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Pre-Employment Background Checks

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Pre-Employment background checks were once considered a luxury among small business owners, but in today's competitive hiring landscape, pre-employment background checks can be a vital part of the hiring process. Background checks help protect employers by allowing them to confirm applicant credentials and skills before the hire.

To maintain excellent hiring practices and increase your chances of hiring the right talent the first time, consider these best practices for incorporating pre-employment background checks into your hiring process.

What is included in a pre-employment background check?

A comprehensive pre-employment background check can go a long way in providing insight into a potential hire. During this process, the employer or a designated research company may investigate multiple aspects of a potential hire's background, including:

  • Identity verification — Verifying name, age, and Social Security information can help confirm that the candidate is who they say they are.
  • Criminal history — If permitted under applicable law, criminal record checks can alert employers to previous criminal activity that could pose a liability to the company.
  • Employment history — By comparing previous employment records to the self-reported employment history on the application, employers can assess a candidate's experience.
  • Credit reports and financial information — A detailed credit analysis may not be appropriate or permitted for each candidate, but it may be relevant for executive-level jobs or positions that involve handling money.
  • Education background — This type of check verifies a candidate's educational credentials, which can be required in heavily regulated industries, such as insurance or public education.
  • Motor vehicle records — When employees are in positions where they may be responsible for driving company vehicles, employers can take steps to protect company assets by reviewing a candidate's driving record before finalizing a job offer.

Why are pre-employment background checks important?

Pre-employment background checks can be a quick and easy step that employers can take to improve the chances of making a great hire the first time. It's also a tool that employers can use to gather concrete, quantitative data on an applicant during a highly competitive hiring process. When employers invest in this process before hiring, the background checks can help employers to:

  • Avoid bad hires — Hiring the wrong candidate can be a drain on valuable company resources. Having to repeat the recruiting and hiring process can add considerable expense to a company's bottom line.
  • Ensure workplace safety — Employers have a responsibility to protect the safety and well-being of all their workers. Hiring a dangerous or threatening employee can jeopardize the safety of other employees within the organization, but background checks can help identify employees with a previous history of threatening behavior before they are hired.
  • Reduce liability and legal costs — Employee theft, property damage, and lawsuits arising from damages inflicted by employees are just some of the negative results that can cost companies billions of dollars each year. Effective employee screening can help avoid some of these issues and minimize the costs associated with them.
  • Verify a candidate's qualifications — Some industries have strict regulations on the qualifications for candidates. Thorough background checks can help verify these qualifications, and reduce costs associated with fines or legal action stemming from candidates working without the proper credentials.

Laws surrounding background checks

Different government agencies have addressed whether and for what purpose background checks can be used as a tool for employment and termination of employees. In many cases, local, state, or federal legislation and regulations may restrict the information employers are permitted to obtain prior to an offer of employment or may use in an employment decision

Fair Credit Reporting Act (FCRA)

The Fair Credit Reporting Act and similar state laws allow people a chance to rebut and  defend themselves against inaccurate, incomplete, or false background checks. Since background checks can influence job offers, housing and credit applications, and other aspects of a person's livelihood, the FCRA provides limited protections and potential recourse for individuals to ensure the accuracy of the information provided during the background check process. Employers must comply with the various notice requirements under the FCRA and applicable state laws when conducting background checks.

Equal Employment Opportunity Commission (EEOC)

The Equal Employment Opportunity Commission provides guidance to employers on how and to what extent employers can use information obtained from a background check to influence employment decisions. Specifically, the EEOC prohibits employers from discriminating during the hiring process on the basis of race, gender, age, skin color, disability status, or several other factors. Guidance provided by the EEOC outlines several practices, such as asking discriminatory interview questions, that are prohibited during the hiring process. In addition to FCRA and EEOC regulations, employers must comply with any state or local laws governing hiring and background check processes.

The process of running pre-employment background checks

When conducting a background check, you may need to gather information from multiple sources to obtain your candidate's information. To ensure your process complies with all applicable federal and state guidelines while also providing the needed information in a timely manner, you should take the following steps:

  1. Create a policy — Your policy should include any needed paperwork from the candidate, such as a disclosure and release form or a summary of rights.
  2. Get legal advice — Speak with an expert in pre-employment screening to identify any necessary steps that should be included in your process, and use this expert advice to determine best practices for handling negative findings when they occur.
  3. Use an FCRA-compliant background check service — Although there are multiple ways to obtain background information on individuals, not all services offer assistance with FCRA and applicable state regulations.
  4. Research Obligations: Be sure to research your obligations under  the FCRA and applicable state laws to help  avoid unnecessary penalties or legal risks.
  5. Notify applicants Employers will have to obtain written consent from applicants to perform a background check and the consent form must meet FCRA requirements.  You should inform applicants if a job offer is contingent on a pre-employment background check.
  6. Make a contingent job offer — By letting candidates know you are willing to offer them a position pending a background check, they are more likely to understand the time required to process the results. By making the offer contingent on the results of the background check, you are also protecting your company should you discover information that would change your hiring decision.
  7. Review the findings — Background check reports can be several pages in length and can take time to review. Explore these results carefully and determine whether the reports include anything that is cause for concern. Employers should also consider reviewing the results with their HR professional or legal counsel.
  8. Follow up on results —If you intend to withdraw the job offer based on the results of the background check you are required to send a pre-adverse action letter to your applicant along with a copy of the report. Give them an opportunity to respond before taking any adverse action. You may also want to consult with your legal team to confirm you are following all state and federal statutes.
  9. Recordkeeping — In compliance with the Fair and Accurate Credit Transaction Act, background check paperwork must be properly safeguarded to protect individuals' personally identifiable information (PII).  Consult with legal counsel on whether it may be helpful to save all records of conversations you have with applicants, including dates, times, and a summary of the conversation and how to keep these records confidential.

Conclusion

It can be challenging to capture the full range of information needed to successfully complete a pre-employment background check. Many companies choose to work with an employment screening resources (ESR) provider to conduct screening tasks such as tracing Social Security numbers, verifying Form I-9s and other submitted paperwork, conducting criminal and financial background checks, accessing civil and driving records, and conducting drug testing and industry-specific background checks. By establishing a clear background check plan and working with experts who specialize in employment screening, your company can minimize costs and delays associated with pre-employment background checks, while maintaining the highest standards for your hiring processes.

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* This content is for educational purposes only, is not intended to provide specific legal advice, and should not be used as a substitute for the legal advice of a qualified attorney or other professional. The information may not reflect the most current legal developments, may be changed without notice and is not guaranteed to be complete, correct, or up-to-date.

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