Business 8th Edition by Marianne Jennings

Exercise 5

Avoiding Permanent Damage from Temporary Help
Because employers have become dependent on temporary workers and the agencies that provide them, an interesting issue has developed with regard to liability: Who is responsible for checking the temporary worker's background, especially when the temporary worker is offered a permanent position following a temporary stint?
For example, Robert Half International, Inc., had recruited TChalla Ross as a bookkeeper, and she was placed with Fox Associates, Inc., in Chicago. She did so well at the temporary position that Fox hired her permanently
However, Robert Half had failed to uncover the fact that Ms. Ross had entered a guilty plea to charges that she embezzled $192,873 from a former employer and had been sentenced to four years' probation and community service. Once hired by Fox, Ms. Ross took blank checks and forged signatures, which resulted in her taking more than $70,000 from the company. Her annual salary was $35,000 when she was hired by Fox.
Fox brought suit against Robert Half to recover the $70,000 plus its $6,600 fee, alleging that Robert Half was negligent in that it failed to verify that Ms. Ross, who had checked "No felony convictions" on her application, indeed had no felony convictions. Two previous employers had given good recommendations and never mentioned any issues of dishonesty or embezzlement.
However, a judge dismissed the case, ruling that Robert Half was in the talent business and not the background check or investigation business.
The issue is not limited to staff level. Sunbeam discovered that the executive search firm it used to recruit Al Dunlap did not discover that Mr. Dunlap had been dismissed from two previous executive positions. Sunbeam is reeling from losses resulting from Mr. Dunlap's tenure as CEO there.
Do you think temporary agencies have a duty to do check backgrounds? Do you think Fox should have done its own background check? Why do you think the former employers said nothing about her history and gave her good recommendations?
Develop some recommendations and policies for your company on background checks for employees hired through a search firm or temp agency. Be sure to consider what you have learned in this chapter on references, defamation, and negligence. Also, refer to the Web sites of various law firms and others advising clients on this issue: http:\\www.bakerbotts.com.
You can also refer to the statutes of various states that have passed laws on privilege with regard to references: Alaska, Arizona, Arkansas, California, Colorado, Delaware, Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Louisiana, Maine, Maryland, Michigan, Nebraska, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Wisconsin, and Wyoming. For example, you could go to http:\\www.capitol.state.tx.us to look for the Texas statute.