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Business and Society Review 120:4 549–576

Further Beyond the Basic

Background Check: Predicting
Future Unethical Behavior
RICHARD G. BRODY, FRANK S. PERRI, AND
HARRY J. VAN BUREN

ABSTRACT

In this paper, we analyze the ethical issues of using

honesty and integrity tests in employment screening.
Our focus will be on the United States context: legal
requirements related to applicant privacy differ in other
countries, but we posit that our proposed balancing test
is broadly applicable. We start by discussing why com-
panies have ethical and legal obligations, based on a
stakeholder analysis, to assess the integrity of potential
employees. We then move to a consideration of how
companies currently use background checks as a pre-
employment screening tool, noting their limitations. We
then take up honesty and integrity testing, focusing par-
ticularly on the problems of false positives and due
process. We offer a balancing test for the use of honesty
and integrity testing that takes in three factors:

Richard G. Brody is Douglas Minge Brown Professor, Anderson School of Management,

Department of Accounting, University of New Mexico, Albuquerque, NM. E-mail: brody@
mgt.unm.edu. Frank S. Perri is an Attorney, Legal Department, County of Winnebago,
Winnebago, IL and Adjunct Professor in Forensic Accounting and Fraud Investigation at
DePaul University, Chicago, IL. E-mail: [email protected]. Harry J. Van Buren is Rust
Professor of Business Ethics, Anderson School of Management, Department of Organizational
Studies, University of New Mexico, Albuquerque, NM. E-mail: [email protected].

© 2015 Center for Business Ethics at Bentley University. Published by Wiley Periodicals, Inc.,
350 Main Street, Malden, MA 02148, USA, and 9600 Garsington Road, Oxford OX4 2DQ, UK.
550 BUSINESS AND SOCIETY REVIEW

(1) the potential harm posed by a dishonest employee in

a particular job, (2) the linkage between the test and the
assessment process, and (3) the accuracy and validity of
the honesty and integrity test. We conclude with impli-
cations for practice and future research.

W
ith high unemployment levels in many countries, com-
petition for jobs—and especially for elite positions—is
fierce and companies have a wider selection of appli-
cants than ever before. This poses a selection problem: how do
companies begin to identify the right individuals to hire? Various
assessments are available to help a company select the right
people. Background checks, one commonly used assessment tool,
are a standard practice among companies for screening potential
employees, but they do not always uncover the truth because
there are several practical limitations associated with these
searches (Brody 2010).
For instance, Al Dunlap, the former CEO of Sunbeam,
neglected to mention during his interview process the fact that
he was fired from Nitec, a paper-mill company in New York, and
Max Philips and Son, a waste company in Wisconsin, on his
resume (Byrne 1999). Search firms verified his employment
history as part of a background check, but unfortunately for
Sunbeam, the company failed to uncover those two dismissals.
After Dunlap was ousted as CEO of Sunbeam in 1998 for engi-
neering a massive accounting fraud, it was uncovered that he
had acted in a similar manner during his time at Nitec. Dunlap
is certainly not the only individual to have left out key infor-
mation on his resume.
Faced with an increasingly competitive business environment
and business failures due to fraud, employers are turning to
employment testing, specifically honesty/integrity assessments,
as a way to protect themselves. Since at least the middle of the
last century (Ash and Maurice 1988), many employers, including
the military, have utilized these assessments to assist in the
hiring process. Honesty/integrity assessments are potentially
useful supplements to the standard background check. As
opposed to a background check, which only looks into a person’s
BRODY, PERRI, AND VAN BUREN 551

past, honesty/integrity tests may potentially be more indicative of

future behaviors. These tools can help to identify and select better
workers and can help improve the quality of an organization’s
overall performance.
However, in contrast to other employment screening tools,
honesty/integrity tests also pose ethical concerns and practical
limitations. Unlike other screening tools such as drug tests, the
accuracy of honesty/integrity tests is less than certain. Drug
tests, for example, measure previous use of illicit substances. The
use of illicit drugs often, but not always, is detectable using urine,
hair, and blood tests (Phan et al. 2012). When drug use is ascer-
tained using such testing, it is because pharmacological markers
can be detected. While not all drug use is detectable using current
methods—and there is the potential for false positives (Moore
2012)—the validity and reliability of drug tests are fairly high
relative to psychometric instruments such as honesty/integrity
tests.
Honesty/integrity tests may accurately predict proclivities
toward dishonest conduct, or they may yield either false positives
or false negatives. Honesty and integrity tests might be seen as
violating the privacy of potential employees. The use or nonuse of
any pre-employment test, we argue, must balance the legitimate
interests of organizations with the legitimate interests of individu-
als applying for employment.
In this paper, we analyze the ethical issues of using honesty and
integrity tests in employment screening. Our focus will be on the
United States context: legal requirements related to applicant
privacy differ in other countries, but we posit that our proposed
balancing test is broadly applicable. We start by discussing why
companies have ethical and legal obligations to assess the integrity
of potential employees. We then move to a consideration of how
companies use background checks as a pre-employment screening
tool, noting their limitations. We then take up honesty and integrity
testing, focusing particularly on the problems of false positives and
due process. We will offer a balancing test for the use of honesty
and integrity testing that takes in three factors: (1) the potential
harm posed by a dishonest employee in a particular job, (2) the
linkage between the test and the assessment process, and (3) the
accuracy and validity of the honesty and integrity test. We conclude
with implications for practice and future research.
552 BUSINESS AND SOCIETY REVIEW

