FIRMS DIG DEEP INTO WORKERS' PASTS AMID POST-SEPT. 11 SECURITY ANXIETY

INDIANAPOLIS -- After Sept. 11, Kimberly Kelly says, she got a lump in her
throat each morning as "The Star-Spangled Banner" blared at the Eli Lilly &
Co. plant where she worked as a pipe insulator.

But on Jan. 29, her supervisor informed her that the drug giant, after
conducting a criminal-background check as part of new post-attack security
measures, had decided to ban her and several other contract workers from
its facilities.

Her crime? In 2000, the 46-year-old single mother bounced a $60 check to a
refrigerator-rental company. Ms. Kelly, who was going through a divorce at
the time, says she moved to a new town and closed her bank account without
realizing the check hadn't cleared. Court records in Montgomery County,
Ind., show that when the appliance company couldn't locate her, it pressed
charges. A judge found her guilty of check deception, a misdemeanor, and
ordered her to pay $179 in fines and court costs.

"I never would have thought a $60 bounced check would cost me my job," says
Ms. Kelly. After being escorted off Lilly premises, she says, all she could
think about were the times she was asked because of her small size to crawl
into dank spaces to work on decaying pipes. "It can be grubby and
dangerous, but it was my job. And I loved my job. I wish I had it back."

Since Sept. 11, Lilly has commissioned criminal-background checks of more
than 7,000 employees of outside vendors, mostly construction workers and
food-service staffers, people familiar with the matter say. Lilly required
the workers to consent to the screenings as a condition of entering its
property. "If I refuse," say waivers signed by the employees, "my
assignment at Lilly will end."

Union officials say Lilly has since banned at least 100 contract workers
from its premises. Some of those were found to have committed felonies,
including burglary. But union officials say a great many were guilty of
nothing but misdemeanors, the lowest category of crime. On the day Ms.
Kelly was banished, four of her roughly 25 co-workers suffered the same
fate. One was arrested 6-1/2 years ago on a misdemeanor battery charge that
had since been dismissed and he thought had been expunged. Another had been
fined $250 and served 20 hours of community service 14-1/2 years ago for
misdemeanor marijuana possession.

Lilly spokeswoman Joan Todd calls the bans a "direct response to the 9/11
attacks" and says the company is "doing what we must do to protect our
company, our people, our assets and our products." The company won't
comment on individual workers' cases or say whether it plans to rescreen
any of its own 36,000 employees. Nor would it discuss the criteria used to
determine which of the outside workers it bans.

"We've been consistent in our application of the criteria," says Ms. Todd.
"I don't expect that everyone will like that."

Similar purges have taken place around the country in the months since
Sept. 11. Citing the risk of potential saboteurs in their ranks, companies
have commissioned an unprecedented number of criminal-background checks of
existing employees.

"Businesses have learned since the 11th there's a lot of inherent danger in
not knowing who works for you," says James Lee, spokesman for ChoicePoint
Inc., an Alpharetta, Ga., data-collection firm spun off from credit-bureau
giant Equifax Inc. ChoicePoint, which in November launched a private
database service offering multistate criminal-history checks, says the
monthly volume of checks soared from 3,000 that first month to nearly
25,000 this February. ChoicePoint is performing Lilly's checks.

Security experts say the biggest change has come from companies
double-checking the backgrounds of outside vendors that come onto their
property. Such workers are more likely to draw scrutiny because they aren't
as well-known to companies as internal employees. Contract employees also
have less legal recourse to fight back.

The National Basketball Association required food and merchandise vendors
to submit names of their employees for criminal checks in advance of this
year's All-Star game. Two major movie studios have retained security firm
Kroll Inc. to help them certify that tens of thousands of employees of
their outside vendors such as caterers, mechanics and medics don't have
criminal records. As of this month, Kroll says background checks are
running about 20% higher compared with a year earlier.

Clarian Health Partners, one of the largest hospital operators in Indiana,
has started telling contractors at its facilities that it will begin
verifying that their workers have passed criminal checks. The U.S.
pharmaceuticals unit of Bayer AG says it is ramping up vendor screening and
is discussing a new round of checks on its own employees.

