Properly Handling Background Record Checks of Potential Employees

All companies must proceed cautiously while trying to create safe, productive and pleasant work environments. The best approach is to develop standard procedures for running background checks and investigations for all applicants who will be handling similar tasks — without regard to any discriminatory traits or characteristics.

First and foremost, you must obtain each job applicant’s written permission to run checks on their job and educational records, criminal background history and financial credit status. Should any of the information you obtain make you no longer wish to consider a specific job applicant, you must inform that person about each report’s negative findings – since all potential employees have the right to refute and correct such data.

Always be sure to also treat all applicants with equal respect and remind them that you’re simply trying to learn all you can about your top applicants. And be sure to state in writing that providing false information can cause individuals to be immediately dropped from further consideration – or be fired in the future when such misinformation is discovered.

Here’s additional information about the types of errors that can appear in background checks, how you might allow job candidates to respond to negative findings — and tips on exercising special caution when sensitive data appears on either sex offender registries or terror watch lists.

Types of negative information & errors that may be uncovered during background checks

Hopefully, most of your searches will just reveal that your applicants have provided their correct names, full address histories, all job information for recent years, accurate Social Security numbers and other basic data. However, chances are that at least some of your potential employees will need to explain about one or more of the following findings.

  • Past arrests or conviction records. Always pay close attention to the types of behavior or crimes involved, when the events occurred and how (if true) that history might affect your work environment. If you still wish to hire a person with some type of negative arrest or conviction, remember that you have a legal duty to create a safe work environment for all your employees. Also, bear in mind that future claims of negligent hiring could prove very costly to your company.
  • Fraudulent or grossly misleading information about the applicant’s academic background or work history. As noted above, make sure that all your application forms clearly indicate that providing false information on such forms (or on a resume) can be immediate grounds for dismissing an applicant from further consideration. Should you believe that any applicant may have simply made a typographical or innocent error on the forms, always allow the person to provide corrected information. Just be sure to respond to the discovery of such false information in the same manner for every applicant;
  • Misleading or inaccurate driving record information. If you’re hiring someone to deliver packages or goods for you – or drive others around on your company’s behalf, you better make sure they have an excellent driving record.
  • A very poor credit score, a bankruptcy or other signs of major financial problems. Always be sensitive and careful when asking applicants to explain this type of information;
  • The person’s name turns up on a sex offender registry or a terrorist watch list. Given the number of people who are burdened with very common names, always reveal what you’ve learned to the individual in a calm manner, preferably with at least one other human resources staff member present. If you still want to hire a person whose name was on one of these lists, always first speak with your Houston employment law attorney.

Your lawyer can tell you how you should go about carefully determining a person’s correct identity and if it’s too risky to hire someone. It may even be necessary to contact the Department of Homeland Security if the person is listed on a terrorist watch list. (Do keep in mind that even the government knows that it can be very time-consuming to remove a name wrongfully added to a terrorist watch list);

It’s crucial to maintain a standard of fairness that applies to all applicants

Be sure your company’s hiring policies provide specific time limits on when applicants must provide you with corrected information after background checks turn up negative or disturbing information. Always apply that same standard to all applicants. If someone needs more time, you should only allow a one-time extension that applies equally to others.

How long must you keep all job application forms and background check information?

The EEOC (Equal Opportunity Commission), the Department of Labor and the FTC (Federal Trade Commission) each provide slightly different guidelines on how long certain records should be kept. Overall, it’s a good idea to keep a copy of all application materials and background information for about two years. Of course, if any job applicant or employee files a lawsuit against your company, that person’s records should be kept until all legal proceedings and appeals have come to an end.

Make sure all employee records are stored in a restricted area where only one or two senior human resource officials have access to them. Once it’s time to destroy the records, it’s wise to carefully shred, burn or pulverize the data so that the material can no longer be read.

Of course, some employers keep all resumes and job application forms in case they later have problems with an employee — or come across information that indicates that the background check failed to disclose fraudulent claims were contained in those documents. Some firms just scan all such data into secure databases.

