In an effort to cut costs in human-resources departments, an increasing number of companies are outsourcing employee verification to private companies that charge potential employers, banks and insurance companies looking for basic employee information.
The companies say that outsourcing that information - a standard function of human resources - allows them to save money and cut down on a burdensome task.
Outsourcing employment verification also helps employees, they claim, because it shortens the amount of time it takes for banks, insurance companies and potential employers to get the information.
Here's how it works: The employee (or ex-employee) calls a toll-free 800 number to get a special PIN. They then give out the 900 number along with the PIN to people they authorize to check their employment history. The call takes an average of three minutes for banks, insurance companies or employers, at a cost of about $12. The information given is simply the dates of employment, and in some cases, salary history.
Taking care of business
But some current and former employees at these companies aren't so thrilled with the idea.
"There's a basic principle of fairness here," said Steve Scolnik, who worked as a systems analyst at America Online from 1994 to 1999. "It's another instance of the company simply disregarding their workers."
Scolnik recently needed to get verification of the dates of his employment and was shocked to find out the only way he could get that information for himself, a prospective employer or a bank was to go through a 900 number.
When he tried to verify the accuracy of the information given out, AOL human resources told him the only way he could do that was to pay to use the 900 number.
Scolnik was infuriated and forwarded his dialogue with human resources to a e-mail list for ex-AOL employees. The e-mail touched off a series of angry and indignant messages on the list.
Scolnik said he fears that small businesses won't want to pay to use the system, and will pass over his or other AOL resumes. Many company phone lines block calls to 900 numbers, which would make it even harder for some that don't mind paying the fee.
And while the cost isn't incurred by the employee, Scolnik said he expects banks and insurance companies to pass the cost of using this system on to the consumer. Further there's no saying that the information is accurate, and no way to check without the employee going through the onerous and expensive process.
"We know from past history they have a poor history of keeping accurate records," he said. And even if all of the company's records of tens of thousands of past employees are all perfectly accurate, errors can be made in transferring it to the new system.
AOL spokesman Nicholas Graham said the company decided to outsource the process in January. At that point, the company had been getting 100 phone calls a day for employment verification, and decided it was too much of a burden on its human resources department. So they decided to do what many other companies have done and outsource it to The Frick Company, and use its VeriFacts system. AOL doesn't get any of the money from the $3.95 a minute charge--that charge is determined by the Frick Company--but the cost savings made it worthwhile, Graham said.
AOL, a division of AOL Time Warner, announced the change in January and has a comprehensive description of how it works prominently displayed on the company's HR Web site, said Graham. The Frick service is not yet used in other units of AOL Time Warner.
Graham also noted there is also nothing to prevent a potential employer from calling a former employee's supervisor directly and obtaining the employment history that way, something many potential employers normally do.
Graham stressed that the system is secure and only companies that have been given the PIN by the employee can access the information. The company makes sure to comply with all federal and state laws, Graham said, and is careful not to allow any sensitive information on the system, such as the reason an employee left AOL.
Charles Craver, a law professor at George Washington University who specializes in labor and employment issues, said that as long as the companies only put employment dates and salary history on the system, and as long as employees have to give out the PIN for it to be accessed, outsourcing the information is perfectly legal.
However, Craver added, "It's very crass," especially in light of the thousands of workers recently laid off at AOL and other companies.
"I'm amazed they're doing this. Particularly you would normally hope they would be easing transition to new employment and this adds a hindrance. They're going to lose a lot of employee loyalty."
Craver said that even though it's perfectly legal, actions like this simply send the wrong message to workers.
"It gives you the sense that the company doesn't care about the employee," said Craver. "It really sends a message that you don't care."
"Think of what you gave to this company and they won't even get on the phone and say you worked there," said Sally Marquigny, who was a project manager at AOL from 1995 to 1999, and runs the ex-employee mailing list.