The heightened security concerns, coupled with the emergence of vast new
electronic databases, raise difficult questions about privacy and fairness
in the workplace. While few would argue with a company's right to ban
dangerous felons from the job site, the calculus becomes much tougher when
it comes to people who have committed only minor offenses and paid their
debt to society.

"There are millions of people in America who have done something illegal at
some point in their lives," says Lewis Maltby, president of the National
Workrights Institute, a nonprofit research organization in Princeton, N.J.
"It's unfair to deny someone a job or destroy their career because of
something they did 10 years ago that wasn't job-related to begin with."

Especially in industries not traditionally considered terrorist targets,
the criteria for dubbing someone a "security risk" can vary widely. Lilly,
for example, has refused to allow some construction workers on its property
who had previously passed extensive criminal, psychological and financial
screenings for projects at nuclear-power plants. It is also excluding
workers for crimes that wouldn't necessarily bar them from airlines. Under
a newly revised federal law, the only automatic disqualifications for
airline workers with access to tarmacs are felony convictions such as armed
robbery, drug dealing, burglary, espionage and willful destruction of property.

Lilly implemented its policy soon after the September terror attacks.
Citing "the need for enhanced security measures" in an Oct. 24 letter, it
told vendors to submit names of all employees working on Lilly jobs to
ChoicePoint. Initially, Lilly told them it planned to pull workers' credit
reports, criminal history and motor-vehicle records.

Employees of contractors flooded union halls with questions. Thomas
O'Donnell, president of the Central Indiana Building and Construction
Trades Council, says some members argued that their credit rating shouldn't
have any bearing on their ability to work at Lilly. Nor, many said, did
they drive on the job.

Mr. O'Donnell and another Indiana union chief, Benjamin Ramsey, pressed
Lilly to back away from the credit checks. But they were loath to push too
hard. More than three years into a 10-year, $1 billion expansion of its
plants and offices, Lilly is responsible for close to 20,000 jobs
statewide, and is also one of the few companies still pumping money into
the strained local economy. Large unionized contractors, traditionally on
good terms with Lilly, nonetheless worry perpetually that Lilly will
replace them with out-of-town, nonunion firms.

At a Nov. 7 meeting with union officials, Lilly officials offered to drop
the credit and motor-vehicle checks. But they were adamant about
criminal-background searches. "We make 60% to 70% of the world's insulin.
We need to know who's on our property," insisted Lilly facilities executive
Richard Menke, according to union officials who attended. Lilly
acknowledges it is a world leader in diabetes-care products, but declines
to specify the percentage.

Mr. Ramsey pleaded for details. "What are you looking for?" he recalls
asking. He says Mr. Menke said he thought the threshold would be "major
stuff," but that he couldn't elaborate. Mr. Menke referred questions to a
spokeswoman, who declined to comment.

Misinformation spread almost immediately. Some contractors, told only that
the checks were related to Sept. 11, reassured employees that misdemeanors
wouldn't get them fired. Others stressed that ChoicePoint wouldn't look for
offenses older than seven years. One foreman at a subcontractor says he was
told by another supervisor that Lilly was only trying to make sure that
"nobody's a terrorist and nobody has large amounts of money in secret bank
accounts."

They soon learned differently. At the Lilly corporate headquarters here,
asbestos-removal workers donned their hazardous-materials suits as usual on
Dec. 13. Employees say Earl Connor, a foreman with Performance Abatement
Services, took them aside at lunch and announced: "At 3 o'clock, there's
going to be eight people who are going to lose their jobs." A receptionist
in Mr. Connor's office said he'd been instructed not to comment.

Later that afternoon, Mr. Connor reassembled his team and read aloud a list
of people no longer welcome at Lilly. One was Cris Lochard, then 28, who
says he has worked at the center for over five years. Humiliated and
anxious, he began to cry.

Ten years ago when he was 18, Mr. Lochard broke into a middle school with a
group of friends. By his own admission, he stole a guitar and the group
stole a VCR and camcorder. Mr. Lochard says his friends called themselves
"Damage Incorporated" after a song by the band Metallica.

