Part 1: Three Reasons to Upgrade Your Employment Verification Technology: Background Screeners
We begin our two-part series exploring the changes affecting employment verification, caused by COVID 19, and provide tips on why to upgrade your technology.
by Adam DiVeroli, Director of Product Development
Consumer Reporting Agencies (CRAs) everywhere are forced to reevaluate their current employment and work history verification process due to high costs, as well as lower than expected hit rates.
Employment Verifications, a main component in employment background checks, assist with screening fraudulent applications. In the past, employers would require employment verifications, but have begun to forgo it due to the substantial increase in price. As a result, CRAs around the country are evaluating alternative methods for verifying employment history. Here we discuss the changes in employment verification technology and how ValidiFI can tailor a solution for your business.
Manual Employment Verifications
For quite some time, CRAs have used manual employment verification for verifying information such as company employed by, position held, tenure of employment, etc., but even that has drawbacks. The COVID-19 pandemic has highlighted the pain points around staffing call centers for the sole purpose of verifying employment history. In early March 2020, CRAs were processing requests at a normal season volume with full call centers when suddenly the pandemic struck, causing hiring to halt across the nation. As a result, CRAs were forced to lay off upwards of 75-90% of hourly verification specialists. This was not a scenario that anyone could have predicted and for the most part, they were able to scale down their operations. However, a bigger problem arose with regrowing their call center operations and training new hires. Issues with forecasting demand and staffing resources are not isolated to global pandemics but occur year-round with normal hiring seasonality and trends, which is why third–party verification services have become a fixture in most CRAs’ verification workflows.
Third-Party Employment Verifications
Traditionally, CRAs have used third-party verification services, databases, and outsourced call centers. Recently, CRA’s have started to adopt shared consent technology. All these methods have their pros and cons, and frankly, each has its respective roles in a complete employment verification workflow. That being said, it’s important to consider the strengths and weaknesses of each choice.
Employment verification databases are a main component in CRAs’ verification workflows for many reasons, but mostly for the rapid turnaround time. Employment verifications that previously took 3-5 business days to complete could be completed instantly. Not only were verifications fulfilled in record time, but it was also achieved without contacting employers, and the data returned was well-cleansed and standardized.
You may be asking yourself, “What could possibly be wrong with this solution?” Well, nothing is wrong with it, but there are factors that prevent CRAs from using it across the board. Two of the major reasons preventing full adoption of database driven solutions are:
- The low hit rates reported by CRAs
- The cost-prohibitive pricing structures
Based on discussions with CRAs and other industry insiders, CRAs can rely on a database for a successful verification about 30-40% of the time. Truthfully, that is not a terrible rate. Working with a 30-40% hit rate is extremely manageable and fits into a verification workflow, but the barrier is currently around the price per verification. Historically, CRAs were able to request and purchase employment verifications by employers but suppliers have recently changed their structure based on the timeframe. For example, I can request an employment history/verification for John Doe and will receive employment information for every job that John Doe has had over the past 5 or 7 years. In theory that sounds great, especially for the pre-employment screening industry. The problem is that databases, on average, provide 1.2 employers per request. So, with the new pricing structure costing more per request and the fact that they provide 1.2 employers on average, then the average cost per verified employer is triple or more, per hit. At that price point, it becomes cost-prohibitive and as a result, CRAs have begun looking for alternative solutions, such as shared consent technology.
Next Gen Employment Verification Technology
Shared consent technology is the concept of consumers giving their permission to share specific pieces of data with a requesting party. The most common shared consent technology is Bank Aggregation technology, where a consumer provides a requesting party with information associated with their bank account by securely supplying their online banking credentials. Shared consent technology has evolved into other types of verifications, such as employment and work history. Instead of utilizing online banking credentials, this technology uses the consumer’s employment portal credentials, provided by their employer, HR (Human Resources) platform, or even their employers’ payroll provider. Once the prospective employee connects their employment accounts, information is gathered to verify their employment and work history such as the employer name, position, tenure (start date and end date), and much more information.
ValidiFI’s Employment Connector solution is one of a few shared consent employment verification solutions that have entered the employment screening industry. Here are three great reasons to make the switch and evolve your employment verification technology today:
- Businesses now have access to employment data and accounts previously inaccessible or cost-prohibitive through traditional solutions. The Employment Connector is a fraction of the cost of other third-party employment verifications.
- The Employment Connector connects directly to payroll and employer sources, significantly reducing fraud. Say goodbye to forged paystubs or proof of employment, and inaccuracies. The Employment Connector supplies the most accurate, reliable, up-to-date employment data.
- The Employment Connector provides access to the majority of the US workforce through direct employer and HR/Payroll platform connections. This includes applicants across the W-2, 1099, Gig-Economy, and Military, directly from the source.
Adopting shared consent technology is necessary and should be welcomed, to better reduce risks and make smarter, informed hiring decisions. It is important to use as many verification tools that are available to you and your specialists when performing employment and work history verifications. Successful verification workflows incorporate multiple sources, including shared consent technology, manual verifications, and other third–party sources. Employing multiple data sources helps you stay agile during uncertainty without sacrificing accuracy. To learn more about the Employment Connector, visit ValidiFI.com/employmentconnector or schedule a call with ValidiFI today.
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