Criminal Background Checks Can Save Your Salon a World of Trouble

[Images: Getty Images]Your nail salon’s bookkeeper has retired and, after a couple of weeks of interviewing applicants, you found someone you think will be a good replacement. She comes with experience and solid references, so no need for further delay, right? Not so fast. As a responsible business owner, you should consider performing a criminal background check on this new hire. It’s worth noting that this process comes with a fee. Criminal background checks can be expensive, costing an average of $60 to $70, but as much as $100, per candidate. Additionally, the process requires waiting before you hire.

In this case, unprocessed receipts are stacking up and vendors’ invoices are going unpaid. You need to bring in a bookkeeper as soon as possible. Besides, you’re the nail salon owner; hiring without conducting a criminal background check is your risk to take. If money goes missing, that’s just the price you’ll have to pay, right? Yes, but that price might be much greater than you think. Hiring the wrong person can have far greater ramifications than a less-than-perfect profit-and-loss statement.

Preventing Negligence

Suppose you fill the position and a third party, such as a customer or supplier, is somehow harmed by this employee. You, as the business owner, can be sued for negligent hiring or negligent retention of an employee. This occurs if the three elements of negligent hiring/ retention are met: The employee is incompetent or unfit; the employer knew or should have known that hiring this person would create a particular risk or hazard; and that particular harm materializes.

RELATED: 8 Strategies for Opening a Successful New Nail Salon

Negligent hiring generally occurs when there’s a problem in the employee’s pre-hire past. Negligent retention occurs when a current employee engages in a bad act while employed either within or outside the scope of employment. The magic words in the second element are “knew or should have known.” What does it mean that a business owner “knew or should have known” their employee was unfit? This is the language, established in case law, which creates a legal duty on the part of the owner to investigate before hiring— through background checks.

The stakes for negligent hiring can be high. If an employee with a record of theft is hired to clean the premises and a customer’s wallet goes missing, that’s one troubling issue. But suppose that same employee has a record of sexual assault and he violates a client? At that point, the level of liability skyrockets to a whole new order of magnitude, with damages in the hundreds of thousands of dollars, not to mention damage to both the client and the salon’s reputation.

One Size Doesn’t Fit All

The upside of performing criminal background checks on prospective employees is prevention of possible harm to your salon and clients. Unfortunately, it’s not quite that simple. If you do decide to proceed with a check, it’s important to be aware of certain pitfalls. That’s because, if misused, criminal background checks can also pose potential liability for employers.

RELATED: 10 Key Steps To Salon Success

One well-publicized example concerns Pepsi Beverages, which in 2012 was fined $3.13 million for improper use of criminal background checks. In a charge brought by the Equal Employment Opportunity Commission (EEOC), it was found that Pepsi excluded a disproportionate number of African Americans from employment via the use of criminal background checks. This was determined to be racially discriminatory. The problem didn’t lie in the fact that criminal background checks were being used; it was in how they were being used.

It was Pepsi’s policy to screen all applicants via criminal background checks and not to hire anyone with any type of criminal record. If a company screens all applicants, regardless of ethnicity, and if someone is disqualified based on a criminal record, and if that rule is applied equally across all races, how can it be discriminatory? The Supreme Court has held that even if an employment policy is, on its face, neutral, it can still be discriminatory if the policy disproportionally impacts a protected class of people. Federally protected classes encompass race, color, religion or creed; national origin or ancestry; sex; age; physical or mental disability; veteran status; genetic information; and citizenship.

Pepsi was denying employment to anyone who had any kind of criminal background—including people who were convicted of relatively minor offenses and those who were charged but not yet convicted. It’s a fact that African Americans and Hispanics have higher arrest and conviction rates than other ethnic groups. Pepsi’s blanket policy, therefore, excluded more African Americans from employment. In many cases, the blanket policy denied employment even for minor offenses or ones completely unrelated to the job in question. As a result, the EEOC issued the following guidelines that form the perfect counterpoint to Pepsi’s “one-size-fits-all” application of criminal background checks, and they should serve anyone in a position to hire:

• An employer needs to consider the nature and gravity of the offense. (In other words, don’t reject someone from employment based on “fishing without a license” or “littering.”)