Sitting in a rocker in a living room full of toys, Mr. Lochard says he has
cleaned up his life since then. Besides a short house-sitting job, the
father of four says he is getting by on unemployment checks and his wife's
income as a teacher at a Christian academy and bank branch manager.

"I felt like an ass," he says. "Where else am I going to go and get me a
job that pays $16.10 an hour?"

William Groth, an attorney for a union helping Mr. Lochard, says his
client's direct boss told him he "didn't want to fire Cris," but had no
other job for him. Mr. Groth initially considered contesting the firing on
the grounds that Mr. Lochard's offenses occurred outside the seven-year
window originally specified by Lilly. The boss declined to comment.

ChoicePoint says Mr. Lochard's felony guilty plea for burglary turned up
because he was jailed less than seven years ago for failing to stay in
contact with his probation officer.

Michael Matthews, a senior vice president for Performance Contracting Group
Inc., the Lenexa, Kan., parent of the pipe-insulation company that employed
Ms. Kelly and the asbestos-removal company that employed Mr. Lochard, says
the contractor had little latitude. "Are we sorry? Of course we are." But
he adds, "As a subcontractor, we're bound by our contractual provisions."

While technically Lilly can't fire the contract workers, a slew of workers
banned from Lilly property immediately got layoff slips from their own
employers shortly after the results of the background checks came in.

Mr. Groth, the union lawyer, says he is pessimistic about the workers'
chances of winning in court. He points out that Lilly has a legal right to
control who can access its property. Lilly isn't subject to the outside
workers' collective-bargaining agreements because the drug firm isn't their
employer, he notes. "If these people had legal remedies, I'd be pursuing
these cases," he says.

Teresa Butler, an Atlanta attorney who specializes in employee background
checks for the law firm Littler Mendelson, agrees. "As tragic as it may be
in certain situations, it just isn't a violation of the law," she says.

Among the hardest-hit economically were sheet-metal workers, because the
market was already flooded with former employees of a large welding and
sheet-metal firm that had just failed.

Donald Ade, 44 years old and a veteran of the sheet-metal trade, made
around $70,000 a year in wages and overtime building air ducts at Lilly's
Technology Center until being banned Jan. 4. His offense: possession of a
pound of marijuana nine years ago. Court records show he spent one night in
jail, with the remainder of a one-year sentence suspended, and paid $1,115
in court costs and fines.

"I could see if I'd gotten in trouble for having explosives, or being a
member of a militia, or had a history of violent crimes," says Mr. Ade, who
sports an American flag on the antenna of his black pick-up. He carries a
card in his wallet showing that he has passed mandatory drug testing while
at Lilly. More importantly, he says, "I'm a very competent sheet-metal worker."

Sandy D. Snodgrass was especially surprised by his removal from Lilly. The
airflow technician is an 18-year employee of Johnson Controls Inc., a large
Milwaukee conglomerate that makes car components, building-control systems
and batteries. He and his wife are such conspicuous patriots that they
devote an entire room in their home to Americana, including a Betsy Ross
lamp, an Uncle Sam doll and two coffee tables handpainted with the American
flag. A sign hanging in the front window proclaims, "Proud to be an American."

On Jan. 29, Mr. Snodgrass's boss and friend of 30 years, David Carter,
called him and told him to come into the office instead of reporting to
Lilly. He handed Mr. Snodgrass a letter. "Due to concerns raised by the
background check" on Mr. Snodgrass, "Lilly requests that you no longer
assign this employee to perform services for Lilly effective immediately."
Mr. Carter wasn't privy to why: "It devastated me. I just couldn't fathom
what would be wrong," he says.

Just about everything, as it turned out. When Mr. Snodgrass received his
ChoicePoint report, it turned out to be a case of mistaken identity.
Graying and weathered, the 56-year-old says he has never had a run-in with
the law. The report was for a 27-year-old relative with a different middle
name. The relative had once stolen a can of Skoal from a grocery store and
had gotten in a scuffle with a woman who is now his wife, leaving him with
misdemeanor shoplifting and battery convictions.

