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Considering the candidate’s background is a no-brainer before making any personnel hiring decisions. It isn’t illegal to do a background check to find out about a person’s work history, education, criminal record, financial history, and medical history—in fact, it’s encouraged as a way to narrow down your candidate pool to the most worthy and reliable individuals. When doing background checks for employment, you need to consider several factors, including why they’re important, what they entail, and how to conduct them.
The 5 Best Companies for Employment Background Checks
Although not mandatory, background checks help you hire reliable and talented people and remove candidates who may hurt your business and brand. After an in-depth search into the best background check companies on the market, we identified the following five to be the most efficient and thorough:
- Intelius — Best for unlimited background checks
- GoodHire — Best for flexible pricing and intermittent use
- B&B Reporting — Best for next-day background check results
- Accurate — Most affordable background checks for small businesses
- Verifirst — Best background check service for property management companies
What Is a Background Check for Employment?
A background check is a vetting process employers use to verify a candidate is who they claim to be. It involves determining the validity of the information presented by the candidate when applying for the job and identifying any potential red flags before officially hiring them.
Why Is Running a Pre-Employment Background Check Important?
Comprehensive background checks for employment have a wide range of benefits, including increasing application quality, reducing workplace violence, and avoiding company losses and negative publicity.
Here’s a more detailed look at the background check benefits for employers:
Improved Quality of Hire
When you conduct a background check or hire a background check company to conduct one on your behalf, you’ll find better quality candidates due to fewer discrepancies and misstatements in job applications. Additionally, while people trying to hide serious offenses are discouraged from applying, those looking for a safe and positive work environment feel encouraged to apply.
All this together leads to substantial improvement in the quality of the applicant pool, giving you access to better, more trustworthy candidates.
Reduced Workplace Violence
Employment background checks filter out applicants that may present a threat to the workplace. Considering over 2 million American workers become victims of workplace violence every year, this is a significant advantage.
You can uncover past incidents and gain critical insights into a candidate’s behavioral habits. In fact, many background check companies do a comprehensive screening to detail safety and security incidents like domestic violence, minor results, harassment, threats, stalking, and emotional or physical abuse.
Lower Negligent Hiring Risks
Negligent hiring is always risky and can cause your company to be directly liable for your employee’s actions. Companies that neglect candidate background checks prior to hiring have consequently been held liable for the latter’s behavior.
If the law finds your company could’ve prevented a fatal incident by performing a background check, you’ll have to suffer immeasurable damage to your reputation and face severe financial penalties.
Improved Regulatory Compliance
When creating a screening solution, you must not only satisfy industry standards but also comply with state and federal regulatory requirements.
The problem here is these requirements vary from one state to another and by the type of position you’re hiring for, making it harder to keep up and risking non-compliance, which can lead to ongoing legal issues and hefty company fines.
Luckily, you’ll find several third-party background check companies with in-house compliance expertise to keep you on top of applicable rules and regulations.
Reduced Losses Due to Employee Dishonesty
Employee theft costs US businesses $50 billion annually, according to Statistic Brain. So you can imagine the consequences of occupational fraud and employee dishonesty on small businesses in terms of finances, productivity, reputation, morale, and public confidence.
Background checks for employment help prevent employee dishonesty. After the screening is completed, you have all the information about a future employee’s past issues related to safety, violence, drug abuse, and other red flags, helping you avoid future liability.
What Is Included in a Background Check for Employment?
There are several different types of background checks, but the type done for employment purposes focuses on the following information:
Social Security and Identity Verification
Searching extensive databases, such as Department of Homeland Security and Social Security Administration records, is a critical aspect of background checks for employment. It helps you to determine the validity of a candidate’s Social Security number, whether it belongs to them, and if it has been used in the past.
On the other hand, online identity verification focuses on verifying the candidate’s address and other information they provided in their job application to detect inaccuracies.
As an employer, you can get penalized and face negligent hiring claims if you know or should’ve known about your employee’s criminal background if the latter gets accused of any wrongdoing in the future.
Luckily, running a background check for employment reveals any history of criminal convictions at the county, state, and federal levels. The report should cover offenses like current pending charges, acquitted charges, misdemeanor convictions, felony convictions, and dismissed charges.
Background checks for employment also verify employment history. This way, you can confirm or deny the validity of a company and a candidate’s qualifications.
A credit check allows you to verify a candidate’s basic information (for example, name, address, and contact details) and how responsible they’re with money. This is particularly important if you’re hiring for a finance role that involves money handling.
What’s more, employment credit reports also include a list of past credit inquiries, identifying retailers, financial institutions, and other moneylenders that may have requested the candidate’s credit report.