ORGANIZATIONAL LEGAL AND ETHICAL OBLIGATIONS

RELATED TO EMPLOYEE INTEGRITY

A threshold question to consider is why potential employers have

legal and ethical obligations related to the assessment of employee
integrity. Delving into an employee’s past conduct—much less his
or her psychological makeup—may seem to some to be an unwar-
ranted intrusion into personal privacy. We suggest that organiza-
tions have legal and ethical obligations to assess employee
integrity, but these obligations are balanced by a variety of other
ethical obligations.
Legally, organizations face liability for the actions of their
employees. Under the United States Sentencing Guidelines
(USSG; Kelly-Kilgore and Smith 2011; McGreal 2010; Nanda
2011), organizations can be held criminally liable as organizations
for the actions of their employees. Under the legal doctrine of
respondeat superior (also referred to as the master–servant doc-
trine), organizations are legally responsible for the actions of their
employees when (1) employees are acting on behalf of the orga-
nization within the scope of their employment-related duties, (2)
the actions of employees were meant to benefit the organization,
and (3) the actions of employees are imputed back to the organi-
zation (Plimpton and Walsh 2010). Such liability can be either
civil or criminal; here, we focus on criminal liability. The USSG,
modified several times since their creation in 1991, codifies this
common law obligation and specifies (1) under what conditions an
organization can be criminally indicted and (2) what factors miti-
gate or intensify criminal penalties for organizations. Because
organizations are potentially at risk of being held liable for the
behavior of individual employees, organizations have an interest
in assessing the integrity of employees.
The USSG are not unique in extending liability for the actions
of individual employees to the organizations by which they are
employed. The U.S. Foreign Corrupt Practices Act (Giudice 2011;
Maurer and Maurer 2013) extends liability for bribery in another
country by an employee to the organization employing that
individual even when the organization had antibribery policies
in place that the employee violated (Koehler 2012). As a matter
of law, it is well established that organizational policies related
to legal compliance may be mitigating factors that affect the
BRODY, PERRI, AND VAN BUREN 553

likelihood that an organization will be held civilly or criminally

liable for the behavior of individual employees acting in contra-
vention of both law and organizational policies, but the existence
of organizational policies related to legal compliance is not a
shield against all such liability.
The nature of an organization’s ethical obligations related to
employee integrity is less clear cut than those related to legal
liability, but we propose that these are more compelling. Here, we
suggest that managers owe a duty of care (Freeman 1994; Quinn
and Jones 1995) to the organization’s stakeholders, particularly
owners (whether shareholders or some other category of equity
investor) and other employees, that includes reasonable and prac-
tical steps to assess the integrity of potential employees and to act
based on those assessments. While the duty is care is often
understood as a legal standard that is applied in corporate gov-
ernance (Langevoort 2005), we suggest that in the present
context, it also functions as an ethical standard related to assess-
ing the integrity of potential employees. Because of preexisting
stakeholder relationships and ethical obligations, it follows that
organizations have ethical obligations to ensure that potential
members thereof do not harm the interests of other stakeholders.
When employees act in ways that violate legal and ethical
obligations (i.e., they act without integrity), there is considerable
harm that accrues to the owners of the organization. It is well
established that reports of illegal behavior cause negative abnor-
mal stock returns and other financial harms to corporations
(Frooman 1997; Wood 2010). The effects on corporate reputation
that occur when employees engage in violations of the law—
brought about in large part because stakeholders such as com-
munities, customers, employees, and suppliers change their
behavior in response to such reports in ways that harm share-
holder interests—are significant (Heymann 2011; Sheehan and
Stabell 2010). Because the illegal and unethical behavior of
employees is frequently imputed back to the corporation as a
matter of law and stakeholder action, it follows that shareholders
have an interest in employee integrity.
As we will discuss in a subsequent section, however, organiza-
tions also owe ethical obligations to potential employees related to
due process in the screening process. These ethical obligations
mean that organizations do not have carte blanche to do whatever
554 BUSINESS AND SOCIETY REVIEW

they want with regard to gathering information about potential

employees. The legitimate interests of organizations must there-
fore be balanced with the legitimate interests of potential employ-
ees, a topic to which we will turn in a subsequent section.
However, we start our analysis by considering the use of back-
ground checks as a pre-employment screening tool and some of
the associated problems with them.

Background Checks as a Pre-employment Screening Tool

One way that organizations have sought to protect themselves

from dishonest employees is through the use of background
checks. Hiring managers, human resources, and other individuals
involved in the employee selection process “all have a stake in
preventing their organization from becoming victims of unethical
behavior, be it white-collar or other” (Martin and Austin 2010, p.
437). The majority of companies rely on background checks to
screen job applicants, especially before a hiring decision is made.
A background check may include, among other things, an edu-
cational and professional credentials check, a media check, a
credit check, a reference check, and a criminal record check.
Brody (2010) discusses several areas of interest in the
prescreening process.

Resume Verification
Companies routinely verify a potential new hire’s resume to
ensure that any information presented is not fictitious in nature
or an embellishment of some sort. In particular, companies verify
past employment and any degrees or professional credentials
listed on an applicant’s resume. Many people also exaggerate
titles, duties, or responsibilities in previous positions. A quick call
to the previous employer will verify the information. The more
serious misrepresentations would include listing academic
degrees or awards that were never earned.

Media Search
With the proliferation of the Internet, today’s employer can merely
type a job applicant’s name into a search engine and find out all
kinds of information about the person. Some information, such as
BRODY, PERRI, AND VAN BUREN 555

that contained in a LinkedIn account, may be beneficial for an

employer to see. Many employers (Kluemper 2013) are engaging in
such information gathering.

