The Kansas Commerce Department had inadequate policies and procedures that would ferret out job applicants with criminal histories similar to the background of a former employee who was hired to oversee millions in federal grants.
A new audit out Monday found that the agency’s hiring policies didn’t include any type of criminal history check for any job other than one in state law for the state boxing commissioner.
“I have great concern over this,” said Republican state Sen. Caryn Tyson, chair of the legislative audit committee.
The audit stemmed from the agency’s decision to hire Jonathan Clayton to oversee millions in federal grant funds at the agency following a fraud conviction in Pennsylvania.
Clayton was found dead in late August in a truck that had crashed into a tree after being driven off the road into a field in Harvey County.
Clayton disappeared Aug. 3 after questions surfaced over how he had accounted for a $740,000 state grant awarded to the town of Peabody when he served as the town’s interim clerk. He left the Commerce Department in 2023. He was hired there in 2020.
Kiowa County Sheriff Kendal Lothman confirmed that he was conducting criminal investigations of Clayton at the time of his death.
The sheriff was believed to be investigating theft of $120,000 from the Mullinville Community Foundation and $70,000 from a local cemetery board.
The Commerce Department filed a lawsuit Aug. 7 against the Mullinville Community Foundation, where Clayton had been listed as the secretary/treasurer on the group’s board of directors.
The agency was demanding repayment of $425,000 in state grant funds for failure to properly account for the money. The lawsuit indicates the agency believes there is $211,000 left.
Commerce told auditors that once they’ve decided to hire an applicant, they perform a reference check and a social media check on the applicant that includes putting their name in a search engine.
Officials said they rely on references, social media checks, search engine results and applicants being forthcoming and honest about their work history and their criminal history to reveal potential problems.
Commerce hired Clayton in 2020 without knowing about his previous criminal conviction in Pennsylvania and then subsequently promoted him to director of economic recovery.
Commerce officials told auditors they were not aware of Clayton’s criminal conviction until after his promotion.
However, the audit went a little bit deeper and examined the hiring procedures for five staffers. In three cases, the agency didn’t adequately document the hiring procedures.
The audit found that reference check summaries weren’t available for three of the five employees reviewed, and interview notes were missing for one of the employees.
“This means we couldn’t determine if Commerce is following these processes consistently,” the audit concluded.
Auditors reported that state retention policies require agencies to preserve hiring documents in the personnel file for the duration of the employee’s tenure plus three years.
Commerce officials said they don’t keep some hiring documents past three years from the date of hire, the auditor said.
“Commerce should strengthen their process for checking the backgrounds of applicants applying for jobs that oversee financial matters” in line with “best practices” recommended by the Equal Employment Opportunity Commission.
Auditors said Commerce didn’t think it had the authority to carry out criminal background checks using the Kansas Bureau of Investigations resources.
Auditors said agencies can’t use the KBI to perform a national criminal history check unless allowed by statute.
However, they said state law appears to generally allow employers to conduct criminal history checks with the written consent of the applicant.
Department of Administration officials told auditors that unless required by statute, state employers set their own hiring policies and procedures for their unclassified jobs.
“But they also said it’s their interpretation that there isn’t a general authority for agencies to conduct any type of criminal history check because it’s not explicitly in statute,” the auditors wrote in their report.
Commerce officials told the auditors that they were not aware of the options for checking criminal histories that were available to them such as using a consumer reporting agency.
Commerce said it would need more information about using consumer reporting agency reports and the type of information they could reveal before they could decide if they would be useful in their hiring procedures.
Commerce also said it was restricted from requiring criminal background checks as part of their hiring process because of an executive order issued in 2018 by former Republican Gov. Jeff Colyer. The auditors took exception to that reasoning.
The auditors said the executive order indicates that job applicants shall not be asked if they have a criminal record during the initial stage of a state employment application.
The executive order also states that a criminal record shall not automatically disqualify an applicant from receiving an interview, the auditors said.
But the auditors also pointed out the order states that it doesn’t prevent agencies from conducting a criminal background check as a condition of employment.
“Nothing in this order shall prevent the conduct of a criminal background as a condition of employment,” the executive order said.
Bob North, legal counsel for the Commerce Department, still said the executive order prevented the agency from doing background checks.
“Our interpretation and our ability to do a criminal background check is a function the executive order…as well as the guidance from the Department of Administration, which is statutorily tasked with personnel policies and procedures for state agency,” North said.
“We’ve got crystal clear guidance from the Department of Administration that executive branch agencies cannot perform these criminal history background checks,” North told the legislative audit oversight committee.
“We support the Legislature giving state agencies that authority,” he said.
Tyson accused North of “looking for a scapegoat” and told him to accept responsibility for hiring a felon to manage millions of dollars in taxpayer money.
“I can’t imagine any business that would not do some kind of checks,” Tyson said.
“Are you going to continue to hire people in this same manner?” she asked.
North said Commerce could not do background checks until the Legislature changes the law.
Tyson suggested that the audit committee should consider whether to freeze hiring for any financially related positions.
“We found out this year that we have some legal authority in this committee, and I think we might take advantage of that,” she said.
“This is just common sense,” she said.
“You’re playing a word smith game, saying that we have to legislate in order for you to be able to do these kind of checks and balances,” she said.
Democratic state Rep. Jason Probst of Hutchinson pressed North for the guidance that was provided by the Department of Administration.
Probst wanted to now if that guidance was based on state law.
“That would be a good question for the Department of Administration. I’m not sure that was asked of D of A during this audit,” North said.
“But that is the guidance that executive branch agencies have,” he said.
