Reducing Workers’ Compensation Claims: The Impact of Integrity Screening in Hiring Practices | JGS Insurance 

Reducing Workers’ Compensation Claims: The Impact of Integrity Screening in Hiring Practices

By Eric Wokas, CSP ARM, Senior Risk Engineer 

Employers who need to reduce workers’ compensation claims are turning to claims prevention through better hiring practices. The standard tools are application, reference check, criminal background check, and possibly a drug test. While these practices help, they can be costly and require legal consent. That’s why integrity testing has recently gained notice as an effective initial screening tool. One of the advantages of integrity testing is that a legal release from the applicant is not required.

An integrity test is a specific type of personality test designed to assess an applicant’s tendency to be honest, trustworthy, and dependable. A lack of integrity is associated with such counterproductive behaviors as theft, violence, sabotage, disciplinary problems, and absenteeism. However, can screening a prospective employee’s integrity affect workers’ compensation claims?

A study in 20121 of companies representing four different industries was conducted to determine if integrity tests as part of the prehire process would reduce the frequency and cost of workers’ compensation claims.

In all four industries studied, the workers’ compensation claim rate was higher for the unscreened group. In addition, the unscreened group had a higher claim incurred cost. The differences were statistically significant—that is, greater than would be expected due to chance. The results suggest that introducing integrity testing into the selection process can result in fewer workers’ compensation claims and at less cost per claim compared to unscreened prehires.

Integrity testing can also point out job performance behaviors like poor work ethic, risky behavior, and lack of moral decision making. There are three basic types of integrity testing:

  1. Overt Tests – Clear in purpose, these tests use direct questions that identify job applicants who admit they’re high risk for behaviors which commonly drive workers’ compensation claims. Overt tests contain questions that leave little doubt about what is being determined. For example, “What is the most you have ever stolen: a) $0; b) $1–$500; c) $501–$1,000; d) more than $1,000.”
  2. Covert Tests – Concealed in purpose, these tests use indirect questions that predict the likelihood of risk for a potential employee if hired. The answers give a sense of the individual’s conscientiousness, emotional maturity, and the like.
  3. Hybrid Tests – As the name implies, this is a combination of Overt and Covert questions.

An effective integrity test can identify up to 20% of job applicants as high risk when used in general labor or light industrial placements. Staffing companies who identify high-risk job applicants before a hiring decision are able to avoid potential costly claims and subsequently an improved bottom line. The company can then focus their attention on applicants who likely improve the quality, productivity, and performance of the organization’s workforce.

By any measure— legal, technical, and return on investment (ROI)—integrity testing gets at least a passing grade. In addition, few, if any, integrity test performance differences are found between men and women or applicants of different races or ethnicities. Integrity tests will not eliminate dishonesty or theft at work, but the research does strongly suggest that individuals who score poorly on these tests tend to be less suitable and less productive employees.

When compared to other pre-employment screening options such as checking credit histories and criminal records, integrity testing is the clear winner. Both credit checks and criminal background checks provide historical data that don’t necessarily predict future behavior. Both also face growing legal and legislative scrutiny.

In contrast, integrity tests have been validated repeatedly by independent researchers and HR professionals at the many companies using them.

Among all types of prehiring assessments, including background screening, research has shown that integrity tests have the highest validity for predicting undesirable behaviors at work.

We are here to answer any questions you may have about reducing workers’ compensation claims.