Credit Check
Checking an individual’s credit report is typically included as part
of most background investigations. A company wants to hire
someone who is both in good financial standing and financially
responsible, especially when the individual will have access to its
assets in the course of employment. If an individual has declared
bankruptcy, has been caught violating tax laws, or has judgments,
liens, or foreclosures against him or her, the risks associated with
hiring this individual are dramatically increased. Another red flag
is candidates living beyond their means, as these individuals will
have to find a way to maintain their lifestyles, which can include
engaging in dishonest behavior. In the current economic downturn,
excessive financial burdens have become a major issue for many
job seekers and a threat to companies as individuals become
desperate to make ends meet. However, the validity of this tool has
been questioned, as sometimes an applicant has poor credit for
reasons beyond his or her control (Kuhn 2013).

Reference Check
Companies often conduct reference checks as part of the back-
ground screening process, collecting information about an appli-
cant’s on-the-job reputation, competency, and what former
colleagues think of that person. Most references provide positive
feedback about the candidate in question, however, even if the
employee’s performance was substandard or the employee was
discharged for engaging in wrongdoing. The reason for this is the
fear of defamation and privacy lawsuits. Consequently, employers
are reluctant to reveal anything other than the most basic infor-
mation and generally provide only the date of employment and
title. This can be frustrating when a company wants a candid
assessment of a potential candidate.

Criminal History
Many companies have added criminal background checks to their
employee screening process, but criminal information is not easily
obtainable. Information is not always updated in a timely manner,
556 BUSINESS AND SOCIETY REVIEW

such as cases that are not entered into public record for months
or years after the case has been litigated. In addition, there is no
national system in place to provide all of the information that
should be reviewed and a criminal record will not always be
found. The fact that there is no national system makes conduct-
ing a criminal background check particularly difficult when a
candidate has lived in several different states.

Current Company Actions Related to Background Checks

What do companies typically include in their background screen-
ing processes? The Society for Human Resource Management
reported that “80 percent of companies said they run a criminal
check on applicants before hiring, up nearly 30 percent from
1996—making the practice as common as checking references or
prior work histories” (Bonné 2004, para. 2). In addition to a
criminal check, companies also relied on additional background
screening. A survey of 270 companies reported that “more than
half verify education records and nearly half check motor vehicle
records” and also that “35 percent run credit checks on possible
new hires” (Bonné 2004, para. 5).
Considering the prevalence of background checks as a
prescreening employment tool, applicants ought to tell the truth
as a matter of personal prudence. Many other examples of
resume-padding exist, and given the current fierce job market and
surging unemployment rate, resume lies are becoming common-
place. As job applicants attempt to stand out from others, “some
are tempted to fudge their resumes a bit” (Witham 2010, p. 38). In
particular, a recent CareerBuilder.com survey found that “38
percent of those surveyed indicated they had embellished their job
responsibilities; 18 percent admitted to lying about their skill sets;
12 percent indicated they had been dishonest about their start
and end dates of employment; 10 percent confessed to lying about
an academic degree; 7 percent said they had lied about the
companies they had worked for; and 5 percent disclosed that they
had been untruthful about their job title” (Witham 2010, para 3).

Limitations to Background Checks

Background checks are a necessary first step for companies, but

many problems will not be uncovered as part of this process.
BRODY, PERRI, AND VAN BUREN 557

There are substantial concerns about the validity of background

checks. In terms of predicting the potential for an applicant to
engage in wrongdoing, the validity of background checks is largely
a function of available information, meaning that some people
who are potential wrongdoers based on their previous histories
will not be classified as such by potential employers. There is also
the potential for background checks to have low validity in the
other direction: predicting that someone is prone to wrongdoing
when that person does not differ from other potential employees
in that regard. We take up both challenges to validity in this
section, in addition to considering (1) the potential for disparate
impacts and discrimination related to background checks and (2)
perceptions by employees that such checks are being conducted
in an unfair manner.

Validity in Terms of Inadequate and Unavailable Information

Missing information in informational databases poses a challenge
to the validity of pre-employment background checks, creating the
possibility of a false negative. When a company conducts a crimi-
nal background check, only those offenses for which the applicant
was prosecuted and convicted will be uncovered. Therefore, if an
individual commits fraud at a financial institution but is not
prosecuted, that fraud will not be revealed on a background check
when he or she attempts to get a job somewhere else.
In addition, locating an applicant’s criminal history is not as
simple as television crime dramas generally portray. It is not
possible to type someone’s name or social security number into a
“master criminal record database which compiles an instant rap
sheet on the individual, including details of every offense ever
committed, alias names, and a recent picture from their driver’s
license” (Jones 2011, para. 4). The National Criminal Information
Center (NCIC) database, which is operated by the FBI, is the
real-life version of a criminal record database, and it has its share
of problems. For one, there are thousands of local jurisdictions
around the country, and data are not always uploaded as quickly
as it should be. Also, it is a federal offense in most cases for
employers or screening agencies to even access the NCIC data-
base (Jones 2011).
In addition to limitations with criminal background checks,
there are also issues with conducting reference checks. In today’s
558 BUSINESS AND SOCIETY REVIEW

