This article was published in slightly different format in the 2008 Employment Law Update, edited by Henry H. Perritt, Jr., Esq.

US employers have gotten especially vigilant in how they screen job applicants. In an effort to bolster Sarbanes-Oxley compliance, and as a reaction to the heightened-security environment after September 11, American employers seem more proactive in applicant screening and background checking than ever before.1 But job applicant screening procedures common in the US—such as background checks, credit screens and written tests— have flourished in the isolated petri dish of employment-at-will.2 Other countries, including even those with common-law legal systems like the UK, Canada and Australia, reject employment-at-will and extensively regulate their workplaces. Outside employment-at-will, applicant screening may be even more vital than it is in the US, because restrictions on firings make hiring mistakes harder to correct.3

However, laws overseas regulate not only firings, but also pre-employment screening in ways unknown in the US. Cultural norms outside the US also hamper American-style pre-hire screening done abroad. Consider drug tests. Pre-hire drug tests are so widespread in the US that, in some sectors, they are almost routine. But overseas, employment-context drug tests are all but nonexistent. Outside the US, laws and cultural norms amount to almost insurmountable barriers keeping employers from demanding urine samples and from rejecting applicants merely because they may have taken drugs in the past few weeks.4 And drug tests are just one example. Many American employers used pre-hire polygraph screening up to 1988, when much US employment-context lie detection testing became illegal.5 Some US employers then switched to pre-hire screening tools like written job aptitude tests, personality profile tests6 and even veracity tests,7 as well as credit checks.8 But these American-style pre-hire screening tools are rare to non-existent abroad. Instead, employers overseas tend to use very different selection procedures, such as:

  • Family and clan networking, in the Mid-East and Africa (but discouraged by US discrimination regulations)
  • Interviews with applicants’ past employers, in Continental Europe and Latin America (but less trustworthy in the US, due to in the threat of defamation and misrepresentation litigation)
  • Pregnancy testing,9 in Latin America (but in many contexts, prohibited by US discrimination laws)
  • Handwriting analysis, in France and Brazil10 (but potentially problematic under US discrimination laws)

This international divergence among hiring selection tools exists even within multinational employer companies. Until recently it was not uncommon for a US multinational to drug-test its American applicants, while analyzing the handwriting of its French applicants, while pregnancy-testing its female Mexican applicants. (Only in the late 1990s did one US automaker publicly announce it would stop pregnancy-testing women who applied to its Matamoros, Mexico assembly plant, after NAFTA enforcers cracked down on the practice.11) Now, however, this fractured mode—lone company using different applicant screening tools depending on intake site—may no longer make business sense.

American multinationals are now finding a business case for aligning their pre-hire screening tools, mostly by extending US-style methods internationally.12 They seem to be thinking: Our applicant screening methods in the US have proven helpful for keeping us from hiring a criminal, someone with a bad work or credit history, an uncredentialed resume liar or an applicant whose skills or aptitudes don’t meet our needs. Perhaps our business case for screening out these bad applicants is every bit as strong overseas, where terminations are so complex and expensive. And if our business case for screening is global, why not align our practices globally? That is an increasingly vital question. In an effort to answer it, this chapter, in four parts, examines: (1) how a multinational can align pre-hire screening strategies, focusing on (2) the legal issues that arise abroad in background checking, as well as in (3) written applicant testing. The article concludes with (4) a strategy overview.

1. Globally Aligning Pre-Employment Screening Strategies

There is good news and bad news for US-based multinationals striving to align pre-hire screening globally.13 The good news is that multinationals can indeed craft a globally-aligned approach to pre-employment screening. The bad news is that doing so requires clearing some high legal and cultural hurdles, and adapting American methods for use abroad. Laws overseas that reach pre-employment screening are complex and varied. They reach background checks and written applicant tests in surprising ways. To craft a workable, globally-aligned approach to applicant screening, a multinational should take four steps: (a) Choose tools, (b) get local guidance, (c) adapt aspirations to foreign realities and (d) launch proactively.

