Christmas Rush: What You Need to Know About Background Checks for Temporary Employees 9 Nov 2017



“I’m a Human Resources Executive at a national retail company. During seasonal rush periods, we need to hire additional cashiers. Since the seasonal workers are technically employed by the staffing agency does that eliminate (or reduce) our liability should it turn out that the worker steals a customer’s identity?”


Great question! The answer is a little complicated, as much depends on the circumstances. While most staffing agencies will perform background checks on temporary employees as part of their services contracts, there are still many gaps that could leave your company exposed.

Why It’s So Important to Ask

The good news is, there are several proactive measures a retail employer can take to protect against their company’s liability for crimes committed by temporary employees hired through an agency. Read on for further detail about employers’ duties in performing background checks for temporary employees.

Most large retail and wholesale companies use the services of a temporary staffing agency to fill seasonal positions. The temporary workers are employed by the staffing agency, but work onsite at the company.

Oftentimes, retailers offer a store credit card, and all cashiers (whether regular or temporary) are trained to encourage customers to complete applications for the card while checking out their purchases. Credit card applications require detailed personal and confidential information. Most employers have procedures and policies in place to protect customers from identity theft, such as pre-employment credit and criminal background checks on all regular employees. In hiring seasonal workers, many retail employers will assume that the temporary agency conducts similar background checks on temporary employees.

A Trap for the Unwary

Since the seasonal workers are technically employed by the staffing agency, it’s an easy trap to assume that step will eliminate (or reduce) liability should it turn out that the worker steals a customer’s identity. But as the employer, you should know exactly what background checks the staffing agency runs on the temporary employees before you assume you’re safe.

Here are a few general principles to guide you.

In your contract with your staffing agency, you should require the staffing agency to conduct background checks for any employee placed at your company. Those background checks should be very similar (and preferably identical) to the background checks performed on your own employees. Your contract should also clearly provide:

  1. How and under what conditions negative information revealed by the background checks must be communicated to the company before any employee is placed by the staffing agency at the company; and
  2. The type of approval the company must provide before any such placement if the background check uncovers negative information in the employee’s background.

Court Cases Offer Limited Protections

It may be possible for an employer to avoid vicarious liability for the tortious or criminal acts of individuals working on their premises through a temporary staffing agency. A New York state appellate case in 2006 held that an employer may delegate the task of conducting pre-employment background checks, and the liability for performing them negligently, to an independent contractor. Similar cases in Texas that same year followed the same rule.

That delegation protection is not without limits, however. Even in situations where the employer did not have a duty to hire or supervise the temporary worker, an employer still may be found liable to an injured party if it acted negligently in choosing the staffing agency that provided the worker, and in conducting his/her background check.

For example, if a temporary worker engages in inappropriate conduct that results in liability, whether the employer or the staffing agency that conducted the background check will be held liable may depend on the reasonableness and diligence used when they chose their staffing agency, and whether the agency itself was sloppy by recruiting temps with inappropriate behavioral tendencies, or using the “quick and dirty” type of background checks that only look at a few national database records for one low price.

Therefore, an injured party could potentially bring a successful negligence action against the employer based on the employer’s negligence in choosing and relying on a particular staffing agency to conduct background checks without asking what kind of employee screening for temporary workers was used, or if the employer failed to review any negative information uncovered regarding the workers to be placed on its premises.

Conclusion: Know Before You Choose

When choosing a temporary staffing agency, always ask who does their background checks, and what types of background checks they order for temporary employees placed in cashier positions — where oftentimes confidential customer information is collected by the cashier.

An employer also can be found negligent under a “failure to supervise” theory. For example, liability might be found if the employer failed to provide proper oversight or training, or failed to employ reasonable safeguards to guard against employee theft of customer information (such as having customers self-enter their information on a privacy-shielded keypad terminal rather than on a paper application handled by the cashier).

There’s also the issue of how you deal with negative information that is turned up in a background check. Once negative background information is conveyed to the employer by the staffing agency, the employer may be subject to liability for the improper use of that information to the same extent it would be had the employer conducted the check. Breaches of confidentiality in these situations can still end you up in court.

Always make sure your staffing agency works with a reputable employee background screening firm. Partnering with a trustworthy staffing agency that uses an equally trustworthy background screening service will go a long way toward making sure your holiday rush times remain peaceful and bright.