"I was shaking, I was so upset," says the elder Mr. Snodgrass. It was
painful, he says, to think his co-workers mistrusted him and a relative's
privacy was violated.

ChoicePoint attributes the error to the fact that at some point, the
younger man's Social Security number got commingled with the elder's in a
database. It contends the elder Mr. Snodgrass didn't write down his date of
birth on his consent form; Mr. Snodgrass says he did. Lilly won't discuss
the episode but admits that sometimes, "mistakes are made." The elder Mr.
Snodgrass was allowed to return to Lilly.

A Johnson Controls spokesman says what happened to its longtime employee
was "unfortunate" but calls Lilly's security policy "fully understandable."

Such errors aren't unheard of in the database industry. ChoicePoint says it
receives 30 to 50 disputes a month from consumers questioning information
in their credit reports, criminal and other reports, or about 480 a year.
The company checks over three million names a year. ChoicePoint says,
therefore, that it has a dispute rate of under 1%. Mr. Lee says the
disputes often result from clerical errors by county courts. For example, a
local courthouse may fail to correct the file to say a record has been
expunged, and then the courthouse may sell its data electronically to
ChoicePoint and the error is repeated.

Occasional database glitches aside, Mr. Lee, the ChoicePoint spokesman,
defends his firm's role in the purges. "In each of these cases, the system
worked," he says, because ChoicePoint uncovered crimes and, when it found
errors, corrected them. He adds that ChoicePoint is forbidden by law from
now offering to sell information it gathered on the workers to third
parties such as insurers or mortgage lenders. But he adds: "Don't lose
sight of the fact that the person committed the crime."

Still, after news of the removals hit the Indianapolis Star newspaper and
local television stations, signs emerged that some Lilly executives were
having second thoughts. Early this year, Mr. O'Donnell, the union official,
called up Mr. Menke and complained that the dismissals were "pretty petty."
Mr. Menke offered to review letters requesting reinstatement, says Mr.
O'Donnell. But another union official, Mr. Ramsey, says Mr. Menke told him
in a separate conversation that "we still contend we have a right to do
this." Ms. Todd, the Lilly spokeswoman, denies Lilly is rethinking its
policy. But several union officials say the pace of removals has slowed.

There have also been some reversed decisions. Electrician Paul Gibson, one
of the foremen commanding 18 other electricians at an insulin-production
plant, was pulled aside by a senior manager on Jan. 28. "Paul, this is the
hardest thing I've ever had to do, but you need to get your things and come
with me," Mr. Gibson recalls him saying. The manager, who didn't return a
telephone call seeking comment, handed Mr. Gibson a sealed envelope with
his ChoicePoint report. 'This has gotta be a mistake," Mr. Gibson blurted out.

Nine years ago, when he was 20, Mr. Gibson, was charged with misdemeanor
battery after getting into a fight with his then-girlfriend's best friend.
He says -- and his then-girlfriend concurs -- that he was trying to break
up a fight between the two women, and pulled the other woman away from his
girlfriend. Court records show the woman he pulled away accused him of
grabbing her by the arm and neck and pushing her into a closet, leaving a
bruise on her arm. A judge fined him $27 and assessed $113 in court costs.

His former girlfriend, Susan Lorimer, says the incident "was nothing; it
was just a bunch of kids growing up. For six years, he never raised his
hand or even his voice at me." Another friend there that day says she never
knew Mr. Gibson faced charges over the incident and calls him "a good
husband and father."

As for Mr. Gibson's former boss, Aaron Lohman, he calls Mr. Gibson "a
professional worker" who never displayed any violent tendencies and whom
he'd take back if he could.

Mr. Gibson found other work but had to take a 45% pay cut from the $90,000
or so he says he was on track to make this year as a foreman. In January,
he wrote a letter to a Lilly official explaining the details of his case.
"I love working at Lilly's and would love to be back," adding, "I deeply
apologize for my actions." A month later, without explanation, Lilly sent
back a terse memo reinstating his access rights. Mr. O'Donnell, the union
official, says six other electricians from Mr. Gibson's local union were
also allowed back.

- -- Davina Wright contributed to this article.