A. Choose tools. The first step in designing a viable global pre-hire screening strategy is to identify the background checking tools that a multinational has a business case to use worldwide, in a best-case (no legal restrictions) scenario. In selecting global tools, US companies will painlessly cross off their lists all those pre-hire tools they do not use stateside, likely including polygraph tests, French-style handwriting analysis, Latin America-style pregnancy tests and the medical and genetic tests that are becoming unfavored or regulated in the US. Multinationals also tend to be quick to let go of drug testing outside the US, where it meets intense resistance.14 But even putting those screening tools aside, US-based multinational employers still have an arsenal of other possible applicant screening devices that may make sense internationally: Criminal background screens. Prior-job reference checks. Credentials and diplomas screens. Credit screens. Full-blown background investigations. Pre-employment written skills (aptitude) tests. Written personality-profile tests. Each multinational employer should select which of these tools it has a business case to use internationally, accounting for the vital security and compliance needs of today’s workplace.

B. Get local guidance. After a given multinational selects its ideal set of global screening tools, it should do a comprehensive country-by-country.15 legal analysis of how to get the desired screening done in each affected jurisdiction. Research the law in each affected country. Get reports that explain local rules and practices in an aligned, user-friendly, human-resources-accessible “how-to” format. Collect enforceable applicant consent forms for each jurisdiction where screening consents will be needed, and get sample applicant forms for collecting data from custodians of criminal records, past employers, educational institutions and references.

C. Adapt aspirations to foreign realities. Adapt the desired screening procedures (step A) to the local requirements (step B), on a country-by-country basis. If any screening will be outsourced, identify local providers, ensuring they commit to follow applicable laws: Rein in over-aggressive background-check investigators who may pride themselves on being able to skirt local requirements—their unlawful acts may be attributable to the principal. As to providers of written screening tests, seek out companies that offer translated, culturally-validated tests in local overseas markets.

D. Launch proactively. Plan out and draft any necessary global employee or applicant communications regarding the tests. Simultaneously, engage local HR staff, motivating them to implement the selected screening procedures fully in local markets. Ensure local HR gets rigorous about: preparing notices and local employee communications; collecting and retaining applicantsigned consents; ensuring legal compliance and informing and consulting with employee representatives (where necessary).

Steps A and D (“choose tools” and “launch proactively”) are vital. But for the most part, those two steps raise human resources process issues specific to each employer. It is steps B and C (“get local guidance” and “adapt aspirations for foreign realities”) that most directly implicate issues under foreign laws. Accordingly, the rest of this chapter will address steps B and C by offering an overview of the legal topics that tend to come into play overseas, starting with global background checking, and then addressing written pre-employment testing. Of course, any real-world global applicant-screening project will require legal research tailored to the employer’s specific screening tools in each affected country. This discussion is merely an overview (with examples) of the issues that the tailored research might raise.

2. Applicant Background Checking

One of the hottest topics in global human resources compliance today is the question of how a multinational can do effective and legally-compliant applicant background checking across worldwide operations. Indeed, robust background checking has become so critical that it now actually makes banner headlines.16 The Massachusetts Institute of Technology landed on page one of the New York Times when it fired its dean of admissions for having lied, decades before, on her resume, falsely claiming to be college-educated.17 MIT’s chancellor announced that “in the future” MIT would “take a big lesson from this.” Now that the future is here: The Wall Street Journal reports that “the background check industry has mushroomed since the September 11, 2001, attacks.”18

Convinced of the vital need to do thorough background checks domestically in the US, American multinationals quickly realize their overseas applicant pools are every bit as important to vet, especially because foreign laws make firing more difficult,19 and because the US laws against doing business with known terrorists effectively require “list scrubbing.”20

