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Who Goes There? The Outsourcing of Security

Who is in you building? Do you know? And most importantly, do you care?

If you answered ‘no’ to either of those last two questions, you could be in for a rude awaking. In today’s environment more and more building owners and managers are outsourcing their basic services to third party providers; the most common are security, janitorial and landscaping functions.  The reason for this is economics, plain and simple. The fact is, it’s far less expensive for a building owner or management company, condo, co-op or gated community to use outsourced workers than to hire full-time, in-house security, janitorial, and landscaping staff.

It’s also a fact that in most cases, the lowest bidder wins the contract—but just what are you getting for that low bid?  Are the people hired to secure your association or building the best qualified and the best trained? Is the company you’ve hired fully licensed and insured? Not knowing the answers to questions such as these is like driving without a seatbelt. Here are some of the questions that you should be asking any vendor that you plan to do business with — particularly if the vendor is going to have a major presence at your facility or on your property.  

• Do you screen your employees and subcontractors?

• Are you licensed?

• Are you insured? What are the limits of your policy?

• Will you name my company as an additional named insured?

• Do you carry worker’s compensation insurance?  

Many of these questions are traditional business questions; however, how a company screens their employees is not. Not all screening methods are created equal. It’s important to know whether your prospective security guard company is doing full background checks, or only checking where the applicant tells them they lived. Does the company confirm that the person is who they say they are? Do they use database searches, statewide searches or county searches, or check to see if their employees and applicants are on a sexual offenders list? Does the company validate previous employers and experience?

Many employee screening firms offer a variety of services and packages, so it’s sometimes a challenge to determine exactly what types of searches and background checks are appropriate. For example, most people think a Statewide Criminal Search is the best, most thorough way to screen a prospective security employee. Some states do not offer a statewide search, however—and most statewide searches do not include all of the counties within the state. Other states only provide Department of Corrections records, which does not reveal all convicted felons—only those who have ever been incarcerated.

According to Michael Pachuta, president of Credential Check Corporation in Troy, Michigan, many hiring companies who run pre-employment screens on applicants aren’t aware of all the searches that are available, or that their screening company may not be offering the best available search. Sometimes it is a matter of cost, but the typical screening is only around $50 per applicant. Running the right background check on an applicant can help avoid situations like this one, taken from the Michigan’s Lansing State Journal:

“Charles Byam Jr. wasn’t necessarily the guy you’d want handling your money.

His rap sheet includes larceny in a building and attempted embezzlement in 1990 and misuse of a financial transaction device - using someone else’s credit card number to buy airline tickets in 1996.

But the…company put him in charge of handling payments for water permits.

Not such a good move, as it turned out. Earlier this year, Byam pleaded guilty to embezzling more than $180,000 by essentially getting businesses to write checks that he could divert to his own bank account…Byam asked customers to write checks to him rather than the company, and would then submit false invoices.

A spokesman said the company didn’t know Byam was a convicted felon with a taste for taking other people’s money when they hired him in March of 2000. He didn’t disclose that on his employment application, and the department didn’t do any criminal background checks.

He was fired for falsifying his job application by failing to disclose his criminal history. He is now serving a two- to 10-year prison sentence after pleading guilty to three counts of embezzling more than $20,000.”

You may be satisfied with the way your HOA’s security provider does their background investigations, but it’s still important to be aware and ask questions regularly. Are they drug screening each and every employee that they hire? Do they have a random drug screen policy? What about screening for cause—post-incident and/or accident?

These are also important questions that should be asked during the bidding process—not after a company is selected.  Not all service providers are doing all of the above-mentioned things. Doing a thorough screening of prospective service providers can help lower your general liability policy. According to Chris Robichaud of Szerlip & Company, an insurance provider for the service industry, these issues are addressed by underwriters because sound, thorough screening tends to limit the exposure that a carrier has to potential loss. The factor — the base for computing a insurance rate—is adjusted upward or downward, depending on the type of screening a hired security company is providing.

Gary Bradley of Bradley & Gmelich in Los Angeles represents a number of security providers.  He says the courts are holding employers to higher standards because there are so many ways to conduct pre-employment screening. Both the number of negligence suits and the amount of damages involved are increasing, and courts are toughening their definition of reasonable care. This is expected to intensify as available security systems become more sophisticated.

Juries are holding employers to higher and higher standards when it comes to negligent hiring. Many companies are being sued—and found guilty of negligence—for hiring individuals that present a danger to others. Many of these companies are required to pay for damages that are in the millions of dollars. The average cost for an out-of-court settlement of a negligent hiring lawsuit is approximately $170,000.

To avoid these costs—and the human cost they represent—your association’s best defense is to ask questions. Look at the big picture, and don’t be afraid to ask the tough questions. Your company and you community will be better off for it in the long run.

Brian Dooley has been in the security industry for over 30 years and is the founder of security consulting firm Brian T. Dooley & Associates.

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Comments

  • This was an eye opening article and there are points made here that I will bring to my condo board as we get ready to bid our security services contract.