working world, reference checks frequently fail to provide

employers with meaningful information. Prior employers are
hesitant to reveal negative information about their departing
employees for fear of defamation lawsuits, and many employers
either refuse to give any reference, or they provide neutral
information such as the dates of employment and job titles
(Stabile 2002). Thus, it is difficult for the hiring employer to get
an honest appraisal of an applicant’s job history from past
employers.
Further, background checks often cannot prevent fraud, con-
sidering the fact that most individuals who commit fraud are not
career criminals. Indeed, “a survey of 1,134 Certified Fraud
Examiners showed that less than 8 percent of fraud perpetrators
had prior convictions” (Brody 2010, p. 211). This demonstrates a
huge limitation to a background check—it cannot reveal a crime
that a person has yet to commit. Background checks offer some
information about ex post behavior, but are of less use when
trying to predict ex ante behavior.
A background check merely delves into a person’s past and is
not necessarily an indicator of how a job applicant might act in
the future. In particular, a background check cannot predict how
likely it is that a prospective employee will engage in counterpro-
ductive work behaviors (CWBs). CWBs plague companies and
“refer to a broad set of illegal, immoral, and/or deviant employee
behaviors that include serious offenses such as employee theft,
fraud, and drug use” (Fine et al. 2010, p. 73). CWBs are respon-
sible for “as much as 30% of all business failures,” and they “are
becoming increasingly prevalent, with a 10% increase from 2003
to 2007 in the percentage of employees who observe violations in
company ethics standards, policy or the law” (Fine et al. 2010, p.
73). In addition, since so many deviant behaviors go undetected,
the actual frequency of employees engaging in CWBs may be even
higher.
Given the prevalence of CWBs, it is in the best interest of
companies to find a way to predict how a job applicant might act
given certain scenarios. Fortunately for companies, there is a tool
to gage an employee’s likelihood to engage in CWBs. Currently,
“perhaps the most widely used personal assessment tools to
predict CWBs among job applicants and employees are integrity
tests” (Fine et al. 2010, p. 74).
BRODY, PERRI, AND VAN BUREN 559

Validity in Terms of Inaccurately Predicting a Propensity to

Engage in Wrongdoing
We previously noted that there are concerns with background
checks in terms of whether they identify individuals whose prior
behavior would be cause for concern; that is, individuals at risk of
engaging in fraud and other forms of CWB. The potential for false
negatives is present in background checks. However, the opposite
problem of false positives is also present. Because of a lack of
training and poor methods used to conduct background checks,
they might yield a conclusion that someone who is not at risk for
fraud or CWBs is actually likely to engage in such behaviors—and
as a result, that person might not be hired.
One example is the use of social media screening as a part of
background checks (Kluemper 2013). Looking at LinkedIn and
Facebook accounts might seem to be useful with regard to a
background check. However, there are significant concerns about
the validity and reliability of such screening methods. In contrast
to integrity tests, which at least have the appearance of validity
based on numerical scoring, social media screening is idiosyn-
cratic and dependent on the skill of the screener, which is often
absent. Many forms of background check data do not have clear
guidelines or hard-and-fast criteria for evaluation (Kuhn 2013;
Roth et al. 2013). As Kuhn (2013, p. 421) notes, “validation
analyses of background check information will be somewhat more
complicated than for tests scored on a continuous numerical
scale, but they are necessary.” Someone doing a social network
screening might look at information from a website and conclude
that the person being screened was susceptible to engage in fraud
when in fact the person was not. Additionally, the personal biases
of the screener may cause that person to weigh some information
more strongly than others, or include information that should not
be. A background screener who is opposed to alcohol use, for
example, might see a picture of someone drinking and believe that
person to be more at risk of fraud than a teetotaler, despite a lack
of empirical evidence that alcohol consumption is associated with
future fraudulent behavior.
Similarly, credit checks might show, correctly, a prior history of
not paying bills on time. However, the link between credit checks
and future fraudulent behavior is not high (Kuhn 2013; Landry
and Hardy 2012; Nielsen and Kuhn 2009), and the interpretation
560 BUSINESS AND SOCIETY REVIEW

of such data is often suspect in employment screening. Informa-

tion in credit reports is often inaccurate (Kuhn 2013), leading to
false positives. While the face validity of credit checks might seem
high, the empirical evidence indicates that (1) there are often
innocent explanations (such as medical bills) for poor credit
history and (2) poor credit by itself does not have strong predictive
ability with regard to future fraudulent behavior. In short, there
is a danger that background checks will yield both false posi-
tive and false negatives, undermining their usefulness in the
pre-employment screening context.

Disparate Impact and Discrimination as an Ethical Concern

Associated with Background Checks
There are also significant concerns about whether background
checks have the potential for disparate impact and discrimination.
Kuhn (2013) notes concerns about disparate impact of back-
ground checks involving criminal histories, a concern shared by
others (Harris and Keller 2005; Hughes et al. 2013). Background
checks, even when done with the best of nondiscriminatory inten-
tions, may have the effect of screening out protected groups such
as racial minorities to a much greater extent than others. Racial
minority group members, for example, often have lower credit
scores than others (Kuhn 2013). As a result, the use of such
screening methods is potentially suspect from an ethical perspec-
tive. The validity and reliability of background checks, which are
often low, must be assessed as part of the ethical analysis of when
they can be used given their potential for disparate impact and
discrimination.

Perceptions of Fairness Related to Background Checks

There is an extensive literature related to when applicant and/or
employees believe that selection methods such as background
checks are being conducted in a affair or unfair manner (Alder et
al. 2007; Arvey and Renz 1992; Hausknecht et al. 2004; Ryan and
Ployheart 2000; Rynes and Connerley 1993). Face validity and
predictive validity are two of the primary determinants of whether
a selection procedure is considered to be fair or unfair
(Hausknecht et al. 2004). Honesty tests, for example, have been
considered to have low validity ( (Hausknecht et al. 2004), in large
BRODY, PERRI, AND VAN BUREN 561

part because the tests appear to be opaque to the person being

tested.
Perceptions of fairness matter because they are linked to
future satisfaction with one’s employer (Ababneh et al. 2013)
in addition to being normatively good in and of themselves.
The rationale for engaging in background screening and other
selection procedures is to select the best employees who are
not likely to engage in fraudulent behavior. However, selection
procedures that are poorly evaluated by applicants and employ-
ees have counterproductive effects on organizations. In this
respect, employers are not free to define how applicants and
employees perceive a particular selection procedure such as a
background check; if applicants and employees believe that
background checks are unfair, then that is the controlling
perception.