Indeed, background checking is perhaps more vital in certain foreign markets than it is even in the US. For example, South Korea (according to a September 2007, New York Times report), is undergoing “a nationwide wave of allegations and confessions” of resume fraud, amounting to a “nationwide focus on academic fraud” that “ became intense” after Koreans “started posting anonymous tips about credentials fraud on Web sites and online bulletin boards.”21 Korean public prosecutor Moon Moo-il, who “is leading a nationwide crackdown on document forgery and misrepresentation,” says that “[b]efore, we [Koreans] struggled more with fake luxury goods. Now that we have entered the knowledge-based society, we have to deal with an overflow of fake knowledge.”22

Because of the vital need to do background checking in the US and abroad, US-based multinationals seem to be thinking: If we subject our American applicants to a rigorous check, can we afford to let our German, Argentine or Korean applicants in the door merely on the strength of what they claim on their resumes? And to that question, multinationals are increasingly deciding the answer is “no.”

But getting adequate background checks done in Germany, Argentina, Korea or elsewhere is much more difficult than background checking is here in the US, because of the legal and cultural barriers abroad. In the US, applicant background checks do implicate legal issues, chiefly under the federal Fair Credit Reporting Act,23 “disparate impact” analysis under discrimination laws,24 and terrorist “list scrubbing.”25 Overseas, on the other hand, job applicant background screening tends to implicate very different legal issues, under a wider range of laws.26 Too many US multinationals blindly entrust their overseas background checking to less-than-diligent investigative agencies, not expert in the law, that may break foreign laws or report “false negatives” in countries where useful personal background information is, for legal reasons, unavailable. Overseas applicant background checks implicate five categories of local legal issues on which any employer doing foreign background checks should ensure compliance: (a) data privacy, (b) consents and releases, (c) references, (d) local criminal records checks and (e) local legal quirks.

A. Data privacy. Data protection laws in Europe27 as well as data laws in Australia, Argentina, Canada, Hong Kong, Japan and an increasing number of other non-European jurisdictions go far beyond analogous US privacy laws, and impose severe restrictions on the availability of background check information (especially absent freely-given applicant consents).28 The legal issue here chiefly goes to the provider of applicant background data, and generally reaches a prospective employer only upon receipt.29 This makes thorough background checks difficult to do, in practice, in highly-regulated data privacy jurisdictions like Europe,30 because data protection laws regulate the very sources and databases that would otherwise provide the requested information: When a prospective employer pays for a background check or credit screen in a country with tough data laws, often it gets back little more than a “clean” report that may be a false negative.31 In addition, however, a few data protection laws overseas act like the US Fair Credit Reporting Act32 in that they regulate prospective employers that request background data. The UK Employment Practices (Data Protection) Code33 expressly regulates the “verification” and “vetting” of applicant data.

A separate data protection law issue is that “sensitive” data are illegal to “process” in Europe34 without “data subject” consent; information about criminal history—key to any thorough background check—is “sensitive” data, making consents a pre-requisite where background checks elicit criminal histories.35

B. Consents and releases. One tool that in many jurisdictions is essential for collecting applicant data, and for complying with data privacy laws, is the applicant-signed consent or release. Job applicants are always keen to make a good impression, and are highly likely to sign background check consents without objecting. In Belgium, China, Japan, the Philippines and elsewhere, a best practice is to have applicants affirmatively consent to the release of background check data. However, in much of Continental Europe, privacy laws presume that employees and even job applicants have little bargaining power in the employment context.36 These countries can see employment-context consents as inherently coerced, and therefore invalid. Under the E.U. data protection directive,37 “consent” must be “freely given”—and many countries in Continental Europe presume that a prospective employer’s “take-it-orleave it” insistence that all applicants sign a consent invalidates the applicant signatures. Therefore, in Continental European countries including Finland, France, Germany and a number of others, a better practice is to have applicants collect and submit background information about themselves. Of course, this practice raises quality of evidence issues, and requires some authentication strategy.38 In Greece, applicants can issue a power of attorney in favor of the employer to collect records.

