The value of verifying the prior salary of an applicant is often overlooked. While verifying the past employment dates and titles are common parts of mid-level and executive background screening package, make sure you understand the procedures being used by your applicant screening vendor. Do they also attempt to verify salary information? If so, to what extent? After all, a verification of salary through a business owned by the applicant’s uncle, friend, neighbor, parent, etc, can make for a tempting opportunity to have someone “verify” a seriously inflated or even nonexistent salary. Likewise, if an applicant knows that his prior company will not disclose salary information, they may feel confident in exaggerating their stated income.
Why does it matter?
At a lower level position with standard pay guidelines, it really doesn’t. You’re going to pay the employee based on the rate of the position and raises will come from performance and time. But when you’re looking at someone to fill a mid or high-level position that has a wide range of pay based on previous performance and/or experience, it matters a lot. This person is an investment and you need to know if they pulled their own weight at their previous employers.
An impressive talker is not always an impressive worker and you wouldn’t be the first to place a “bouncer” in a high paying position. (“bouncer”: One who bounces from company to company siphoning a large salary until the company realizes they’ve been duped.) Imagine hiring a regional sales person with a salary of $200,000 plus bonus/commission based on a great interview and an impressive resume citing years of sales experience, accolades, and C-level pay. Only to find out months later that they never actually earned more than a base salary of $40,000 and very little commission from their past two employers. You’re back to square one. You have lost $100,000 of payroll and an equal amount in training and expenses. Trust can be overrated at times.
So how do you know if you’re getting an accurate portrayal of an employees previous income? Here are a few tips on how to avoid overcompensating an applicant whose experience and past pay may be more fiction than fact.
Option 1) Human Resources / Payroll Department.
The most common method can also be the most inconsistent if it is not completed by a professional.
This is where a professional researcher, as opposed to a call center, can make all the difference. A researcher will verify that they are calling a legitimate business, cross-referencing information from the company’s website, Secretary of State filings, and phone listings, against the data provided by the applicant. With a signed authorization, about 50% of companies will provide salary information. That percentage drops to approximately 20% with smaller employers that do not have designated HR staff.
Pros: Typically no additional cost on top of the background check. Information as reliable as the person processing the verification.
Cons: About half of all companies won’t accommodate this type of request. Information as reliable as the person processing the verification.
Option 2) Third Party Records Manager
A prime example would be “The Work Number”, which is a company that manages the past employment records of many large corporations. Your background screening vendor will often have an existing account with “The Work Number” so that they can quickly access employment records of applicants when needed. Salary information, however, is NOT always a default part of this search. It depends on the internal policy of the company itself as to if they allow salary information to be released. If they don’t allow this information….See Option 4, as that may be your only option.
Pros: Fast and usually accurate information if the company uses “The Work Number” and allows salary information.
Cons: You’ll only find large corporations on this database and the price can be $15.00 to $25.00 per search.
Option 3) Tax / Payroll Records from the Applicant:
This option simply means that the screening agency requests documentation directly from the applicant such as a W2, 1040, Check Stub or other official documents. Again, the experience of a professional researcher can make a big difference in obtaining what documents make the most sense and then evaluating those documents for authenticity.
Pros: Typically no additional cost on top of the background check. This type of documentation cannot easily be forged.
Cons: Older records becomes harder for the applicant to locate in a timely manner.
Option 4) I.R.S. Salary Verifications:
That’s right, the IRS will actually do something for YOU! For a small fee of course. And while you can get this information yourself, you’ll get it in a matter of days instead of weeks if you pay a few extra dollars and go through a reputable background screening company. With this type of verification, you can select a particular year or multiple years, and request a copy of stated income from tax documentation. Of course, you’ll need a signed authorization from the applicant to do this.
Pros: Rock solid, indisputable income information.
Cons: Additional cost to the background check. Approximately $10.00 to $15.00 per applicant per year search.
In summary, a good background screening provider will start with option one and work their way down. They will verify the legitimacy of the company and if an HR or Payroll department exists, proceed to request information. For small or self-owned companies they may jump to Option 3 or Option 4 depending on the situation. Larger companies may require Option 2. Option 4 is a blanket option that can work in any situation where salary information is essential. In the end, it’s important to remember that the dishonest resume comes from a dishonest applicant, and lies about experience or salary can be as bad, if not worse, than a criminal conviction.
Brad Jones is President of Background Screening Consultants LLC (DBA SafeScreener.com), an applicant background screening agency in Chicago. Brad has worked with hundreds of corporations, nonprofit organizations, and government agencies to establish FCRA compliant applicant screening protocols since 1996. Prior to being fully engaged with the background screening industry, Brad specialized in fraud investigations and complex due diligence related to corporate acquisitions. Brad is an active member of the National Association of Professional Background Screeners as well as a Chicagoland Chamber of Commerce member, serving on the Health and Wellness Coalition as well as the Workplace Well-Being Committee. Brad can be reached at bjones@safescreener.com or 312.985.5010 x113