Bob North, an attorney at the Kansas Department of Commerce, pushed back against the Kansas Legislature's audit of hiring at the commerce department, including employment of a felon to run a program distributing more than $100 million in economic and infrastructure grants. (Sherman Smith/Kansas Reflector)

TOPEKA — The Kansas Legislature’s auditing agency concluded Monday that personnel practices and procedures at the Kansas Department of Commerce were inadequate to prevent hiring of applicants with a criminal history.

The analysis was inspired by the commerce department’s employment of an individual with a criminal record who was placed in charge of administrating more than $100 million in state infrastructure and economic development funding. Jonathan Clayton was hired at commerce in 2020, despite being on probation since 2018 after pleading guilty to felonies for stealing more than $200,000 from a Pennsylvania business.

Auditors said the Department of Commerce wasn’t aware of Clayton’s criminal history when he was hired and promoted into an oversight role for funding the state received under the American Rescue Plan Act. His employment at the state agency ended in 2023, but Clayton’s conduct, including claims he engaged in conflicts of interest, have continued to be scrutinized since August when he disappeared and was found dead in rural Kansas.

“Commerce’s hiring policies and procedures were not adequate to mitigate their risks associated with hiring applicants with a criminal history,” said Sam Dadds, a state auditor. “It doesn’t include any criminal history check or even ask about relevant criminal history during the interview.”

The commerce department, auditors said, argued it was following instructions to avoid criminal-history checks when filling unclassified employee positions with the exception of one job. For the position of state boxing commissioner, commerce officials said state law mandated a national fingerprint-based criminal history check.

State auditors told a joint auditing committee of House and Senate members that the commerce department should “strengthen their process for checking the backgrounds of applicants for jobs that oversee financial matters.” Auditors recommended reforms comply with Equal Employment Opportunity Commission best practices.

Auditors said their published report of the examination didn’t reveal state statutes forbidding the commerce department from using public records when considering applicants. Information about applicants could be gathered by state agencies through the Kansas Bureau of Investigation’s public records portal, the audit said.

In addition, auditors said exploration of criminal backgrounds could be conducted with approval of a prospective applicants.

Bill North, an attorney with the commerce department, said the agency agreed the hiring process for jobs involving oversight of financial matters was important. However, he disputed the auditors’ conclusion that Kansas executive branch agencies had leeway to make routine use of criminal history checks when filling jobs.

“Commerce operates in a legal and regulatory environment established by the constitution and Legislature,” North said. “Notwithstanding that criminal background checks may be a good practice, commerce lacks the authority to use these checks as part of the hiring process.”

North pointed to an executive order signed by Gov. Jeff Colyer in 2018 that restrained executive branch agencies from leaning on criminal background checks. He said the Kansas Department of Administration offered “crystal-clear guidance” that there wasn’t “existing legal authority that allows executive branch agencies to conduct a criminal background check as a condition of employment.”

In terms of the auditors’ recommendations, however, commerce department officials said they would pursue legislation in the upcoming 2025 session to grant the agency more authority to pursue background checks.

Sen. Caryn Tyson, a Parker Republican who chairs the Legislative Post Audit Committee, said she had deep concern about audit findings. She suggested the Legislature should consider imposing a hiring freeze at the commerce department until the applicant vetting process could be improved.

Tyson, while questioning North, indicated the commerce department was administering the agency in other ways not explicitly spelled out in state law.

“Do you have employees that are telecommuting now — working from home?” Tyson said. “Is that in statute? No, it’s not. I am asking this because I could go down a list of items that … are not in statute. Therefore, which is it? You follow the statute to the letter of the law or you throw common sense out the door on checking financial backgrounds for somebody that is going to be managing millions of dollars?”

North said he wasn’t aware of a state policy against remote work among state employees, but repeated the Department of Administration directed the commerce department not to do unauthorized criminal-background checks.

Tyson contended the Department of Administration offered the commerce department the option of using publicly available records or to seeking consent of applicants before digging deep into confidential criminal records.

“I disagree,” North said. “I don’t think (Department of Commerce) gave us those methods. I think those are backdoor methods to circumvent the policy.”

Tyson’s rebuttal: “Respectfully, Mr. North, you are looking for a scapegoat. Accept responsibility. You hired a felon to manage millions of dollars in grant money. And you’re looking for a scapegoat. I can’t imagine any business that would not do some kind of check.”

She asked North if the commerce department would stick with its concept of applicant evaluation if the Legislature and governor didn’t create state law clearly declaring criminal background checks were acceptable. Under the current approach, the agency makes use of interviews, online searches, social media reviews and reference checks.

“I think we should absolutely put a freeze,” Tyson said. “You’re playing a wordsmith game, saying, ‘We have to legislate in order for you to be able to do these kinds of checks and balances.'”

Rep. Jason Probst, a Democrat from Hutchinson, attempted to clarify whether North’s position was anchored in Colyer’s Executive Order 18-12. His order sought to put in place an approach that didn’t automatically disqualify people with a criminal history at the beginning stage of vetting applicants for state government employment.

“I can look at Order 18-12 and very clearly there’s a line that says nothing in this order shall prevent the conduct of a criminal background check as a condition of employment,” Probst said. “You can’t do it in the initial part, but you can do it anywhere else in the process, according to my reading.”

The published audit of hiring practices at the Department of Commerce reached the same conclusion regarding reliance on criminal records when weighing state employment applications. The auditors said, in their view, Colyer’s executive order didn’t “prevent agencies from conducting a criminal background check as a condition of employment” as the vetting process advanced past the first phase.

The auditors asked the commerce department for documentation related to the consideration of five applicants who were hired by the agency, including Clayton.

Reference check summaries weren’t available for three of the five employees and interview notes were missing for one of the five employees reviewed by auditors. The report didn’t identify if Clayton’s file was incomplete.

Kansas law mandates agencies retain hiring documentation in a personnel file for the length of an employee’s tenure plus three years, auditors said. The Department of Commerce, however, argued the auditors were misstating record-retention regulations in Kansas.

“Commerce officials told us that they don’t retain some hiring records past three years from the date of hire,” the audit said.

One of the auditors’ recommendations was that the Department of Commerce make consistent use of hiring process templates to secure for future the interview notes and document reference checks and internet searches.