1. Security, Human Resources, Background Checks and the Law: ROI ASIS International 2000 46th Annual Seminar & Exhibits 9/11/00 - Orlando, FL M. K. Poquette

2. $$$$$$$$$$$ $$$$$$$$$$$ $$$$$$$$$$$ Security Products

3. Worldwide Security Spending 1998$512 Million 2003$2.24 Billion Source: International Data Corp Security Products

4. PREMISE #1: 4 Security ROI is compromised unless measures include background checks.

5. CCTV * Security Guards * Locks * Power Supplies * Transmission Systems * Vaults * Computer Software * Bar Coding * Pagers *Fences/Gates/Guard Booths * Voice Evacuation Systems * X-Ray *Alarms *Iris Recognition * Intelligent Key Systems * Metal Detectors * Intrusion Detection * Fire Protection Equipment * Bio-metric Access * Buried Sensors * Night Vision Equipment * In-fared Cameras * Two Way Radios * Bullet-Resistant Barriers * Digital Recorders * Video Signal Equipment *

6. CCTV * Security Guards * Locks * Power Supplies * Transmission Systems * Vaults * Computer Software * Bar Coding * Pagers *Fences/Gates/Guard Booths * Voice Evacuation Systems * X-Ray *Alarms *Iris Recognition * Intelligent Key Systems * Metal Detectors * Intrusion Detection * Fire Protection Equipment * Biometric Access * Buried Sensors * Night Vision Equipment * Infared Cameras * Two Way Radios * Bullet-Resistant Barriers * Digital Recorders * Video Signal Equipment * Background Checks

7. Human Resources, Background Checks and the Law: ROI Security,

8. Human Resources, Background Checks and the Law: ROI Security,

9. PREMISE #2: 4 Security ROI is compromised unless measures include background checks. 4 Security expertise needed in background check program

10. Security Back- ground Checks The Law Human Resources

11. Security Back- ground Checks The Law Human Resources

12. Security Back- ground Checks The Law Human Resources

13. Objectives 4 Protection –Employees and Clients –Assets –Liability

14. Direct Cost NEGLIGENT HIRING... more than half the awards in recent security negligence cases have exceeded $100,000. HR Magazine, 6/00 “Looking for Chinks In the Armor.”

15. Direct Cost THEFT... The stores had become a haven for ex-felons and thieves.... Almost all of the thieves were gaining employment at a xxxxx store for one premeditated reason -- to steal. Security Management Magazine, 11/99 “Stop Insiders from Eating Profits.”

16. Direct Cost COMPUTER CRIME Average Cost Per Hacker Incident: Outside Hacker$56 Thousand Inside Hacker$2.7 Million Security Management Magazine, 12/99 “Inside the Mind of the Insider.”

17. Direct Cost NEGLIGENT HIRING... awards average about $500,000 in cases where an individual is assaulted at a place of business. HR Magazine, 6/00 “Looking for Chinks In the Armor.”

18. Objectives 4 Protection –Employees and Clients –Assets –Liability 4 Add Value

19. Screening “One of the most significant missed opportunities in security departments is related to the screening of applicants for employment.” Security Management Magazine, 12/99 “How Can Security Get Inside the Door?”

20. Screening “... the most probable and most significant loss prevention tool in the future will be the use of better employee-selection techniques.” Security Management Magazine, 4/00 “An Inventory of What’s in Store.”

21. Indirect Cost SELECTION, TRAINING, & START-UP 50% - 150% of annual salary

22. $$$$$$$$$$$ $$$$$$$$$$$ $$$$$$$$$$$ <$100 <$50 <$10 Screening

23. Recommendations PROACTIVE INVOLVEMENT 4 Utilize security expertise 4 Design/implement screening program 4 Participate in vendor selection 4 Obtain legal approval 4 Audit processes and on-going results.

24. Recommendations COMPREHENSIVE 4 All Staff –Employees, including executives –Temporary Staff –Contractors

25. Security Expertise 4 Pragmatic view 4 Knowledge of criminal record system 4 Enterprise-wide security view 4 Part of executive management 4 Minimize Legal Department objections 4 Position background checks as critical security component

26. PREMISE #3: 4 Security ROI is compromised unless measures include background checks. 4 Security expertise needed in background check program 4 Program must be legally compliant and defensible.