Provisional Conclusions About Background Checks

We note that background checks are being used more and more
frequently, with a variety of data sources and analytic methods
used. The application of these methods is often idiosyncratic and
dependent on the skill of the person or organization conducting
the background check. Sometimes, background checks yield
accurate results and screen out someone who would harm an
organization. Sometimes background checks yield a false negative
due to a lack of information or poor skill on the part of the
screener, and as a result, the organization hired someone that it
should not have. Sometimes background checks yield a false
positive, and a person who should not be screened out is not
hired. Background checks are also fraught with the potential for
disparate impact and discrimination. Employees may perceive
background checks negatively if they are not done in ways that
they can understand how the results thereof connect to hiring
decisions made by organizations.
There is, however, a compelling rationale for using background
checks in some settings. Further, the goal of protecting the orga-
nization from fraudulent behavior and other CWBs is a sound
one. To shore up some of the shortcomings of background checks,
many organizations are using honesty and integrity tests, to
which we now turn.
562 BUSINESS AND SOCIETY REVIEW

HONESTY AND INTEGRITY TESTING: BACKGROUND

Psychologists have developed personality assessments that can be

used to help measure a job candidate’s risk levels for engaging in
undesirable work activities (Oliver et al. 2012). Perhaps the most
commonly used personality assessments measure dispositions for
integrity and honesty, and they are referred to as honesty/
integrity tests. According to the U.S. Office of Personnel
Management (n.d.: para. 1), an integrity test is “a specific type of
personality test designed to assess an applicant’s tendency to be
honest, trustworthy, and dependable.”
Integrity tests were used for the first time more than six
decades ago, and they were the first personality tests used to
screen potential employees. Further, integrity testing saw a surge
in popularity after the federal Employee Polygraph Protection Act
of 1988 banned the use of pre-employment lie detector tests for
all but a select few jobs (Roberts 2011). After pre-employment lie
detector tests were banned, “employers began to want—and
vendors began to offer—more broad-based personality tests,
which are also valid and shed light on many character traits,
including integrity” (Roberts 2011, p. 56).
Honesty/integrity and other personality assessments were spe-
cifically designed to predict the predisposition of job applicants to
engage in counter-productive work behaviors such as on-the-job
theft, absenteeism, substance abuse, and insubordination using
composite measures of personality dimensions, such as reliability,
conscientiousness, trustworthiness, and sociability (USDL 2000).
In relation to theft-related issues, they measure attitudes related
to one or more of the following psychological constructs: toler-
ance of others who steal, projection about the extent of theft by
others, acceptance of rationalizations for theft, inter-thief loyalty,
antisocial beliefs and behaviors, and admissions of theft-related
activities.
Currently, it is estimated that anywhere from 33 to 75 percent
of employees have engaged in some form of deviant behavior (Fine
et al. 2010). Not only is the prevalence of such behavior alarming,
it is also costly to a company. Collective damages from employee
theft and fraud are estimated to be as high as $400 billion dollars
a year, and this is just in the United States (Fine et al. 2010).
Since CWBs are both commonplace and costly to companies, it
BRODY, PERRI, AND VAN BUREN 563

would be prudent for companies to find a way to predict such

behaviors. As mentioned before, background checks only delve
into a person’s history, and a person’s past behavior is not nec-
essarily an accurate indicator of future behavior. Integrity testing,
on the other hand, is widely used to predict a job applicant’s
likelihood to engage in CWBs.
Integrity testing is already being utilized as a pre-employment
screening tool by companies. According to estimates made in the
early 1990s, up to 5 million integrity tests are administered annu-
ally in the United States alone and, in particular, it is estimated
that “10–15% of all US retailers, banking and food service orga-
nizations use integrity tests for personnel selection” (Fine et al.
2010, p. 74). Other settings where recruiters have a tendency to
use integrity tests are nuclear plants, law enforcement agencies,
and child care facilities (Roberts 2011). In addition, the American
Management Association reports that a majority of the Fortune
500 companies now use testing as part of their hiring process
(Fisher and Nobile n.d).
The growth of testing in the workplace reflects a broad consen-
sus in the business world that hiring the wrong person, particu-
larly the wrong senior level executive who may be in a position to
commit fraud, can negatively impact morale, productivity, and
focus. Concerns about high level management committing fraudu-
lent acts are not an anomaly. Consider that the United States
Securities and Exchange Commission (SEC), which is charged
with regulating the accounting and financial standards of publicly
held companies, between 1998 and 2007 named the chief execu-
tive officer (CEO) and/or the chief financial officer (CFO) for some
level of involvement in 89 percent of its fraud cases, up from 83
percent of the cases between 1987 and 1997 (COSO 2010). Within
two years of completion of the SEC’s investigation, about 20
percent of the CEOs/CFOs had been indicted, and over 60
percent of those indicted were convicted. One such CFO was
Andrew Fastow, an architect of Enron’s fraud, who was named
CFO in 1999 and charged and plead guilty 3 years later to
securities fraud (Goldstein 2011).
As for the tests themselves, there are two types of integrity tests
used today: overt and covert. Overt tests consist of closed-ended
questions. For example, a common question might be “What is the
most you have ever stolen: (a) $0; (b) $1–$200; (c) $201–$500; (d)
564 BUSINESS AND SOCIETY REVIEW

