BEWARE--JOB SEEKERS HAVE NO SECRETS MORE EMPLOYERS ARE RUNNING DEEP BACKGROUND CHECKS ON CANDIDATES. THAT MEANS SCRUTINIZING YOUR CREDIT HISTORY AND DRIVING RECORD, MAYBE EVEN TALKING TO NEIGHBORS.
By EDWARD A. ROBINSON

(FORTUNE Magazine) – So you haven't changed jobs in the past seven years or so but are finally making a switch. Get ready for a rude surprise: Chances are, your new employer will delve into your driving record, check for criminal charges or convictions, survey your creditworthiness, examine whether you've been sued or have run afoul of the IRS, and sometimes even query co-workers and neighbors about your reputation. Your educational history, past employment, and references listed on your resume are in for fierce scrutiny.

About 95% of U.S. corporations now employ such background checks, according to Aon Consulting, a Detroit firm that conducts an annual survey on the subject. The trend has been driven by--what else?--litigation. Many companies have made it a standing rule to tell other companies very little about former employees in order to avoid defamation-related lawsuits. Meanwhile, the courts have found that companies bear a responsibility for thoroughly evaluating the trustworthiness of their hires. Last year, for example, the Nevada Supreme Court ruled that the family of a person killed by a security guard at an apartment complex could sue the guard's employer because it had failed to look into his criminal background.

So it's no surprise that more companies now order up examinations on all applicants, from clerks to the CEO. BellSouth, for example, has conducted background checks on all new hires for ten years. Why? Jim Monk, the telecom's corporate security director, says that between 15% and 20% of applicants conceal a dark secret. He recalls a recent case in which an applicant used a phony social security number to cover up a criminal conviction. "It's not uncommon to find somebody who applies and looks great, and then you do a little digging and you start to see all sorts of criminal history," says Monk.

But how should job seekers with no such history deal with all this probing into their lives? First, anticipate a credit report and make sure yours is accurate. Lewis Maltby, director of the ACLU's Workplace Rights Office, says credit-reporting companies are notorious for failing to check the accuracy of payment problems reported by merchants and banks. Dave Van De Walle, a spokesman for Trans Union, a Chicago-based national credit-reporting firm, replies that the Fairness in Credit Reporting Act (FCRA) requires that mistakes be corrected within 30 days. "We advocate that consumers look at their credit report every year," he says. To ensure that your report is accurate, call Trans Union or the other two national report companies, Equifax and Experian, for a copy.

Also, be aware that you have new rights under FCRA. The law, which enables consumers to receive copies of their credit bureau reports, has been changed to allow people to obtain what are called "consumer reports" as well. These reports sketch a profile of an applicant's character and reputation through interviews with co-workers, neighbors, and others, and are increasingly being used in pre-employment checks. The law requires an employer to inform an applicant if it plans such an inquiry, and the company must provide the job seeker with a copy of the report if it will lead to a no-hire decision. This allows the applicant to point out any mistakes the report might include.

You might also discuss with your old employer what sort of reference you can expect before you leave your job. If you have a sterling performance record, be sure to make it clear that you want that information passed along. That way, says Michael Cleveland, an employment law attorney with Chicago-based Vedder Price Kaufman & Kammholz, you can be sure a prospective employer gets more than your name, rank, and serial number--and doesn't think you're hiding something awful.