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In the Gig Economy, Background Checks are a Thing of the Past

In 1951, a delivery man ‘made an indecent attack’ on a housewife. The court advised that the employer was to be held responsible for the "reasonable care to select employees competent and fit for the work assigned to them and to refrain from retaining the services of an unfit employee,” especially since their employees dealt with the public. This case marked the beginning of background checks.

In the 1950s, employees were primarily hired in-person. Their credentials were reviewed by recruitment professionals, and they shook the hand of their employer. A driver might expect to provide references before being trusted to tote around a customer’s children. Background checks were created to supplement this vetting process.

Fast-forward to today, when over 57 million Americans are part of the gig economy. Instacart users trust that the company won’t send a convicted felon to their home with their groceries, and Angie’s List users trust that the contractor they just hired based on the platform’s recommendation will have the necessary insurance and professional licenses to do the job they’ve hired them to do. 

Turns out, this abundance of peer-to-peer trust in sharing economy platforms may be misguided, because in many cases, companies aren’t doing their due diligence when hiring gig workers or vetting platform users. 

Rather than acting as a supplement to an existing vetting process, lightweight background checks have too often become the primary means of vetting this rapidly growing workforce.

While in 1951 a company would be held responsible for the actions of a delivery employees, today’s delivery personnel are increasingly considered ‘contractors’ – thus limiting the liability exposure of gig economy platforms.

Legally, these gig economy companies aren’t required to verify the information posted by others on their sites. Many do the bare minimum, while others rely on infrequent identity, credential, and background checks that may take months to detect important changes such as if a contractor loses his or her license, or a driver’s insurance lapses and isn’t renewed.

The result: A steady stream of horror stories filling newsfeeds on any given day about contractors, medical practitioners, lawyers, care givers, and other employees who aren’t properly vetted, certified or licensed to do their jobs but are doing them nonetheless -- with sometimes tragic results. 

The companies that are adequately conducting due diligence might not be doing so with enough frequency to detect changes to certifications or licenses in time to alert their customers. The tragic consequences of this failure to verify have been proven again and again. The onus is on companies to enable that trust, and choosing to skip this critical step is a business liability companies can no longer afford to tolerate. 

If the increasing fallout from the sharing of false or misleading information across the internet isn’t enough to spur businesses to make a change – consider this: Lack of trust costs global brands $2.5 trillion per year, with $756 billion lost by U.S. companies, alone. And prudent sharing economy businesses that want to do better must view customer trust as critical to survival and brand equity, or, at the very least, as a means to avoid potentially massive public backlash and loss of customers. 

Right now, these companies aren’t doing enough to verify and track changes to their workers’ records, including licenses, certifications, criminal histories and other credentials, which are critical to helping their customers make informed decisions about interacting with these workers. 

In a world that’s becoming increasingly reliant on trust between strangers, background checks won’t cut it. While they’ve been the go-to method for pre-employment screening, background checks are limited to screening a candidate’s past behavior. Gig economy companies need to monitor a worker’s ongoing compliance with job-specific policies.

Companies need to take responsibility, not just for verifying workers’ identities, but also for verifying that they have the necessary credentials and meet customer and policy requirements. They must take responsibility to know when a worker’s information changes so they can alert customers right away.

If, for example, a home daycare facility loses its state license to operate, a business that connects parents who need daycare to that facility, should get an alert, notify any parents who have booked care through their site, and remove the facility listing from their platform. If a contractor loses his or her license for gross negligence, the home service platform should no longer promote the negligent contractor as a recommended resource to their customer base.

Companies must see their ability to verify personal information as an imperative for business sustainability and boards need to demand this of their leadership teams. The payoff will come in increased customer trust, loyalty, continued growth and the companies’ ability to avoid ugly and tragic circumstances that hurt their brands, their reputations and their bottom lines. 

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