more than $500” (Roberts 2011, p. 6). On the other hand, covert
tests consist of open-ended questions with answers designed to
“give a sense of the applicant’s conscientiousness, emotional
maturity and the like” (Roberts 2011, p. 56).
IntegriTEST is one overt integrity test commonly used as a
pre-employment screening tool. This particular test consists of
“96 items which tap individuals’ opinions about serious counter-
productive work behaviors” and measures opinions “regarding the
sanctioning, pervasiveness, and rationalization of counterproduc-
tive work behaviors, as well as thoughts about engaging in coun-
terproductive work behaviors and the identification with others
engaging in these behaviors” (Fine 2010, p. 608). Sample test
questions include, “Do you think a person has the right to break
laws they don’t agree with?,” “Should a company employ someone
who is known to have been fired for stealing in the past?,” and “If
a colleague were to offer you drugs, would you complain to their
superiors?” (Fine 2010, p. 608).
Because most providers offer the tests online, a candidate
merely goes to the employer’s recruiting site, completes the job
application, and is then directed to the test. The results of the test
are usually immediately analyzed and forwarded to the employer
(Roberts 2011). There are numerous providers of integrity tests,
including Merchants Information Solutions Inc., SHL PreVisor
Inc., SkillSurvey Inc., Success Performance Solutions Inc.,
Vangent Inc., and Wonderlic Inc. (Roberts 2011).
As an alternative to paper and pencil integrity testing,
employers can choose to conduct a face-to-face structured inter-
view with the line of questioning focused on integrity. There are
two types of structured interviews. The first is a situational
interview, and the second type is a behavioral interview. In a
situational interview, the questions are based on hypothetical
situations, and the applicant is asked to show what he or she
would do in the given situation (FPCNational, n.d.). On the other
hand, in a behavioral interview, employers ask the applicant to
discuss specific examples of challenges faced at a job and the
questions tend to start with “Tell me about . . .” or “Describe a
situation where . . .”
Overall, regardless of how rigorous an organization’s attempts
are to use honesty/integrity testing in their workplaces, these
tests should still be used as only part of the process. It is still
BRODY, PERRI, AND VAN BUREN 565

equally important that employers use traditional hiring practices.

These practices include conducting a background check, review-
ing the candidate’s resume, and participating in the interview
process before making a decision to hire or not hire a candidate
(USDL 2000).

Ethical Issues Associated with Honesty and Integrity Tests

There are a number of ethical issues associated with the use of

honesty and integrity tests in pre-employment screening. In this
section, we deal with two of them: privacy issues and validity.

Privacy Issues
Unlike personality-oriented and clinical measures of personality,
integrity tests have generally not been challenged on privacy
grounds. This is because these tests do not typically inquire into
sensitive areas and are more clearly job related. Moreover, leading
test publishers continuously conduct follow-up research to
ensure that their test items are not perceived to be invasive.
Personality assessments must not be unreasonably intrusive
and must be job related. Of course, the debate about what
“unreasonably intrusive” entails continues. Unlike the U.S. Con-
stitution, which does not have an explicit right to privacy provi-
sion but one in which privacy is implied, state constitutions
provide a possible avenue for job applicants to challenge the
employment practices of private employers. This is because some
states have constitutions that provide right to privacy protections,
many of which are broader than the federal constitution. We posit
that personality tests such as honesty and integrity tests are less
intrusive than other forms of pre-employment screening because
they by and large probe personal attitudes rather previous behav-
iors. Similarly, Fine (2013b) found that the integrity tests did not
create adverse impact across age and gender categories and were
(in a three-country study) valid across different cultural contexts
vis-à-vis predicting CWBs.

Validity
As noted previously, one of the major concerns about background
checks is that they yield false positives and false negatives.
Ideally, pre-employment screening methods would screen in the
566 BUSINESS AND SOCIETY REVIEW

right people (people who are honest and good fits for a position)
and screen out those applicants with a propensity to engage in
CWBs and/or that are poor fits for a job. When these outcomes
occur, then the pre-employment screening method has high valid-
ity. Do honesty and integrity tests meet the criterion of high
validity? Here, the evidence is somewhat mixed. While early
assessments of the accuracy of such tests were highly negative—
leading for many to call for them not to be used (Dalton and
Metzger 1993)—more recent work in this area has somewhat
ameliorated these concerns.
Using test instruments that are valid is critical to effectively
assess candidates and reduce legal risk. According to the United
States Department of Labor, validity is the most important issue
in selecting assessment tools (USDL 2000). It refers to (1) the
characteristic the assessment instrument measures and (2) how
well the instrument measures the characteristic. A test’s validity
is established in reference to a specific purpose, and it may not be
valid for different purposes. Assessment manuals usually provide
a statistic, the validity coefficient, which gives an indication of the
test’s validity for a specific purpose under specific circumstances.
It measures the degree of relationship between test performance
and job performance (i.e., job relatedness of the test). Interest-
ingly, among all types of assessments used in the employee selec-
tion process, including background screening, research has
shown that integrity tests have the highest validity for predicting
undesirable behaviors (Roberts 2011). However, reported validities
for these tests are somewhat low.
There has been a great deal of validity research. Some of this
research has shown that integrity assessment scores can predict
theft behavior (Eisenbraun 2006), although research conducted
by the creators of honesty and integrity tests have provided higher
validity measures than those found by scholars not directly con-
nected to the tests’ creation (Van Iddekinge et al. 2012). In their
meta-analysis of integrity tests, Van Iddekinge et al. (2012) found
that mean observed validity measures corrected for unreliability
ranged from 0.26 to 0.32—positive, to be sure, but not so much
so that the tests can be determined to be highly reliable on their
own. Marcus et al. (2013) found integrity tests had significant
validity, but when added to the Big Five personality dimensions,
the incremental value thereof declined significantly. We conclude
BRODY, PERRI, AND VAN BUREN 567

