Company caveat: avoid illegal job screening.

• Position: Equal Employment Opportunity Commission

To protect their bottom line in this time of high unemployment, employers need to check the background of job applicants thoroughly. Christopher Charow, lead investigator and director of operations at Michigan-based Lakeside Investigations, warns that as joblessness rates remain high, employers should increase the frequency of pre-employment background checks. During a recession with extensive job losses, employers are more likely to confront resume fraud and employee theft at two times: (1) when the economy declines and (2) as it begins to improve. Charow says, "It's not unusual for someone who has been out of work to lie about previous employment or steal from their employer. ... A pre-employment background check policy could prevent that damage."

He advises companies to establish a pre-employment background check policy. The policy should require all potential hires to undergo the same series of background checks, which could include credit, driving, and criminal histories, thereby protecting the company from a discrimination suit.

To conduct background checks, employers must obtain an applicant's permission. If an employer decides not to hire the applicant because of the findings, it must comply with the Fair Credit Reporting Act and explain to the applicant the reasons for rejection. A prospective employer must respect the privacy of a potential employee regarding information uncovered in a background check. However, Charow says, "A credit check can prove an applicant is a poor money manager, a driving record can prove disregard for traffic laws, and a criminal check can reveal embezzlement charges and sex offenses among other offenses."

Employers need to be careful when using criminal records or bad credit reports in order to screen out job applicants. A comprehensive policy of refusing to hire people because they have criminal records or credit problems can be illegal if it has a disparate-effect on minorities, according to Equal Employment Opportunity Commission (EEOC) regulations.

The EEOC enforces employment discrimination laws, and according to Carol Miaskoff, EEOC assistant legal counsel, "the problem is snowballing" because technology helps to increase the number of background checks. Justice Department statistics show that incarceration rates for...