Background Checks

A lawsuit, for our purposes, is a civil complaint by an individual or corporation that alleges that a wrong or injury has been caused by another individual or corporation.

There is no question in my mind that, as a society, we have become lawsuit-happy. The legal profession, in my amateur opinion, must accept some of the responsibility for the proliferation of frivolous lawsuits, but part of the blame must also be placed on insurance companies.

There is also no doubt that many lawsuits are filed by individuals who simply aren’t willing to admit that they might be partially to blame for the injury or harm that happened to them.

Personal injury claims, for example, are one of the most common types of lawsuits because most people and corporations have insurance to protect themselves from liability for injuries to others that could be considered “their fault.” Here’s a simple example: You invite a job candidate to your office for an interview. After the interview, the candidate trips and falls down the stairs. He sues your company for the medical expenses incurred because, so the theory goes, your company was at fault for not making sure the stairs were safe and, as a result, caused him to fall. Your company has liability insurance that covers incidents like this. The insurance company, rather than go to court and fight over the amount of the claim for medical expenses or whether the candidate should have been more careful, will often agree to a settlement out of court because settling the claim is less expensive. Lawyers know this. So, the candidate’s lawyer collects a percentage of the settlement the insurance company agrees to pay for the harm caused.

The truth of the matter is anybody can sue anybody else, but that doesn’t mean the complaining party is always going to win. Whenever an issue with potential legal consequences comes to a company’s Legal Department, their responsibility is to look at the worst thing that could happen and try to reduce the risk of it happening, to the greatest extent possible. Lawyers, in other words, act a great deal like a company’s risk managers.

When the discussion turns to background and reference checking, the Legal Department usually has a “no comment” policy in place to help avoid the perceived risk of being sued by a disgruntled job seeker. Anyone in the business of hiring people is going to incur some risk as part of the process. My next few blogs will be about the major legal risks in the hiring process – and what to do about them.