that honesty and integrity tests do add new information that can
be useful in pre-employment screening, although observed validi-
ties are not high. Such tests also avoid some of the pitfalls
associated with background screening, such as disparate impact
and invasions of privacy.
Pollard and Richardson (1987), in their analysis of Type I and
Type II errors, offer a helpful analysis in this regard. The goal of any
pre-employment screening method, as previously noted, should be
to confirm true hypotheses—here, whether or not a prospective
employee is prone to fraud and CWBs. If the null hypothesis is that
the applicant is prone to such behaviors and it is rejected due to
faulty pre-employment screening methods, then the organization
has fallen short in fulfilling its ethical obligations to other employ-
ees and organizational stakeholders. If the organization fails to
reject the false null hypothesis that the employee is prone to fraud
or CWBs, then it has treated that employee unfairly. Many back-
ground checks, because of their low validity, are prone to both Type
I and Type II errors. The goal of using honesty and integrity tests is
to reduce the likelihood of both error types.

BALANCING TESTS FOR THE USE OF HONESTY AND

INTEGRITY TESTS

We now turn to our proposed balancing tests for the use of

honesty and integrity tests. Previously, we have argued that orga-
nizations have legitimate concerns about employee dishonesty
and CWBs that provide ethical support for the use of pre-
employment screening in some settings and circumstances.
Employees, however, have legitimate concerns about fairness,
accuracy, and relationship to organizational objectives. Our bal-
ancing test has three elements: (1) the potential harm posed by a
dishonest employee in a particular job, (2) the linkage between the
test and the assessment process, and (3) the accuracy and valid-
ity of the honesty and integrity test.

The Potential Harm Posed by a Dishonest Employee in a

Particular Job

First, we note that some jobs create more potential for harm to
the organization if an employee engages in fraud and CWBs. Some
568 BUSINESS AND SOCIETY REVIEW

positions, such as senior executive positions and those involving

financial decisions, are highly fraught with the potential for
employee malfeasance. Fine (2013a) suggests that organizations
critically analyze where the exposures to fraud actually are and
design a program to use honesty and integrity tests accordingly.
The greater the potential for harm, the greater the ethical support
for the use of pre-employment screening methods, including the
use of honesty and integrity tests.

The Linkage between the Test and the Assessment Process

When honesty and integrity tests are used, they should also
have a rational relationship to the overall assessment process.
Assessment instruments, like other tools, are helpful when used
properly but can be useless, harmful, or illegal when used inap-
propriately. Often, inappropriate use results from not having a
clear understanding of what is to be measured and why it needs
to be measured. Employers must first be clear about what they
want to accomplish with an assessment program in order to
select the proper tools to achieve those goals (Fine 2013a).
Assessment strategies should be based on both an understand-
ing of the kind of employment decisions to be made and the
population to be assessed. Once a strategy has been developed,
selecting appropriate assessment tools becomes more efficient.
Only use assessments that are appropriate for a particular
purpose.
Previously, we noted that many background check methods are
idiosyncratic and fraught with the potential for misapplication.
The ethical use of honesty and integrity tests is strengthened
when they are triangulated with other informational sources in
ways that paint a fuller picture of the applicant, and the entire
pre-employment screening process has a strong link to the orga-
nization’s objectives related to assessing the potential for fraud
and CWBs, in addition to fit for the job. Because employee per-
ceptions of fairness matter, employers using honesty and integrity
tests should ensure that they are seen by applicants and employ-
ees as fair, accurate, and rationally used. Employers have lots of
legal leeway to use such tests, but it does not follow that they
should use these tests just because they can.
BRODY, PERRI, AND VAN BUREN 569

The Accuracy and Validity of the Honesty and Integrity Test

Finally, while the validities of honesty and integrity tests show

some benefit, we do not conclude that they can be used uncriti-
cally. Because of the potential for false positives and false
negatives—and especially the former—organizations have an affir-
mative ethical obligation to conduct independent assessments of
whether the tests are accurate and valid for their own purposes,
rather than rely on the test makers themselves (who have obvious
conflicts of interest). They should also seek improvements in the
validities of these tests, conduct frank assessments of whether
they are being used in valid ways, and shift to better tests if they
emerge.
Although assessments provide important employment-related
information about an individual, no assessment tool is 100
percent reliable or valid; all are subject to errors, both in mea-
suring job-relevant characteristics and in predicting job perfor-
mance (USDL 2000). Moreover, a single assessment instrument
provides a limited view of a person’s qualifications. Using a variety
of tools to measure skills, abilities, and other job-relevant char-
acteristics provides a more solid basis upon which to make
important career and employment-related decisions and mini-
mizes adverse impact. Using unbiased and fair tests will help
select a qualified and diverse workforce. Organizations should
review the fairness evidence associated with assessment instru-
ments before selecting tools by examining the test manual and
independent test reviews.
An assessment tool is usually developed for use with a specific
group; it may not be valid for other groups. For example, an
assessment designed to predict the performance of office manag-
ers may not be valid for clerical workers. The skills and abilities
required for the two positions may be different, or the reading
level of the test may not be suitable for clerical workers. Assess-
ments should be appropriate for the individuals desired to be
tested; that is, one’s target population. Manuals should indicate
the group or groups the assessment is designed to assess. The
target population should be similar to the group on which the
assessment was developed. In determining the appropriateness of
an instrument for a target group, also consider such factors as
reading levels, cultural backgrounds, and language barriers.
570 BUSINESS AND SOCIETY REVIEW

