Some Companies Have Cut Back on Background Screening

​Editor's note: This article was updated on June 23, 2022, with information about New York City's Fair Chance Act.

When hiring workers for its growing stable of restaurants and clubs, Groot Hospitality in Miami Beach no longer asks candidates to provide two professional references. One will do.

“People know each other in our industry,” says Groot HR director Erica Cruz. “We’re able to get a pretty good pulse on who the employee is and why they left their previous job.”

Groot halved its reference requirement in mid-2020 after the initial pandemic shutdown was lifted and only about 50 percent of its workforce returned. Two years later, the company is opening new venues and hopes to hire 500 new employees by the end of 2022—if the tight labor market will cooperate. 

“It’s painful,” Cruz says. “We hear all the time from our managers, specifically in the back of the house, about cooks who will schedule interviews—let’s say 10 in a day. Out of the 10, maybe one shows up. Sadly, that’s pretty standard for us.”

Such headaches have become standard for just about everyone on the other side of the Help Wanted sign. As a result of staffing changes caused by the pandemic and the subsequent Great Resignation, U.S. employers are collectively sitting on 11 million job openings as the national unemployment rate hovers around 3.6 percent, one of the lowest levels in 20 years, according to the U.S. Bureau of Labor Statistics.

Like Groot, many employers in this highly competitive environment are rethinking how they vet job applicants. Some have reduced or eliminated requirements for pre-employment screening with the goal of speeding up the hiring process and tapping a wider talent pool. Others have made changes in their screening procedures to comply with new state laws and local regulations.

“They’re systematically looking at where they can move faster and take on a little bit more risk—and where they can’t,” says John Gulnac, vice president of search for Adecco, which recruits job candidates and provides background-screening services.

A pre-pandemic survey from the company in 2019 found that 37 percent of employers had already loosened job requirements, such as previous work experience and education levels, for temporary hires in what was then a tightening market. Now, Gulnac says, HR professionals and hiring managers are pressured to make applicants’ user experience as pleasant as possible as they move through the hiring pipeline. 

Employers, he says, are asking themselves, “How do we get them through our interviewing process so we can make a quality hire that we feel really good about? But also, how can we do it quickly so we don’t lose them to somebody else?”

Should AI Take Over Screening?

At a time when some organizations are scaling back on pre-employment screening, one type of high-tech background check appears to be taking off.

Vendors are offering employers the option of using artificial intelligence to examine an applicant’s online history. Software programs will scour publicly accessible social media accounts, news stories and blogs for red-flag material that could threaten a company’s workplace culture and brand.

“If you’re putting something out there that’s racist or derogatory that the whole world is seeing, that’s something a company may want to take a look at,” says Fred Amicucci, vice president of sales and marketing for Woodland Park, N.J.-based Data Screening, which has included the AI feature in its offerings for about a year.

Employers previously have gotten into trouble for perceived overreaches in the digital realm, pushing lawmakers to enact controls such as bans on “friending” applicants or workers on social media. 

Proponents of AI filters say the screening technology will avoid legally protected information about a job candidate, whereas a person doing the work could stumble on material that injects bias into the hiring process.

Ben Mones launched Los Angeles-based Fama Technologies in 2015 when he saw employers using teams of human researchers to analyze what he calls a candidate’s “online behaviors.” 

He says his more efficient and mostly automated system employs language and image recognition to examine online content. A staff member reviews the results for accuracy before they are forwarded to an employer, he says.

There are guardrails: Job candidates must consent to have their online history screened, he says, and the process is regulated by the Fair Credit Reporting Act. Employers, in turn, have developed protocols to adjudicate questionable material. 

Mones says changes in background screening reflect changing times. Companies are showing great interest in the signals potential employees are sending online. At the same time, employers have adjusted to fair-hiring laws that compel them to consider people with criminal convictions.

“Whether or not you were a low-level offender six years ago is less relevant now than whether you’re acting in a way that’s going to alienate my customers or make my workplace uncomfortable,” he says.

One labor attorney who has evaluated AI screening tools offers a few words of caution to his clients when the topic comes up. 

“People tend to forget that artificial intelligence is the byproduct of human intelligence,” says Gary Friedman, a partner at Weil, Gotshal & Manges LLP in New York City. “You have to feed it the proper search terms and nomenclature in order for it to be effective. It’s not purely objective.”

If the software raises flags, Friedman adds, employers aren’t off the hook. 

“You can’t immunize yourself from potential legal liability just by virtue of the fact that you either have a third-party company or a software product that is hunting for the online information,” he says. “All roads lead to the employer, as [it is] the adjudicator of if and how that information is used in the hiring process.” —M.R.

Adjusting the Process

Last year, the pharmacy chain announced it would end its GPA requirement for university recruitment. And for most entry-level roles, CVS eliminated the prerequisite of a high school diploma or GED. 

Lackey says the company emphasizes the Virtual Job Tryout, an online skills test that helps determine whether candidates are a good match for the position for which they’re applying. If an entry-level candidate without a high school degree passes one of the modules, Lackey says, CVS is interested.

“The high school degree is not a predictor of success,” he says. “Why use criteria that don’t help us differentiate somebody as being successful or not? The pandemic happened to be a good time for us to be able to remove that and open up the talent pool.”

CVS, which met an ambitious goal last fall to hire 25,000 employees for flu season, still considers itself selective, Lackey says.

“While we are very intensely looking at hiring a lot of people, we also don’t hire the vast majority of people who apply,” he says.

Not all requirements are getting thrown overboard as companies try to fill positions. Criminal-background checks remain in play for many employers, screening professionals say, although the temporary closure of courthouses during the pandemic caused a delay in filling vacancies.

