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International Background Screening: Top 5 Risks for U.S. Organizations

October 9th, 2014 | Sterling

The international legislative landscape for background screening can often appear complex and difficult to understand, even for organizations with experience grappling with international compliance issues. U.S. organizations intending to implement a pre-employment screening program internationally must be conscious of the hurdles created by local laws and cultural norms. Developing a strategy which is relevant to the markets, cultures and geographic locations in which an organization operates is crucial to ensure that a program is both legally compliant and practically effective.

When creating a new screening program at an international location, or exporting an existing one, organizations will quickly discover that whist some checks are perfectly acceptable in one jurisdiction, they may be irregular and sometimes illegal in another, thereby exposing organizations to increased scrutiny from national regulators, and potentially costly litigation.

Although tailoring any international background screening program to local requirements will take the efforts of HR, Legal and Compliance, below are the top 5 risks to guide in the decision-making process.

Risk #1 – Ignoring legal and cultural differences around the world

For the majority of multinational organizations, background screening programs are conceived and matured in the U.S. Unsurprisingly therefore, program owners often feel the need to ‘export’ programs to their international locations. However, the legal and cultural differences that exist in these locations differ and therefore create varying-sized obstacles that impact availability of certain background information, as well as an employer’s ability to use the data for background screening purposes. Whilst in the U.S., background screening is more harmonized under the Fair Credit Reporting Act, outside of the U.S., data privacy laws, employment laws and anti-discrimination laws merge to create a (sometimes conflicting) patchwork of regulation for background screening. Navigating through these requirements is important to ensure that the overall goals of a background screening program can be translated locally.

  • Employer Tip: Always make sure that your organization’s background screening program aligns with local legal requirements and restrictions before launching a program; a country-by-country compliance approach is key.

Risk #2 – Conducting background checks which are excessive and not relevant to the candidate’s responsibilities

For the sake of simplicity, many multinationals make the mistake of applying a blanket rule on the components of a background screening program based on location. This approach may lead to breaches of the laws and regulations discussed above. Whilst it is important to ensure a uniform approach both domestically and internationally, it is crucial that a background screening program takes into account sector-specific requirements as well as differentiates between the various types of role and associated responsibilities within an organization.

  • Employer Tip: Ensure that the background checks selected for each function are relevant and appropriate based on the industry in which your organization is based and the candidate’s role and responsibilities

Risk #3 – Organizations carry out background checks too early or, worse, too late

Background checks can be carried out pre-offer, post-offer or post-hire. Knowing the stage at which to carry out a background check becomes much more important outside of the U.S as certain countries’ labor laws prevent conditional offers of employment based on the completion of a successful background check. It is always advisable to seek advice from local employment experts on what is possible under local laws.

Another timing consideration that becomes more prevalent abroad is turnaround time. Many international checks may take considerably longer to complete compared to their American equivalents.

  • Employer Tip: Careful planning is necessary to reduce delays in the onboarding process. Understanding business requirements in relation to legal requirements and turnaround times will help in selecting the background checks that provide ‘best fit’ for your organization.

Risk #4 – Organizations make final hiring decisions using irrelevant information

As discussed above, it is important for background checks to be relevant and appropriate to the job role. Similarly, just because a check is legally permissible in a particular jurisdiction does not mean that all the results can be used as the basis of a hiring decision. In the event that negative information is uncovered during the course of the background check, employers should only take into consideration that information if it is relevant and directly linked to the candidate’s role and responsibilities.

  • Employer Tip: When making a final hiring decision, you must only use the relevant results from the background check. Decisions based on negative findings, unless directly relevant, could be discriminatory or in breach of privacy laws.

Risk #5 – Making negative hiring decisions without taking into account a candidate’s rights

Organizations are sometimes mistakenly told that adverse action is a process that only exists in the U.S. and that similar processes need not be followed abroad. However, candidates are granted rights under other laws, such as data privacy laws, labor laws and anti-discrimination laws which must not be overlooked. Under data protection and privacy laws, for example, candidates have the right to access any information an organization holds on them, including background screening reports. If any information proves to be inaccurate, the candidate also has the right to correct that inaccuracy.

  • Employer Tip: Making a (negative) hiring decision based on a background check should take into account the rights granted to candidates under local laws. Candidates should be given the opportunity to dispute the results of a background check.

This publication is for informational purposes only and nothing contained in it should be construed as legal advice. We expressly disclaim any warranty or responsibility for damages arising out this information. We encourage you to consult with legal counsel regarding your specific needs. We do not undertake any duty to update previously posted materials.