Integrity Tests Can Reduce Employee Theft

Employers have become very aware of the high costs of compensation claims. The loss to American business from both fraudulent claims and re-injury causes many employers to want to know whether a job applicant has a history of filing workers' compensation claims.

The Federal Americans with Disabilities Act(ADA) as well as numerous state laws, however, seek to protect job seekers from discrimination in hiring as a result of filing valid claims. The ADA also seeks to prevent the discrimination against workers who, although suffering from a disability, are nevertheless able to perform the essential functions of the job as long as there are reasonable accommodations.

The bottom line is that an employer cannot request workers' compensation records in order to have a policy of not hiring anyone who has made a claim.

But there is an alternative.

As hard as it is to believe that someone you hire would actually steal from you, it happens every day in all kinds of businesses and in a variety of ways. To make matters worse, the value of stolen items rose one-third in the past two years, according to PriceWaterhouseCoopers. That might be a conservative number too since it is estimated that up to 75 percent of all employee theft goes unnoticed.

Some security experts predict that up to 30 percent of the nation's workers will steal at some time in their career. Difficult economic times, lack of salary increases and the threats of downsizing and cutbacks make it even more tempting for employees to help themselves.

Employee theft can take many forms, from stealing office supplies or merchandise, to stealing time by improperly reporting sick leave and vacation to stealing intellectual property and confidential information.

But despite a theft threat level high and research demonstrating pre-employment test validity, many employers have been slow to adopt testing as part of their selection process. Part of the reason has been a lack of documentation that they provide anything more than a feel-good effect with little ROI. But several recent reportsreleased from The Center for Hospitality Research at Cornell Universitymight prompt employers to re-think their reluctance.

The results not only show that integrity tests can work but that they can differentiate between the candidates who will have positive work attitudes and those potential employees who bring along some baggage, commonly referred to as counterproductive work behaviors (CWB).Specifically, CWBs include theft, substance abuse, absenteeism, tardiness, and violence.  By predicting the likelihood of an employee behaving badly, these integrity and personality tests can have substantial positive financial implications for businesses.

For example, of 29,043 applicants who participated in one study, 31 percent were classified as “high risk.” Not only did 1,881 employees admit to stealing from their employers, they admitted how much they had stolen.  The amounts reported were not negligible: 698 (37%) employees reported stealing up to $25; 275 (15%) reported stealing between $25 and $500, and 908 (48%) reported stealing over $500! Employees also responded positively to questions regarding whether they had shoplifted in the past year, would help a friend steal, would steal if they had low pay, or would fake time cards if those were never checked.

In addition to questions about theft, applicants admitted on the test that they used illegal drugs. The most common admissions were for cocaine (1,507), hashish (1,100), and hallucinogens (1,050). Additionally, 1,338 employees admitted regular drug use at work, 1,955 admitted drinking at work, and nearly 2,000 employees admitted that they would fail a urinalysis.

It is also estimated that nearly 25 percent of all workers’ compensation claims are fraudulent. By screening out dishonest employees, an integrity test can cut the average cost per workers’ compensation claim by as much as 37%.

In all, the studies demonstrate that many job applicants openly admit to theft and drug use when completing an integrity test, and as a consequence a validated integrity testcan screen out nearly one-third of high-risk applicants with minimal effort and expense.

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Ira S Wolfe