What Your Company Can Learn From J.P. Morgan’s Employment Screening Failures

A $1.25 million fine was recently levied against the J.P. Morgan Chase company by the Financial Industry Regulatory Authority for lapses in employment background check processes. This steep fine against such a high profile company is a reminder of the costs of employment screening failures.

When it comes to financial services, few names are as recognizable as J.P. Morgan. However, this popularity does not exempt them from using proper employment screening processes. In fact, as shown by the steep fine, the larger and more successful the business, the higher the stakes for employment screening failures.

Even Industry Giants Can Have Employment Screening Failures

The J.P. Morgan Securities company was found to be conducting incomplete background checks from January 2009 through May 2017 on 95 percent of non-registered associate employees. This violated regulatory imperatives and prevented accurate determination of eligibility for employment.

To J.P. Morgan’s credit, they self-reported the employment screening failures to the Financial Industry Regulatory Authority (FINRA). This resulted in a more lenient settlement and a lower fine than otherwise would have been assessed.

Lapses in a company employment screening policy are often the result of:

• Deficient procedures
• Out of date policies
• Communication failures within the company
• Lack of transparency
• Compliance issues
• Screening gaps

In the case of the recent J.P. Morgan lapse, the securities company failed to conduct adequate fingerprint screening for eight years on thousands of non-registered employees and associated persons. This caused potentially ineligible or even risky personnel to be hired by the firm.

While some personnel were fingerprinted, others were not screened for felonies or disciplinary actions taken by financial regulators. Such screening is required in their industry under the Exchange Act and Financial Industry Regulatory Authority laws.

Employment Screening Failures Can Be Costly

J.P. Morgan screened only for certain criminal convictions and was not comprehensive and compliant in its employment screening processes. The lapses resulted in the hiring of high-risk individuals who had a criminal report in the omitted areas. The price of these employment screening failures was a $1.25 million fine, which could have been even higher had the firm not self-reported the errors.

Companies large and small can learn from the recent mistakes of financial giant J.P. Morgan. The best way to avoid making mistakes like these is to partner with a professional employment screening service.

Professional Employment Screening Equals Peace of Mind

Professional employment screening can help to avoid employment screening failures and ensure companies make informed and intelligent hiring decisions. Businesses can help themselves to avoid hiring dishonest or otherwise unqualified employees as well as negligent hiring lawsuits down the road. Company finances and intellectual property is far more secure when honest, qualified and thoroughly vetted individuals are hired.

To avoid making potentially costly employment screening failures, businesses should strongly consider outsourcing employment screening to an experienced professional. In addition to avoiding oversights, it allows HR departments to stay focused on job-centric screening such as interview protocols and candidate testing.

Disclaimer Statement: All information presented is for information purposes only and is not intended to provide professional or legal advice regarding actions to take in any situation.