation -- or interview the job candidate. If it does one or the other, the new statute says, an employer is presumed not guilty of negligent hiring in the event somebody is harmed by the employees intentional misconduct, which can include assault, battery, civil theft and sexual harassment.

Its really ridiculous. Everyone to some degree can say they've done an interview, says Steven Kaufer, co-founder of the Workplace Violence Research Institute in Palm Springs, Calif.

With the economy booming, companies short of staff and the labor pool limited, employers may be less thorough in pre-employment screening than they were when the supply of prospects was larger, Kaufer says.

The Florida law change applies to all employers, including temp agencies, which increasingly are providing many of the workers in corporate America. The number of temp-agency workers in Florida has doubled in the last six years, says Steve Berchem, a spokesman for the American Staffing Association. In 1998 Florida had 1,183 temp agencies placing 142,603 workers daily with an annual $ 2.1 billion payroll. The agencies are an important channel into full-time work: 72 percent of all temps eventually are hired by the company to which they are placed, Berchem says.

15 to check

But companies shouldn't assume temp agencies are performing background checks, warns lawyer Irving Miller, a senior shareholder of Akerman Senterfitt in Miami and head of the firms employment and labor law department.

Miller is now working on a case of a Fort Lauderdale temp agency that sent a woman with a record of criminal embezzlement to work at the financial department of a Broward company.

She was the proverbial wolf in the hen house, he says, since the worker stole $ 50,000 from his client.

A $ 15 criminal background check with the Florida Department of Law Enforcement would have found she was on probation for stealing $ 50,000 from her former employer, according to Irving.

In order to recover some of the losses from the temp agency, Irving must first prove the agency had a duty to make a reasonable background search, including a criminal history check. He recommends that businesses insist on a check in their contracts with temp agencies.

But the new law is offering an escape hatch by letting an employer avoid negligent hiring responsibility if it conducts just one interview, says trial lawyer William Amlong, a partner in Amlong & Amlong in Fort Lauderdale.

Negligent hiring occurs when an employer knew or should have known at the time of hiring that the employee was unsuitable or unfit for the job. The legal claim, which Florida courts first recognized in 1954, focuses on the adequacy of the background check. Typically, the plaintiffs in these suits are co-workers or members of the general public harmed by the negligently hired employee.

Background checks on employees have become a key issue in the employment process, in part because of a mushrooming of lawsuits since the mid-80s involving negligent hiring, negligent retention/supervision and sexual harassment. Some verdicts soared into the millions, mobilizing industry lobbying to stem the tide of litigation.

And there's keen concern for work place violence.

The National Institute for Occupational Safety and Health reported in 1996 that each week an average of 20 people are murdered and 18,000 assaulted while working or on military duty. (Those numbers include crimes by non-workers.) According to the Pinkerton Security Issues Survey Report in 1997, businesses ranked work place violence as their top concern for the third straight year.

Not that a simple interview provides employers with immunity from lawsuits. The presumption that a company is not guilty of negligent hiring can be attacked and likely will be where people suffer significant injury or damage at the hands of a worker gone wrong.

Its ridiculous, lawyer Regina Alberini Young says of the interview-only clause. She is a partner specializing in temp agency and employer defense at Jacksonville-based Rogers Towers Bailey Jones & Gay.

While she applauds the laws requiring a thorough background investigation, she says permitting only an interview to create a presumption of non-negligence is no solution. It offers plaintiffs lawyers opportunity to eat away at this statute, Young argues.

And performing some vague interview, she says, will likely not pass appellate muster if that's all an agency or company does before putting someone to work.

What's sufficient?

The new law defines what constitutes a background investigation: an FDLE criminal check; a reasonable effort to contact references and former employers; a job application asking if an applicant has been convicted of a crime, calling for details as well as asking if the candidate has ever been sued in civil court for intentional misconduct. A driving record check is also required.

Temp agencies owe companies a duty to conduct such searches, says Jim McKenzie, president of the states temp-staffing trade group, the 100-member Florida Staffing Services Association.

I think we’re not properly serving our clients who pay us to provide the best applicant for the job unless we do an in-depth background check and perform due-diligence, including a thorough interview, says McKenzie, who has owned Treasure Coast Staffing in Port St. Lucie since 1988.

At McKenzie's company, background checks lead to rejecting between 20 percent and 25 percent of temp applicants. An August study by the New York forensic accounting firm Michael G. Kessler & Associates found 5 percent of those who stole from employers had theft-related criminal records.

A skimpy interview is not a good business decision, he says. We should do those things [background checks] to protect the public anyway.

Many of the larger agencies do just that. Two of the countries largest, Manpower and Kelley Services, conduct background investigations of every applicant, including criminal and driving record checks.

Manpower area manager Linda Ogle, based in Palm Beach Gardens, says Manpower farms out background checks to a national firm. You can never be too thorough, she adds.

When outsourcing background investigations, the federal Fair Credit Reporting Act (FCRA) requires an employer or temp agency to disclose to the applicant in writing that it is seeking a consumer report, which includes a background investigation, and to get the job seekers signed consent.

If the candidate isn’t hired, the agency or company must inform the applicant in writing of the reporting agency's address and phone number, including notice the applicant can request a free copy of the report within 60 days and dispute its contents.