Additional Recommendations for Practice

It is fair to say that increased use of any kind of testing of

employees or applicants means an increase in the potential for
litigation; however, an employer can take special precautions in
order to minimize the risk of litigation (Seegull and Caputo 2006).
Deciding whether to implement psychological testing with appli-
cants and employees does not need to be an anxiety-riddled
experience. With careful planning and execution, an employer
should be able to use psychological testing as a way of achieving
efficient hiring and promotion without violating federal and state
laws. For example, do not make using tests the sole criterion for
hiring or promotion decisions. Administer the test in a standard-
ized fashion that ensures that all job applicants or employees are
assessed in the same way. Take active steps to ensure the con-
fidentiality of test responses.
Also, there are some commentators who believe that it is best to
avoid using assessments that require analysis by a psychologist,
psychiatrist, or social worker because of the fear that their inter-
pretation of the results may produce the appearance that the
assessment was a pretext for a medical examination to reveal
some disability. The authors disagree with this position because
all too often, assessments are administered by those not properly
trained in employment testing, especially if the assessment given
does not contribute to a finding of a particular mental impairment
or psychological disorder. Typically, an organization sends a
human resource person to a day of training with the vendor of the
assessment, and consequently assessment results are incorrectly
interpreted and an organization wastes time and money before
discovering that the test was never valid. Furthermore, according
to industrial organizational psychologist Wendell Williams, “people
are out there putting on amateur psychologist hats and using
personal opinions, memory and other unscientific types of pro-
cesses” to administer and interpret assessments (Daniel 2005,
para. 15). Assessments are used to make inferences about peo-
ple’s characteristics, capabilities, and future performance, and
inferences should be reasonable, well-founded, and not based
upon stereotypes. If assessment scores are not interpreted prop-
erly, the conclusions drawn from them are likely to be invalid,
thus leading to poor decision making. Moreover, ensure that there
BRODY, PERRI, AND VAN BUREN 571

is solid evidence to justify assessment score interpretations and

the employment decisions made on those scores.
In addition, Williams states that “a test should be based on
some theory of job performance; it should have integrity and
reliability, and it should accurately predict what it’s supposed to
predict and be backed up by studies” (Daniel 2005: para. 25).
Furthermore, he states that every test should come with a tech-
nical manual that proves the rigors it went through in develop-
ment and should have studies to vouch for its validity. At times,
vendors refuse to provide evidence of validity and claim that the
information was proprietary. However, such a denial of informa-
tion should be a red flag to employers because vendors should
stand by their products by providing their validity studies. Legal
experts also caution against an over reliance on representations
made by test manufacturers regarding test validity for a particular
job and encourage conducting periodic audits of employment
selection testing procedures to monitor for possible adverse
impact, significant changes in jobs, outdated validity studies, and
other potential problems (Vann 2007).
Lastly, concerns about invading a person’s privacy can be
alleviated if the potential employee gives informed consent to
taking the assessment. Personality assessments are more defen-
sible if the employer is open with the applicant concerning the
purpose of the assessment, how the results of the assessment will
be used, and the relative importance of the assessment compared
with the other selection criteria that will be used in the hiring
process. The applicants should be given reasonable notice that
they will be asked to take an assessment. If an employer decides
to use some form of assessment either to hire new employees or
to award internal positions, the assessment must also be admin-
istered fairly and accommodations may have to be made for
someone who has a disability. The assessment should be admin-
istered by a trained individual in a manner that is consistent for
all of the people taking the assessment.

IMPLICATIONS FOR FUTURE RESEARCH

We believe that our analysis has significant implications for future

research. First, there is need for research that explores the
572 BUSINESS AND SOCIETY REVIEW

additional value that honesty and integrity tests add to pre-

employment screening processes such as background checks.
Given the problems associated with background checks, how
might organizations come to better conclusions about a prospec-
tive employee’s propensity to engage in fraud and CWBs? Here,
both empirical and theoretical research would provide useful
guidance for organizations, with particular attention to the valid-
ity thereof.
Second, we propose that that there is a need for HRM research
to provide stronger frameworks for when—and what kinds—of
pre-employment screenings such as background checks and
honesty testing should be used. We have noted that these can be
useful, if problematic in practice. When is it worth the risk of
making Type II errors, and harming applicants, for example?
When is the cost of doing such screening not worth the marginal
benefit? Which kinds of jobs are these tools best used for, and
why?
Finally, we suggest that there is a need for research about how
organizations communicate the use and value of pre-employment
screening to prospective employees and those who are working or
who will work for the organization. Even if screening is valid, it
may be counterproductive if employees and applicants believe it to
be unfair and inaccurate. In this regard, the communication of
what organizations do is as important as what the organization
does.

CONCLUSION

It is clear that background checks have many limitations associ-

ated with them. Given the damage that a dishonest employee can
cause for an organization, this paper suggests that the use of
honesty and integrity testing is an appropriate additional measure
that should be used as part of the prescreening process. While
there are individuals and organizations with concerns associated
with the use of such testing, if done properly, there is no legal
reason to exclude these tests. In fact, it is expected that these
tests will be very beneficial as part of the screening process as
they are expected to identify applicants who are likely to engage in
behavior that is counterproductive to the organization. Given the
BRODY, PERRI, AND VAN BUREN 573

time, expense, and importance associated with the hiring process,

it is strongly recommended that organizations consider the use of
honesty and integrity tests to help them hire the “right” individu-
als and avoid hiring the “wrong” ones.

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