HireRight The Threat of Indirect Labor on Workplace Safety page 1 Copyright © 2006 HireRight, Inc. All Rights Reserved. HireRight, Inc., 2100 Main Street, Suite 400, Irvine, CA 92614 1-800-400-2761 www .hireright.com The Threat of Indirect Labor on Workplace Safety A multinational company recently discovered a critical security gap in its procedures. Employees underwent comprehensive background screening before being granted access to the company’s facilities and systems, and visitors were assigned a badge and required an escort on site. The CEO’s office was especially secure and no one entered who had not been fully vetted by the security department. However, there was one loophole the security procedures did not address — the person who cleaned the CEO’s office and watered his plants was a maintenance company employee and the security department had no background information on such vendor employees. This demonstrates a major security risk present in companies of all sizes — the extended or indirect workforce including vendor employees, partner employees, and temporary and contract employees. According to the Bureau of Labor Statistics (BLS), roughly 10 percent of the U.S. workforce can be classified as indirect labor today. Security Gaps Exist In today’s security-conscious corporate environment, the vast majority, roughly 85 percent, of all large companies conduct background checks on employees. Far fewer background screen the indirect or extended workforce, even though these personnel have access to facilities, systems, staff and information. To put this problem into perspective, although indirect labor makes up roughly 10 percent of the total U.S. labor force, at some large firms in the U.S. today, it’s not uncommon to find more than 30 percent of their workforce made up of indirect labor. Furthermore, in most large companies, the utilization of indirect labor is on the rise. A recent HireRight study of companies who conduct background checks on their direct and extended workforce found extended workforce employees were 92 percent more likely to have a felony record than a permanent hire, and approximately 50 percent more likely to have a misdemeanor record or drug history. (See Table 1) One reason for this striking difference is the phenomenon of adverse selection. Since so many large companies conduct background checks as part of the standard hiring procedure, applicants with a criminal history tend to find jobs in sectors where background checks are not performed. The extended workforce often includes smaller companies and temporary employment opportunities that are less likely to require background checks. This neglect of background screening for a significant portion of the people with company access is a dangerous and risky practice. The Costs of Ignorance Since a vendor employee has a 92 percent higher likelihood of a felony conviction than a full-time employee, companies are beginning to understand the substantial risks of allowing unscreened vendor personnel access to company facilities, staff and data. The costs of not addressing these risks include the potential for workplace violence, theft, negligent hiring suits, data security breaches and negative public perception. Permanent Hire v. Contingent Worker Risk Adverse Records Applicants with a Felony Record Table 1 HireRight Extended Workforce Study 2005 Applicants with a Misdemeanor Record Applicants with a Drug Record .72% 5.33% 2.10% 1.39% 8.01% 3.14% 92% 50% 49% Permanent Hire Vendor Employee Increased Risk