On the Net

But employers or agencies can avoid the FCRA by conducting their own investigation. There are scores of background investigation companies on the Internet that spit out criminal history and driving record reports -- and much more -- at costs ranging from $ 15 to $ 100.

Dee Moran of Personnel Plus in Port St. Lucie often hops onto the Internet and accesses the FDLE site, completing a criminal history check within 24 hours. Credit and motor vehicles checks on the Internet are instantaneous, she says. Then she verifies employment, attempting to chat with supervisors.

(Another change that took effect Oct. 1 cloaks a job applicants former or current employer or temp agency with immunity from defamation suits when discussing the applicants work performance -- unless the information is false or divulged in violation of federal or state civil rights laws.)

But McKenzie, who didn't know about the new laws until contacted for this story, acknowledges that not all agencies conduct checks. In fact, he says, about 25 percent of the association members don't. What's more, the association only accounts for about 10 percent of the temp agencies in Florida.

Among those not routinely doing criminal background checks is Legal Staffing Services Inc., a 2-year-old agency with offices in Boca Raton and Miami. It conducts criminal checks only if the client makes such a request, says founder Harold A. Diamond. Legal Staffing does verify an applicants work history and contacts former employers. But it runs no criminal history or license verification.

And Co-Counsel, an agency that has 12 offices nationally and places temp workers in the legal industry, including attorneys, does not routinely perform criminal checks. Co-Counsel regional manager Jeff Whittle, speaking from Dallas, says his firm doesn't confirm that a lawyer is licensed, although he’s heard horror stories about people who are not licensed.

Background checks add unnecessary costs to the front end, says Whittle. Like Legal Staffing, Whittles agency contacts former employers and references. And both interview applicants.

Asked whether the interview-only proviso is bad public policy, the laws author, lawyer and lobbyist John Alley of Tampa, stresses: I think we ought to do what we can to hold down on all kinds of litigation, including negligent hiring.

The new law, Alley says, does not protect employers from negligent supervision or retention lawsuits. Those are suits that accuse a company of continuing to employ someone who it knows is unsuited to the job or has a propensity to harm co-workers or the public.

Alley, a partner in the national employment law firm Alley Ford & Harrison, says he negotiated the so-called tort reform package for Associated Industries of Florida Inc. and helped push it through the Legislature in 1999 after industry and the trial lawyers failed to achieve a compromise the year before.

A sham

Its the battle cry of Associated Industries: No suits are good suits, says plaintiffs lawyer Amlong. Associated Industries was dragged into the 20th century, and the new millennium will be a real time warp for them. The negligent-hiring shield law is a sham.

He's confident the law will be thoroughly tested by the plaintiffs trial bar. That's why we have juries. Despite repeated phone calls to his office in Tallahassee, Associated Industries chief executive Jon Shebel remained unavailable for comment.

And as for the law insulating companies whose employees endanger co-workers or the general public, Alley emphasizes he favors doing something to help crime victims. But he's dead set against creating a select group of victims who happen to be lucky enough to have an employer involved with a deep pocket.

All crime victims should be treated alike, he insists.

In defense of interviews

The interview requirement is far from useless, Alley says. He singled out a tragic incident, which he claims could have been avoided with an interview.

In 1985, a Tallahassee furniture company hired a furniture deliveryman without thoroughly interviewing him or having him complete a job application. There was no background investigation or reference check.

What the furniture company and the deliveryman's victim found out too late: The man had twice been convicted of assault and battery, once for cutting up his wife's face with a knife. He also had been hospitalized for paranoid schizophrenia, and was a heavy drug user.

Soon after he was hired, the man talked his way in to the home of a woman, where he had delivered a couch a few days before, and attacked her with a knife, nearly killing her.

A trial judge confirmed a jury award to her of $ 1.9 million compensatory and $ 600,000 punitive damages. In 1991, the 1st District Court of Appeal affirmed the judgment, despite a hard-fought appeal by the furniture company and its allies. Associated Industries, the Florida Chamber of Commerce, Florida Retail Federation, Florida Association of Insurance Agents, National Federation of Independent Business and Florida Movers & Warehousemen's Association weighed in on the company's side in a friends of the court brief.

Background investigations are extremely cheap insurance, says work place violence expert Kaufer.

West Palm Beach employment lawyer Justus W. Reid, a partner with Reid Metzger & Associates, agrees.

Reid filed suit in September in Palm Beach Circuit Court on behalf of a client who was allegedly attacked by a convenience store clerk in Jacksonville.

Reid's client, he says, stopped at the store to buy gas. She became convinced the cashier was serving other customers ahead of her and grew irritated. Words were exchanged. Reid says the cashier grabbed a box cutter and slashed his clients arm as she sought to pay for gas and goods, leaving a scar that will cost between $ 3,500 and $ 5,000 to correct.

Reid paid $ 15 for an FDLE check on the cashier, finding she had been convicted of public assistance fraud, grand theft, resisting arrest, breach of the peace, disorderly intoxication and threatening to shoot her husband.

Reid says that the clerks employer had never performed that background check, and that he knows of other incidents where an interview would not have flushed out a job applicants criminal past. The new law, he says, is a joke, and the public is the one being duped badly.