Recruiters Should Adapt Background Screening Methods for Growing Gig Economy Workforce

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Oct 26, 2017

The fast growing “gig economy” that focuses on temporary work — or “gigs” — accounted for 30 percent of new jobs and created new income sources for 2.1 million people in the United States between 2010 and 2014, according to a 2015 American Action Forum Report. The gig economy shows no sign of slowing. According to a report from Intuit, 7.6 million people will be part of the on-demand gig economy by 2020, and that slice of the labor market will grow by 18.5 percent per year over the next five years. These numerous part-time services should still be subjected to some sort of background check process, although the process may require a different approach than what is used in the full-time economy.

Some companies take the position that they are enabling the service but not actually providing it. For example, a company that provides technology that allows ride sharing would dispute an argument they are a transportation company. But the public, legislators, and regulators are concerned that without background checks, users of these services can be harmed.

Even though gig economy firms may deny they are service providers, safety concerns should still be paramount. Background checks built around the sharing of human and physical resources fall outside the traditional employer-employee situations but are nevertheless critical as users of these services are concerned with the integrity of the service providers.

Unfortunately, there is no national standard as to what constitutes an appropriate background check in the gig economy even though companies that facilitate peer-to-peer activities have a vested interest in assuring consumers that their services are safe. Each provider is free to establish its own criteria. Background checks can range from a cheap and instant database check all the way to an in-depth investigation including interviews with the candidate or past employers, and many variations in between.

In determining how much effort, money, and energy to put into background screening non-traditional workers in the gig economy, recruiters should consider two factors:

  • Use consistency. The same level of screening used for similar positions should be used for a position that is to be filled by a non-traditional worker, or the firm may be subject to allegations of disparate treatment of similarly situated people.
  • The duty to hire with due diligence. This basic rule still applies. An employer is negligent if they hire someone who the employer either knew or should have known, in the exercise of reasonable care, was dangerous, unfit, or not qualified for the position.

As the gig economy grows, stories of consumers being harmed by criminal acts of providers can be expected to increase. Given the negative fallout from such publicity to any firm in the gig economy, it would be of great benefit to both providers and consumers to create some standardized and generally accepted background screening protocols. In the gig economy, there are so many moving parts that it is hard to know just how much due diligence a company is using at any given time.

For example, if a service engages someone through an online application without ever meeting him or her, there is the question of whether the person being researched is actually the person applying for the job. In a standard employment situation, the recruiter — at some point — meets the person and engages in some sort of identity verification. That may not always be the case in the gig economy, where people may sign up through a software application, sight unseen, to provide ad hoc services.

Ride-sharing app provider Uber has been involved in several court cases regarding background checks of drivers since the company’s creation. In April 2016, Uber agreed to pay at least $10 million to settle lawsuits filed by district attorneys in San Francisco and Los Angeles that claimed the company misled passengers about the quality of driver background checks. The prosecutors had sued Uber in 2014 for falsely claiming its driver background checks were the most comprehensive available.

The bottom line is that even part-time workers in the gig economy need a full background check. And safety goes beyond just the background check. Third-party gig economy application providers can build in safety protocols that can help them sell their services. Background checks are complex, and consumers are entitled to know exactly what measure of safety they are getting. Gig economy firms have the same duty of care to perform due diligence background checks as traditional firms.


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