Pre-Employment Background  and Due Diligence Investigations

It is important to understand that since no two people or companies have the same background, what is appropriate in a pre-employment background or due diligence investigation will vary with each situation. Prepackaged investigations for a flat fee simply cannot provide the flexibility necessary to conduct a thorough investigation.

There are, however, certain types of information most commonly used for pre-employment background and due diligence investigations (described below) and there are two different methods normally used to access that information, on-site searches and computer searches:

Each investigation should be custom designed, based on (1) the known background of the person/company being investigated (hereinafter referred to as the "subject"), and (2) the objectives of the investigation, rather than taking a cookie cutter approach and conducting the same searches for each investigation.

If, on the other hand, numerous investigations are needed for similar employment positions, situations or levels of responsibility, different levels of investigation can be established ahead of time to correspond to those requirements; however, until what names the subject has used and where the subject was located, it simply is not possible to know all the counties in which the investigation needs to be conducted or what the approximate cost will be.

Following are the most commonly used types of information and they are listed alphabetically rather than in order of priority:

Bankruptcies, Tax Liens, Judgments and Notices of Default - This information is generally obtained through a statewide computer search that is available in most states. The amount of information available and how current the information is varies by state. When the most current and complete information available is required, it can be obtained through on-site searches; however, a separate on-site search is generally required for each of the four types of information.

Civil Litigation History (7 Year, Per Court or Jurisdiction) - Each state has three courts in which a civil suit can be filed: lower, upper and federal. The types of cases handled by the lower and upper courts vary from state to state. In California, for example, the lower court handles financial disputes up to $25,000 and the upper court handles disputes over $25,000. Federal courts handle such matters as bankruptcy, patent infringement, trade secrets and civil litigation filed in other states. All three courts should be searched for a complete investigation. Most of the lower courts are not available by computer and only some of the upper courts are available. All courts are available by on-site searches and court searches should be conducted on-site if time permits (usually five to seven working days). Neither computer nor on-site indices searches include reviewing any files that are located by the search. The indices searches normally identify the parties to the case, the type of case and the date it was filed. Court-imposed fees, file reviews and copying costs are extra.

Corporate/Limited Partnership Affiliations - This information is generally obtained through a statewide computer search that is available in most states. It can identify business entities for which the subject of the investigation is/has been a registered agent, officer or director. It also provides the current status of the business.

Credit Report (Business) - These computer reports fall into two basic categories: those compiled from information provided voluntarily by the company (i.e., Dun & Bradstreet), and those compiled from information that is independently obtained and verified (i.e., TRW Business Profile and TRW Small Business Advisory Report).

Credit Report (Consumer) - Industry sources show that 21 percent of applicants had a collection, bankruptcy, repossession or a credit record that did not exist. OAI’s report will be a summary of the report obtained from Trans Union Credit Bureau. Appropriate releases are required by the Fair Credit Reporting Act.

Criminal Conviction History (7 Year, Per Court or Jurisdiction) - Industry sources show that 11 percent of job applicants had a criminal record in the past 7-10 years. In general, arrest records are not public; only convictions are public-record. As in civil litigation searches, there are three courts in which a criminal case can be filed: lower, upper and federal. Lower courts handle misdemeanors, upper courts handle felonies and federal courts handle violations of U.S. law as opposed to violations of state law. Again, all three courts have to be searched for a complete investigation and on-site searches are recommended rather than computer searches because not all courts are available by computer and because on-site searches are the best way to obtain the most current, accurate and complete information available. As in civil litigation searches, court-imposed fees, file reviews and copying costs are extra.

Driving Record (CA)(1) - Industry sources show that 45 percent of job applicants had one or more accidents, moving violations or suspended license on their driving record. This computer search by name and driver’s license number is an exception to the general rule that arrest records are not public information in that arrests for driving while under the influence of alcohol or drugs are normally contained in a driving record. This search, therefore, can provide information about someone’s addiction to alcohol or drugs.

Education Verification - Industry sources show that 8 percent of job applicants could not verify their education or credential records. This verification is normally performed by phone and in most cases requires a signed release.

Fictitious Business Names - This search is available by computer in some counties but, in general, is more current when performed on-site. It is useful when it is important to know if the subject has been affiliated with any business ventures other than corporations and limited partnerships.

Former Employment Verification - Industry sources show that 11 percent of job applicants former employment could not be verified. This verification is also normally conducted by phone and most companies require a signed release before they will provide any information.

Media Search - This is a computer search of newspapers, magazines and periodicals that can be useful to locate (1) criminal cases that are not available in court indices searches because there was no conviction, and (2) derogatory information that never became part of a civil litigation. The dates included in each library vary for each publication contained in the database.

Name Search For Personal Identifiers and History of Addresses - This computer search through all three major credit bureaus, plus other public record sources, is one of the most valuable searches that can be performed. It does not require a signed release like credit reports and is one of the best public record searches available to determine all the names and addresses that have been used by the subject, thereby identifying under what names and in which counties the investigation needs to be conducted. Many people who have had criminal or civil problems move from the area in which those problems occurred and this search is an excellent way to uncover such situations. This search does not provide any financial information.

Name Search For Financial, Criminal, and Civil Litigation Information - This is a computer search of a number of databases that varies by regions of the U.S. This search provides a list of all databases containing filings in the subject’s name, as well as a list of the databases searched.

Personal Reference Verification - This verification is normally performed by phone. Since it would be unusual for someone to provide a reference that would provide anything other than positive information, the reference should be asked for the names of other people who know the subject so they can also be interviewed.

Professional Licenses - This is a statewide computer search of professions that are licensed and regulated by each state’s equivalent of the California Department of Consumer Affairs. The number of professions covered in the search varies by state and the value of this search is in determining status of licenses and any disciplinary or regulatory problems that did not result in civil or criminal actions.

Social Security Number Search - This computer search is used for the same reasons as the Name Search for personal identifiers above and is used when the social security number is already known.

Uniform Commercial Code Filings (UCC) - This is a statewide computer search that can reveal credit relationships that are not included in credit reports, as well as tax identification numbers.