If you want, you can also include drug testing as part of a background check for employment. This helps prevent the lack of productivity in the workplace and increases employee turnover rates by helping you make sound hiring decisions.
Motor Vehicle Record
If you’re hiring for a role that involves driving a vehicle, make sure you review the candidate’s motor vehicle records to check for bad driving habits, DUIs (driving under the influence), and speeding tickets.
How to Conduct a Background Check
Most businesses outsource background checks to third-party professionals, but you can also conduct one yourself.
Here’s how to go about it:
Step 1: Inform the Candidate About the Background Check
As per the Fair Credit Reporting Act (FCRA), you must notify the candidate you’ll be conducting a background check, outlining all the areas you’ll be checking. You also need to provide an attached document for them to sign electronically, confirming their consent to proceed with the background check.
Step 2: Review Applicable State Laws
Check your state’s specific laws and regulations before conducting a background check. Find out what information you can check and what information constitutes dismissal for a candidate within your state.
To get started, visit your state’s department of public safety website.
Step 3: Reach Out to Candidate’s References
Captain job applications, ask candidates to provide 2 to 3 references who can vouch for their qualifications and experiences.
Thereafter, email each reference to set up a phone call to discuss the candidate. Before getting on the call, prepare a list of questions to confirm or deny their skill sets and work ethic. Meeting references in person or doing a video call to verify their identity is less conventional but allowed.
Step 4: Use a Background Check Website to Review the Records
While hiring third-party professionals is expensive, you can improve the accuracy of your results by using a background check website at a fraction of the price.
Sign up with an online background check company to find evidence of a candidate’s criminal background and other civil records. You’ll have to pay a fee to access public records, but compared to hiring full-fledged professionals, the former is certainly more cost-effective.
Step 5: Set Up a Drug Test for the Candidate
If you’re hiring for roles where the candidate will have to care for children, drive a commercial vehicle, or work in a potentially dangerous environment, ask them to take a drug test to determine the safety of your other employees and customers.
Schedule an appointment with a doctor for a drug test on the candidate’s behalf, or have a certified professional collect the candidate’s sample in the office.
Step 6: Determine the Candidate’s Validity
After gaining access to the candidate’s background check documents, review them to determine whether they are worthy of working at your company.
If you don’t feel comfortable proceeding with the candidate based on the information you uncover, be sure to let them know. Then proceed with other candidates you think will better represent your company and do better at their jobs.
What to Do When a Candidate Fails a Background Check for Employment?
Criminal history, education discrepancies, poor credit history, false employment history, failed drug test…there are all kinds of reasons for a failed background check.
If you have to dismiss a person’s candidacy because of any one of these reasons, here’s how to proceed next:
Step 1: Review Company Policies
Ideally, your organization should have an employment screening policy outlining every aspect of a background check for employment, including Social Security number verification, education verification, past employment verification, criminal history, and credit history, among other factors.
Consider these terms carefully and equally with each candidate.
Step 2: Send a Pre-Adverse Action Notice
If you plan on not hiring a candidate based on background check results, you have to send them a pre-adverse action notice, along with a copy of the background check and a copy of “A Summary of Your Rights Under FCRA,” letting them know of your decision.
This gives the candidate a chance to review the results and respond to any questions regarding the information discovered from the background screening.
Download the required forms and templates.
Step 3: Give the Candidate Enough Time to Respond
Give the candidate some time to discuss the issues highlighted by the background check. A good rule of thumb is to wait for five to ten business days, depending on your jurisdiction.
Why? There have been instances where candidates have been victims of identity theft, which ended up harming their credit history or motor vehicle records. So it doesn’t hurt to allow the candidate to explain the discrepancies.
Step 4: Make the Final Decision
Hiring a candidate is at your sole discretion.
As long as you follow your company’s policies and employment guidelines set out by the Equal Employment Opportunity Commission (EEOC) to conduct individual employment assessments, you’re good to go.
Step 5: Send an Adverse Action Notice
If your final decision is to not hire the candidate because of a failed background check, federal law mandates you to send a final adverse action letter to the person, mentioning the findings of the background check as the reasons for rejection.
Be sure to stick to the letter of the law, especially when the candidate has a record of criminal history, to mitigate the risk of potential fines and legal action against the company.
Final Thoughts About Background Checks for Employment
Background checks are critical for effective and successful hiring. As a business owner or hiring manager, you need to conduct comprehensive background screening to protect your other employees, customers, and your business’s reputation.
Take the right step in this direction by signing up for reliable background check companies that can help you weed out ineligible candidates and identify top-quality hires.