That is not to say a conviction reported by a court researcher is a deal-killer. Some employers are willing to be flexible depending on the circumstances, says Fred Amicucci, vice president of sales and marketing for Woodland Park, N.J.-based Data Screening. 

“They are more interested in the details,” Amicucci says. “They want to know what happened with this type of crime or conviction. They realize, ‘This may be the most qualified candidate we have seen or will see, so let’s take a really good look at them.’ ”

Similarly, observers say, in jurisdictions that have legalized recreational marijuana—currently 19 states and Washington, D.C.—employers are more likely to relax their drug-testing policies with the expectation that workers won’t be impaired on the job. 

Amazon is one example. The company’s retail chief, Dave Clark, last year said the online retailer had “changed course” and would no longer test for marijuana for positions that aren’t regulated by the U.S. Department of Transportation.

A few state governments such as those in New York and New Jersey, as well as some local municipalities, have even provided employment protections for workers who use marijuana recreationally during their off-hours. Philadelphia this year joined New York City and Nevada to effectively ban pre-hire testing for marijuana. The drug, of course, remains a controlled substance under federal law.

“Employers are becoming more and more comfortable with dropping that standard, but it’s still an individual choice for the employer,” Adecco’s Gulnac says of cannabis tolerance. 

A Step Too Far?

Candidates for jobs at distribution centers are asked if they can legally work in the U.S., stand on their feet for eight-hour shifts and lift up to 50 pounds. Applicants seeking jobs at stores are also asked a more subjective question: Why do they want to interact with customers?

“When we ask the question, it really is something they need to reflect on,” says Jennifer Wale, people director at The Body Shop’s home office and distribution center. “And if people say, ‘No, I’m really not a people person, I really don’t want to work with customers,’ then it’s OK for our team to say, ‘This may not be the right job for you.’ ”

But that’s pretty much it. There are no background checks of any kind, she says. 

Just a few years ago, The Body Shop’s job applicants were subject to the usual gauntlet of screening requirements, including drug tests and interviews, Wale says. The company began testing open hiring in 2019, took it wider in 2020 and permanently adopted it last year.

“When the pandemic came and it was really difficult to find workers, we were a leg up, honestly,” says Wale, who credits the new system with reducing turnover. 

Open hiring, a concept credited to Yonkers, N.Y.-based Greyston Bakery, is meant to remove employment barriers for people from disadvantaged circumstances and job applicants with criminal records.

While screening companies and others say open hiring and similar models are well-

“When we’re talking about negligent hiring, it’s what an employer knew or should have reasonably known,” says Alonzo Martinez, associate general counsel for HireRight, a global background-screening company. “And once they breach that duty of care to others and there is an actual injury to somebody that was reasonably foreseeable, the employer is liable.”

Gary Friedman, a partner at law firm Weil, Gotshal & Manges LLP in New York City, agrees that multiple risks arise from forgoing background checks. He says employers are better off knowing information about a candidate and weighing it against several factors.

“There are people from underprivileged backgrounds who are wonderful to have in the work environment, but you do need to have some screening mechanism to hire candidates that will mesh with your culture, your ethics and your values,” he says. “And those values should include giving people who’ve had criminal histories a fair shake.”

Executives at The Body Shop weighed the switch-over carefully, Wale says. The company provides support services for employees to help them be successful, but expectations aren’t lowered.

“Open hiring expands your candidate pool. It gives opportunities to people who may not have had them before,” she says. “But what it doesn’t do is protect someone when they choose not to come into work. And if they choose not to follow the rules, then they’re choosing not to keep the job.”

‘Ban the Box’

In recent years, an increasing number of state lawmakers have supported so-called fair-chance hiring for people with criminal histories who are pursuing employment. 

Nationwide, 37 states and more than 150 cities and counties have adopted “ban the box” or fair-hiring measures for the public sector. Fifteen states and 22 cities and counties extend their fair-chance laws to private employers, according to the National Employment Law Project (NELP), which monitors fair-hiring laws and advocates for people who have been incarcerated. At their most basic level, these measures prohibit employers from asking on an initial job application whether the candidate has ever been convicted of a crime. 

The laws vary significantly. Some allow criminal-history searches early in the hiring process, says Beth Avery, a senior staff attorney for NELP.

“Preventing people with records from being able to support themselves and their families has truly negative consequences,” she says. “It’s unfair to tell people to rebuild their lives after an arrest and incarceration and then block off all paths to do that.”

Among the strictest measures is New York City’s Fair Chance Act. Only when a candidate receives a conditional job offer can the employer seek to learn whether the applicant has a criminal conviction. Even then, the employer must weigh specific factors in determining whether the conviction matters in the context of the position, says Katelynn Gray, an employment law and labor attorney with Duane Morris LLP in New York City. 

Employers must provide applicants with a notice and written analysis of the factors leading to a withdrawal of the conditional offer and provide the applicant with at least five business days to respond before a conditional offer of employment can be withdrawn.

Gray says HR professionals have effectively been forced to bifurcate pre-employment screening so that the criminal-background check is delayed—or the results are held back by a third party until the appropriate time.

“The ban-the-box laws just keep growing and becoming more restrictive on employers,” she says. “I’ve had clients who have just chosen to forgo the background-check process altogether because it’s just fraught with hurdles.”

Groot Hospitality typically runs credit history checks on people who fill corporate-level positions with control over money. It doesn’t run criminal-background checks on job applicants, Cruz notes.

“It’s something we may implement,” Cruz says. “But because of this labor market and how quickly we’re looking to bring people on, that does slow down the process.”