C. References. In domestic US operations, some employers’ skills at fruitfully interviewing applicants’ past employers and chasing down detailed personal references (beyond verifying dates of employment) may have atrophied, because the fear in the US of defamation and misrepresentation liability lowers the odds that former employers will volunteer negative information. Indeed, some American companies impose written policies forbidding the release of reference data about past employees, beyond dates of employment. Abroad, though (outside a handful of common law jurisdictions like the UK, where many employers also restrict the release of reference data), litigation in this context is all but unknown. In fact, South Korean law affirmatively requires previous employers to comply with a prospective employer’s request for a “certified” prior job history reference. Therefore, robust reference checks can be a vital tool overseas that US-based companies might otherwise overlook. Outside the US, multinationals should build up their reference checking practices, while keeping in mind that in countries that comprehensively regulate data privacy, some informants may prove less than forthcoming, for fear of violating local law.

D. Local criminal records checks. Getting a local criminal records check done, where possible, obviously can be an invaluable screening strategy. But whether usable police and criminal court records will be available varies from country to country. Find out what local criminal records collection procedures are available before paying any third-party-provider to do a foreign criminal records check—and be sure to do a criminal records check for each given applicant in every local jurisdiction where that applicant may have gotten arrested.39

In some countries, comprehensive criminal records checks are quite viable, and are even routine. In the UK, the Scottish Criminal Records Office and the Criminal Records Bureau of England and Wales do national criminal record sweeps for prospective employers at three levels (Basic, Standard, and Enhanced), depending on the job position and whether the position is “FSA” (financial services) regulated. In Indonesia and Taiwan, police issue certificates of good behavior (“Surat Keterangan Kelakuan Baik,” in Indonesia)—but usually applicants themselves need to collect these. Netherlands police issue similar certificates, but only where a prospective job position could pose a “risk to the community.”

These countries, however, are exceptions. In most other countries criminal background checking gets done regionally or by municipality, not nationally, meaning that thorough criminal checks are difficult to do on applicants who have moved around domestically.40 Further, data protection and other laws restrict the availability of criminal records in many places, while a few countries, such as Poland, make collecting criminal records flatly illegal. Spain prohibits employers from possessing criminal records, although a Spanish applicant might show criminal records for inspection. However, some countries that restrict the availability of criminal background information relax these restrictions where a job position presents special risks, such as affording access to children or to sensitive data. Employers with special needs for criminal checks should always investigate whether the special circumstances allow for exceptions to any restrictions.

E. Local legal quirks. Various jurisdictions impose local legal doctrines that can interpose additional hurdles into the background checking process. One example is Russia, where an applicant who gets rejected because of a purported past bad act can sue the prospective employer, imposing on the employer a burden to prove the act actually occurred. In Russia, therefore, employers should retain documents that support no-hire decisions, and be careful how they communicate rejections to applicants. Check into analogous issues in all affected countries. One context in which there may be specific rules in many jurisdictions is credit checking, which is often more difficult abroad than in the US.41

3. Pre-Employment Written Testing

Beyond background checking, other pre-hire screening tools popular among US-based multinationals include written applicant tests, be they general aptitude, skills, personality-profile or veracity tests. Many US employers find written applicant tests effective in weeding out applicants who do not have the right skill sets or aptitudes for a particular job.42 Logically, these tests might be just as powerful for screening foreign applicants, so US employers sometimes seek to export these tests.