Since credit background checks are governed by the Fair Credit Reporting Act (FCRA), be sure you understand the terms of that legislation and how it impacts your specific workplace. Also, always keep in mind that the State of Texas also has laws and regulations that can impact how your company handles background checks and employee records. It’s always wise to periodically touch base with your lawyer to find out if any of these laws have recently changed.

Please feel free to contact one of our Murray Lobb attorneys so we can provide you with the legal guidance you may need while hiring employees or simply running your business. We can also provide you with any contracts you may need — or review the contents of your current employee handbook.

The SBA Suggests 10 Key Steps for Starting a New Business

Once you’ve decided to start a new business, it can be tempting to simply moved forward with various tasks as they come to mind. While this may work for a few entrepreneurs, it’s always best to create an organized plan of action so you won’t waste time and cause problems for yourself that could easily have been avoided.

Fortunately, the SBA (Small Business Administration) provides excellent online materials that can help you plan the most useful way to start a new company – or expand the current reach of an existing one. Here’s a brief review of the ten important tasks that should normally be addressed first as you launch a new business.

The key steps for creating a solid foundation for your new business

  1. Decide where to locate your company. Prior to starting any market research, you’ll need to look at several cities to decide upon the best location for your business. This decision must be partly based on if you’ll be selling goods and services to your customers from a brick-and-mortar storefront or office – or if you’ll just be contacting potential customers on the phone or over the Internet. Be sure to select a location where many well-qualified job applicants live – as well as a city and state with reasonable business taxes;
  1. Develop a reliable market research plan. Once you’re certain about the goods or services your new business will sell, you must conduct market research to verify that there’s a definite need for what you’ll be selling in a specific location. This activity also involves identifying your potential customers and all known competitors; 
  2. Create a viable business plan. Most people starting a new business choose between a traditional business plan or a lean one for a basic start-up company. If you need to borrow money to finance your company, you’ll almost certainly have to provide a lender with a traditional business plan.

The traditional plan is normally very comprehensive – it describes your specific goods and services, provides a mission statement about what you seek to accomplish in the long run and names the initial team of professionals who will be running the company. It also states where the business will be located and how many employees you’ll need to hire. A traditional business plan should also describe the business structure you’ll be using, who will be handling specific tasks – and it should review your market analysis. Initial financial projections or earnings for the company should also be included.

In contrast, a lean start-up business plan may simply describe your goods and services, provide a statement about who will be running the company and state who you believe will be your most likely customers. It should also contain information about how you’ll initially finance the company and where it will be located;

  1. Make sure you have enough initial funding for the company. You and your business partners or advisors must determine how much money you’ll need to start your business. If you cannot raise this money among your business partners, then may have to try and obtain funds from venture capitalists or request a small business loan from a bank or through SBA resources. Other options include raising capital through crowdfunding or other online resources;
  2. Select the best business structure for your company. While many people run sole proprietorships if they’ll be handling all of the major company tasks themselves, others choose between forming such structures as partnerships, limited liability companies (LLCs) — or some type of corporation or cooperative;
  3. Decide upon the best name for your company. It’s a good idea to brainstorm with your partners or investors since you want to try and choose a name that clearly reflects the nature or “brand” of your business – as well as its spirit. Be aware that one of your first tasks will be to make sure the name you select is original and that it’s not already being used by anyone else;
  1. Be sure to register and protect your business name. After you’ve chosen the best name for your company, you’ll need to take steps to protect that name by properly registering it. Keep in mind that you may also need to register any trademark you’ll be using. Since additional ways of protecting your company name may also be required, you should always discuss this topic with your Houston business law attorney;
  2. You must request state and federal tax IDs. You will need to obtain an EIN (employer identification number) for many reasons. For example, you must have an EIN to open a bank account for your company and to pay taxes (among other tasks). Depending on the different states where your company will be operating, you may also need to obtain one or more state tax IDs;
  3. Obtain all required licenses and permits. Your specific type of business activity and where you’ll be working will determine the types of permits and licenses you must obtain, if any;
  4. Be sure to open one or more business accounts for your company. These most often include checking and savings accounts, credit card accounts and a merchant services account. Depending on the nature of your business and its initial size, you may be able to simply start with a checking account and then open other accounts as the need arises.

