Home » MBJ FEATURE » LaborChex flourishing in fast-growing employment background screening industry
LaborChex partners, from left, Ben Holmes, COO; Ricky Rayborn, president; and Frank Petrusnek, CEO.

LaborChex flourishing in fast-growing employment background screening industry

By TED CARTER

You can still get hired in a New York Minute – or something close to it.

The difference is that nowadays the person doing the hiring knows a lot more about you and can set expectations accordingly, says Ricky Rayborn, a principal and president of LaborChex Inc., a Brandon employment background screening company that did its first job candidate inquiry for an employer in 1991.

In those days, Rayborn and his staff filled their workday with phone and mail inquiries and even some gumshoe work, all in an effort to help employer clients have confidence in their hiring decisions. Phones, letters and face-to-face inquiries are still mainstays, but it’s the automated tracking systems and integrated data bases that make the checks seem lightning fast compared with the past and – more important – far more thorough.

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How thorough?

Thorough enough to catch a lot of fibs.

A 2018 HireRight report found that 85 percent of employers surveyed uncovered a lie or misrepresentation on a candidate’s resume or job application during the screening process—up from 66 percent five years ago.

“Today, I think the biggest concern of clients is that they want to make sure that person is being honest with them,” said Rayborn, whose company counts about 3,000 clients nationwide, including around 600 in Mississippi.

“Odds are that more than half of all resumes and job applications contain any number of misrepresentations from education to work experience to how much they were paid,” he said in an interview.

So, it is clear why it helps to bring an over-sized catcher’s mitt to the employment background screening business. But speed and efficiency are equally important, not only for the employer but for the candidate the employer wants to hire.

Like 72 hours or less as “time to hire,” an industry benchmark that LaborChex typically meets, said Rayborn. “The easier it is to screen someone the more likely to come to work for you,” he said.

Other turnaround times are offered as well, Rayborn said.

“All the employment screenings are integrated on the platform,” an open-source API XNL format LaborChex uses in a partnership with Eight, a Software-as-a- service-based employee management software licensed by Arc Technologies and developed in Ridgeland.

The platform, noted Rayborn, “can be integrated with any of our clients’ Applicant Tracking System of choice.”

Among clients, at least 60 percent of mid-size companies and 90-plus percent of large ones use an Applicant Tracking System, according to Rayborn.

Integrating into the LaborChex platform, he said, strengthens the client’s existing vetting process, cuts the cost of the screening and speeds up the turnaround.

Rayborn put the number of data bases LaborChex can access at 599,000.

LaborChex and companies like it are regulated federally by the Fair Credit Reporting Act and officially are “consumer reporting agencies.”

They’ve been doing a lot of reporting. The U.S. employer screening services market hit $3.2 billion last year and expected to grow to $5.46 billion by 2025.

Some of that comes as technology allows screening companies to significantly broaden their services.  LaborChex – whose main competitors are SterlingBackcheck and Hire Right – is a 10-person operation, including a number of staffers there 20 years or longer.

You hire LaborChex if you want to hire someone, fire someone, or reassign or promote someone. Skipping the drug testing or background check, LaborChex says, “could make your organization vulnerable to a negligent hiring lawsuit by any worker or customer who has been hurt by a violent employee.”

For Mississippi clients, Rayborn and his partners do criminal background checks county by county. “In most cases we have a personal relationship with the courts because we are local,”

Mississippi puts no restrictions on screening beyond the Fair Credit Reporting Act, according to Rayborn.  “What this means for reports in Mississippi is that your records will include felonies that go back many years,” he said.

“If your applicant was in prison 20 years ago for murder, we are not bound by the FCRA laws to not report it.”

Further, Rayborn noted, Mississippi “is the only state that we can get Worker Comp searches with ease.”

Worker compensation histories and criminal checks are part of a services offering that also includes driver’s license reports, name and address checks, verification of previous employment, confirmation of education (including transcripts), checks on professional licenses and credentials, contact with references, employment and credit reports.

LaborChex also provides employers with E-verify checks of foreign workers, as well as employment verification checks through the Department of Homeland Security.

Rayborn’s pitch to potential clients emphasizes there is no one-size-fits-all background check. “Your industry and risks are unique factors that determine the type of screening program that you use,” he said.

LaborChex has also developed a mobile app that allows a client’s job applicants to complete their applications on their phone, upload the application and get updates on the status of their background screen and drug check. “This app exponentially increases speed to hire,” Rayborn said in an email.

And it also gives LaborChex a direct line to applicants, he noted.

The Digital Age and the efficiencies it brought have not only made the screens wider and more thorough. It’s also greatly lowered the costs to employers, Rayborn noted.

The lower costs, fastest-turnarounds and demand for qualified workers have put LaborChex and its counterparts in the screening business on a sustained growth curve.

“We have grown exponentially the last two years,” Rayborn said. “Last year we grew probably 100 percent.”

Marketing is through social media and word-of-mouth, according to Rayborn. “Our clients are long-term clients,” he said. “They come on board and don’t leave us.”

Clients come from both the public and private sectors and represent industries from transportation and healthcare to manufacturing and municipalities.

Rayborn declined to give annual revenues, noting companies have approached LaborChex about acquiring it. Revealing financial information could cause it to lose leverage, he said. “We want to negotiate from a position of strength.”

Employers come to LaborChex as a way to establish consistency in hiring.  In return, Rayborn said, they get an improved quality of hire and keep themselves out of legal hot water for discriminatory hiring practices.

In all, the pitch to potential clients comes down to this, Rayborn said: “Every hire represents a huge investment as well as a potential risk to the employer.”

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About Ted Carter