But overseas, written pre-hire tests implicate cultural and legal issues very distinct from the main concerns in the US Administering pre-employment tests overseas raises cultural and human resources issues including: fear of the unknown, translations and culture:

  • Fear of the unknown: Applicants abroad who have never encountered pre-employment tests may become suspicious when asked to take an unfamiliar exam as a precondition to getting hired.43 Assuage concerns by communicating to applicants the “why” and “how” of testing more thoroughly than would be necessary in the US.
  • Translations: More so than skills tests, personality, aptitude and veracity tests often use idiomatic language virtually impossible to translate. Consider substituting a locally developed test for an imperfect translation of a nuanced English-language test.44
  • Culture: Cultural differences can skew responses to personality, veracity and other tests that ask about traits strongly influenced by culture—traits like assertiveness, truthfulness, deference to authority, likes and dislikes. One widely-used US personality test, for example, has test takers disclose (along with many other questions) whether they would scold a stranger who cut in front of them in line. Responses to that hypothetical question will inevitably vary by country: “Queue” etiquette is more rigid in the UK than in Spain, for example, while public outbursts are more taboo in Japan than in parts of the Mid-East. The Geert-Hofstede Cultural Dimensions sociological model45 explains how cultures vary in these regards. Validate personality tests accordingly.46

After accounting for cultural and human resources concerns, address the legal issues. Stateside, a chief legal issue with written applicant tests is adverse impact test-validation requirements under discrimination laws. US E.E.O.C. regulations governing adverse impact in pre-hire tests47 amount to guidelines that can help employers sanitize pre-employment tests in advance by eliminating improper questions and demonstrating up front that the tests do not adversely impact protected groups.48 Abroad, though, the adverse impact issue tends to be minor. Almost every country prohibits employment discrimination of some sort—and so in theory prohibits “indirect discrimination” (as disparate or adverse impact is often called abroad). But in practice, the adverse impact concept is less often litigated, and less developed, under foreign laws, and is correspondingly less likely to arise in the pre-hire testing context. Outside of common law jurisdictions, few countries overseas have regulations or case law specific to adverse impact discrimination in applicant tests.

Nevertheless, overseas a local rejected applicant might in theory raise the disparate impact issue and sue, shifting to the employer the burden to disprove adverse impact discrimination. And US discrimination laws protect US citizens living overseas who may apply for a job with a US multinational’s local affiliate.49 Therefore, running adverse impact validation before launching overseas applicant testing might be prudent. Unfortunately, though, adverse impact test validations done in the US may mean little overseas, because of the demographic differences: Validation for US “African Americans,” for example, may not logically extend to non-American blacks in Europe, much less in South Africa, where local law distinguishes “Africans” from “coloureds,”50 or in places where nearly everyone is black, such as in much of Africa and in certain Caribbean countries. Similarly, US adverse impact validation for US “Hispanics” means little where almost everyone is Hispanic (Spain, Latin America) and where almost no one is (China, Sweden).51

Adverse impact aside, four distinct legal issues tend to arise abroad in the written pre-hire test context: job-relatedness, data privacy, worker consultation, and consents/acknowledgments:

  • Job-relatedness: A handful of countries mandate that any pre-hire screen be directly job related, and in these countries an employer could face a difficult burden proving an American-style personality or general aptitude test meets the standard. French Labor Code art. L 121-6,52 for example, requires that any pre-hire tool have a “direct and necessary link” to needed skills on the job.53 (Apparently handwriting analysis in France54 can clear the L 121-6 hurdle, but French enforcers may be more skeptical of locally-unfamiliar aptitude or personality tests.) French law also requires telling applicants in writing that the test is just one of several selection tools. Further, putting aside analysis under pre-hire-testing-specific statutes such as this one in France, countries with no statute on point may be receptive to a claim that a test is not “proportional” to the job. Check whether written tests will have to clear any jobrelatedness or “proportionality” hurdle. Where necessary, prepare a file supporting the business need for the tests.
  • Data privacy: Applicant test responses are personal data, so data privacy laws in jurisdictions from Europe55 to Argentina, Canada, Hong Kong, and Japan reach pre-hire tests.56 The data privacy law issue here is different from data law issues with background checks. Some countries interpret their data laws so as to make pre-hire tests especially difficult: Under data privacy law in Greece, for example, pre-hire tests are allowed only in limited circumstances, only if applicants see their test scores, and only if test responses and results get destroyed promptly after the hire decision. France’s data privacy agency goes even farther and imposes nine rather detailed rules on employment test data. Separately, the E.U. data directive57 affirmatively grants “the right to every person not to be subject to a decision which produces legal effects” where the decision “is based solely on automated processing of data intended to evaluate certain personal aspects relating to him.”58 As such, automatically-failing scores on computer-graded tests are in theory illegal across Europe unless they fit under some exception (in UK, notice to applicants of computer scoring may be an exception, but other E.U. states may tend to be stricter on this point). Yet another data law issue is that some E.U. data protection agencies require employers affirmatively to disclose their applicant testing programs to the agencies.
  • Worker consultation: Employee representative bodies may get a say in the roll-out of pre employment screening procedures, even though job applicants are not yet even employees. French Labor Code art. L 432-2-159 specifically requires that employers run applicant selection tools (“methods or techniques for aiding in recruitment of candidates”) by the “works council” (employee representative body), and consultation is recommended elsewhere, for example in Greece as to Greek union committees. (Information and consultation could also come into play as to background checking, in theory, but is more likely to arise as to written applicant tests, which are often more visible both to applicants and to intake-level human resources staff.) In some countries, even if a local statute does not require “consultation” regarding pre-screening tools, an employer may have signed an agreement with its worker representatives setting out this right, so check both legislation and existing agreements.
  • Consents/acknowledgments: Applicant-signed consents can be a useful tool for helping ensure pre-employment applicant tests comply with laws. But the legal analysis differs as compared with applicant background check consents. Asking applicants to release claims related to the data processing of their test scores could head off pre-hire testing claims in some, but not all, jurisdictions. In Continental European countries like France, Greece and Spain, applicant signed acknowledgments may be good evidence that the applicant recognizes the job-related nature of a test and the legitimacy of processing test score data. But in these countries, to enforce consents as consents can be difficult—because of the E.U. view that the employment context is so inherently coercive that consents are not “freely given.”60 Meanwhile, in other jurisdictions, a pre-hire test consent might not be effective in heading off challenges and may not be worth the effort. A best practice is for a multinational employer to decide what screening procedures it will use internationally, and then to get advice in each country not only on legal issues but also on the utility of a consent. In those countries where a consent is advisable, get an organic, local form to use locally. (Local nuances mean a single global consent form is unlikely to be ideal.)

4. Strategy

Job applicant screening, be it background checking, credit screening, or written applicant testing, is critical in this post-September 11, security-conscious environment. Pre-hire screening may be even more critical outside the US, where restrictions on firings make hiring mistakes tougher to rectify.

Not surprisingly, multinationals increasingly feel a business need to align applicant screening procedures across borders. But the legal and cultural issues surrounding job applicant screening abroad differ radically from analogous concerns in the US. Countries with comprehensive data privacy laws, in particular, impose significant hurdles.

In many cases multinationals can indeed export their headquarters-developed applicant screening tools to their local operations abroad. But doing so requires a careful, country-by-country compliance approach, and may require actively restructuring— even reinventing—US procedures in light of the realities of foreign workplaces. Proactively account for cultural and human resources concerns abroad before launching any US pre-hire screening methods internationally. Regarding legal issues:

  • As to background screening, account for: data privacy, consents, references, criminal checks and local legal quirks
  • As to written applicant testing, account for: job-relatedness, data privacy, worker consultation and consents/acknowledgments.

Speaking broadly, the lesson here is that US-based multinationals might well be ahead of their overseas counterparts in appreciating the need to screen applicants by gathering information going beyond what the applicants themselves volunteer. But laws abroad, especially data privacy laws, erect compliance hurdles. Launching a global background-checking or pre-hire testing initiative takes patience, resources and a carefully considered strategy. In the end, though, the effort will quite likely produce valuable results.