Please feel free to contact one of our Murray Lobb attorneys for legal advice as you address any or all of the various steps named above while starting a new business. We’ve had the opportunity to help many clients establish a wide variety of successful businesses in the past and are prepared to provide you will all the guidance you may need.

Designating a Guardian for Your Children in a Will

If you’re a parent with children who haven’t yet reached the age of majority, you need to create a Will that designates a guardian to step in and look after them if you suddenly pass away. If you fail to provide for your kids in this manner, a court will usually appoint someone to serve in this role – especially if your former spouse is deceased or incapable of handling this responsibility.

A list of traits and abilities a responsible guardian should have are set forth below. If your children have entered their teens at the time when no parent remains alive to care for them, the courts will normally consider their preferences for a guardian at that time.

What are some key considerations when choosing a guardian for your children?

  • It’s often best to choose someone already known to your kid(s) or who has a definite gift for caregiving. This might be one of your parents, a sibling or a very close and trusted friend. Always be sure to obtain this person’s advance permission to name him (or her) in your Will before doing so. If you prefer, you can also designate a married couple as co-guardians;
  • If possible, try to choose a person who already lives in the same city as you — or who is willing to relocate there in the future. It can be very comforting to children if they’re allowed to remain in their same school district. If you can’t find someone who lives nearby, be aware that it may prove a bit expensive for an out-of-state guardian to handle legal matters for the children in a different state. Choosing a local guardian can prevent this type of problem;
  • Give serious thought to choosing a guardian who will fully support your faith beliefs and core ethical values. It’s always best to appoint a person who’s eager to help your children grow up in the faith community you prefer – and who will daily enforce the moral teachings you treasure most;
  • Think about the financial responsibilities involved. Hopefully, you’ll have provided well for your children’s future with life insurance and other funds prior to your death. However, regardless of how much money you’ve put in an account for your kids, you’ll need a guardian who can responsibly handle money. If you do not know of anyone with strong financial skills, you can still choose a person to serve as the caregiving guardian – and designate a different individual to manage the children’s financial resources;
  • What should you do if you do not want your estranged spouse to become the guardian after you pass away? Your Houston estate planning attorney may advise you to write and sign a letter documenting your reasons – and to attach relevant police reports or court documents to the letter. You can then give that letter to your named guardian so that it can be presented to the court after you’ve passed away;
  • How should you proceed if you have children living with you from different marriages? It may be necessary to name more than one guardian for the children. Your main goal should be to keep as many of the kids together as possible. However, you must be realistic about how many children your named guardian can handle;
  • Give some thought to the age of the person you’d like to name. If your parent or another desired guardian is still in good health, you may decide to go ahead and name that person now and simply revisit your decision within the next five years (or when that guardian’s health suddenly declines.) If you are naming a much older person as guardian, be sure to also name a secondary guardian who is willing to step in if the first one cannot serve in this capacity after you pass away. In fact, it’s always a good idea to have a back-up guardian named in your Will;
  • Remember to name every child you want to be cared for by your guardian. It’s never wise to think that a court will assume that all your kids are covered if you only name one or two. Also, extended family members might step in and try to contest your choice if every child isn’t named individually.

Before finalizing any Will that designates one or more guardians, be sure to discuss your choices with your older children. Also, make sure each named guardian is truly interested in helping you by taking on such a demanding assignment.

Please feel free to contact one of our Murray Lobb attorneys so we can prepare a Will that designates a guardian for your children. We’ll be happy to answer any additional questions you may have about this critical task. Most parents gain a greater sense of peace once they’ve legally provided for these important caregiving needs for their children.