27. Implementation OBTAINING AND USING SCREENING INFORMATION 4 Equal Employment Opportunity Laws 4 Fair Credit Reporting Act (FCRA) (Federal & State versions may apply.)

28. FCRA 04/25/71 - Fair Credit Reporting Act 09/30/97 - Consumer Credit Reporting Reform Act of 1996 11/02/98 - Consumer Reporting Employment Clarification Act of 1998

29. FCRA CCRRA of 1996: 4 FCRA governs all background checks done for employment purposes by a third party for which third party is paid. 4 Applies whether or not credit is included in background check. 4 State law may add more requirements.

30. FCRA KEY DEFINITIONS 4 Background checks = Consumer Report (CR) or Investigative Consumer Report (ICR). 4 Background-checking provider = Consumer Reporting Agency (CRA) 4 Employment purposes = Employment, retention, or promotion

31. FCRA KEY DEFINITIONS 4 Adverse Action = Not hiring, retaining or promoting applicant based in whole or part on information in background check. 4 Excluded Information = Any adverse item of information, other than criminal convictions, older than 7 years* * Some exceptions apply.

32. Screening Process CERTIFICATION 4 Employer signs “User Certification” with CRA 4 CRA provides employer with “Notice to Users of Consumer Reports: Obligations of Users Under the FCRA.” Note: One-time steps.

33. Screening Process CERTIFICATION Employer agrees in User Certification* to 4 Use information only for employment purposes 4 Use information only in legal ways 4 Make disclose to applicant and obtain authorization 4 Follow adverse action procedures *Note: Exact language not specified.

34. Screening Process INTERNAL PROCEDURES 4 Standardize checks by position 4 Applicable to position 4 Use and impact of key identifiers (Date of birth and other names used) 4 Define action based on information; “green, yellow, red” criteria.

35. Screening Process INTERNAL PROCEDURES 4 Use of contingency offers 4 Applicant’s continuation, suspension, or termination in employment process. 4 Adverse action process, time lines. 4 Effect of adverse information.

36. Screening Process WITH APPLICANT 4 Make “Clear and conspicuous” disclosure in a “document that consists solely of the disclosure.” 4 Obtain signed authorization from applicant. 10/21/97 FTC Opinion: Disclosure and authorization may be combined. 4 Obtain applicant’s key identifiers. (SSN, DOB, other names used)

37. Screening Process TO CRA 4 Provide applicant information to CRA –Employment Application –Authorization* –Key Identifiers * Possession by CRA not legally required, but practical considerations apply.

38. Screening Process WORKING WITH RESULTS 4 Apply pre-determined criteria and procedures (Green, yellow, red light)

39. Screening Process ADVERSE ACTION 4 Notify applicant before taking action 4 Provide time to dispute and correct 4 Provide copy of report and “A Summary of Your Rights under the Fair Credit Reporting Act” 4 Provide adverse action notification 4 Obtain applicant’s key identifiers. (SSN, DOB, other names used)

40. Screening Process INTERNAL INVESTIGATIONS 4 FTC opinion –Authorization required 4 Hearings in process 4 Authorization effective throughout employment

41. ROLE OF THIRD PARTY 4 Provides background information. 4 Meets or exceeds service commitments. 4 Provides expertise. 4 Is legally compliant. 4 Applies technology to improve product and process. Screening Process

42. Technology BACKGROUND CHECKING 4 Information 4 Accuracy 4 Convenience 4 Cost-effectiveness.

43. Technology MANAGEMENT DATA 4 Audit trail of all work 4 Management reports –Applicants screened –Checks conducted –Hit ratios –Turnaround time –Dollars invested

44. Audit INTERNAL AND EXTERNAL 4 Checks ordered by position 4 Start date versus background screen date 4 Use of adverse action procedures 4 Compare vendor data to company data

45. HR Magazine, June 2000. Agenda: Security... balance costs and risks... HR Magazine, June 2000. Agenda: Security Security

46. Security Back- ground Checks The Law Human Resources ROI

47. QUESTIONS?