A good background check is a protective measure that allows employers to make a fully-informed decision on a job candidate. Whether your business is hiring for an entry-level position or for a position of trust, these checks will help you identify potential issues up front as opposed to leaving unpleasant surprises in the future.
There are several components to a good background check. Each of these parts provide different bits of information to help employers gain a better understanding of who an applicant is and if there are any issues. However, you also need to make sure that you’re following legal guidelines while you investigate candidates’ backgrounds as well. Keep reading for a breakdown on background checks for small businesses.
How To Maintain Background Check Compliance
In general, background checks are regulated by the Fair Credit Reporting Act (FCRA) and the Equal Employment Opportunity Commission (EEOC). One FCRA requirement is that you notify job candidates that you will perform a background check and have them sign off on this before you can turn to a Consumer Reporting Agency (CRA) to begin any checks or searches.
The FCRA also requires employers to take certain steps if they decide not to hire, promote, or retain a job candidate, also known as adverse actions, due to information uncovered in a background report. First, an employer must notify the subject of the background check. This can be done orally, in writing, or electronically. Second, an employer must provide this person with an adverse action notice. According to the Federal Trade Commission, this notice includes:
- The name, address, and phone number of the consumer reporting company that supplied the report
- A statement that the company that supplied the report did not make the decision to take the unfavorable action and can't give specific reasons for it
- A notice of the person's right to dispute the accuracy or completeness of any information the consumer reporting company furnished, and to get an additional free report from the company if the person asks for it within 60 days
Another important detail to note is that some history may be too old to be picked up during a background check. The FCRA notes that “in most cases, a consumer reporting agency may not report negative information that is more than seven years old.”
What You Should Include In Background Checks
A comprehensive background check should account for a variety of red flags. Small businesses should consider including the following types of checks whenever they investigate a potential employee’s background.
Social security validation
Tracing a social security number is a good place to start a background check. This process allows employers to complete a couple of key tasks:
- Verify that a candidate's social security number is legitimate
- Uncover any additional aliases or name variations used by the candidate in the past, along with dates of birth and addresses associated with the number
These details can help uncover any criminal records or other unsavory information that wouldn’t normally fall under the name given by the candidate. Traces can be performed through the Social Security Number Verification Service.
Criminal records check
If an employee has a criminal history, you’ll want to know. There are three variations of criminal records checks that will provide insight on whether an applicant has been in trouble with the law.
- National Criminal Record Database (NCRD) search – The NCRD houses millions of searchable criminal records and sex offender registries, which can quickly point out any red flags. While an NCRD background check is a good starting point, these screenings may not include every jurisdiction or not offer enough detail for your needs.
- Statewide criminal records check – These checks narrow down your search to a specific state, which can offer more detailed information about any potential felonies or misdemeanors.
- County criminal records check – While county criminal background checks cover the smallest geographic area, they can offer the greatest amount of detail, including the places that an applicant with a criminal record has lived or worked.
Employment history
According to CNBC, 78% of candidates either misrepresented themselves on their application or would consider lying on their resume. An employment history check can help you verify job titles, dates of employment, the reason someone left a job, and rehire eligibility. Employer verification can be done through a CRA and calling a candidate’s references.
Motor vehicle report
This report allows employers to verify a candidate’s driver’s license verification and review driving records. According to the DMV, this information can include:
- Past and current driver's license statuses including suspensions, revocations, and cancellations
- Driver's license class
- Special driver's license endorsements
- Any restrictions on your license
- Traffic violations, such as:
- Traffic citations
- Vehicular crimes
- Accident reports
- Driving record points
- DUI convictions
This information is crucial for employers hiring a driver, although it can be insightful for any other job candidates as well. Motor vehicle screening services can be completed by a consumer reporting agency or through your state’s driver’s license agency, which can be found via the DMV.
U.S. terror watch list check
In addition to criminal records, background screenings can also include a review of the U.S. terror watch list. Third-party checks can compare candidates to various government watch lists, which can be important for any jobs where security is involved.
Drug testing
While drug testing is not technically a part of a background check, it’s commonly done in conjunction with pre-employment screening. In addition, past drug-related offenses can also surface during criminal record checks.
There isn’t a single, comprehensive law that covers drug testing, so you’ll need to review your state’s specific drug testing regulations for specifics on what is and isn’t restricted. The American Civil Liberties Union keeps a list of each state’s regulations online.
How To Run A Background Check
Running a background check is a multi-part process that requires some initial planning and consistent application. The following five steps will help your company lay the groundwork for pre-employment background checks.
1. Have a background check policy in place
A written background check policy makes it easier for companies to lay out guidelines for a fair, consistent process. This policy should include the following details:
- Which background checks your company will conduct
- How and when the company will conduct these screenings
- How the results of these check will be used in employment decisions
- The responsibilities of the hiring managers and HR team when it comes to the screening process
2. Choose a background check partner
There are several professional background check companies that provide screening services, but not all of them are right for your business. Narrow your search to FCRA-compliant partners who can scale with your business and offer a range of screenings that will help you make the most informed hiring decision.
3. Notify candidates of the background check
As mentioned above, it’s essential to notify candidates of any background checks. Employers must also give candidates the aforementioned adverse action notice and have them sign a release form for any screenings before they begin.
4. Allow for explanation
If a candidate’s background check uncovers some information that would impact your offer of employment, give them a chance to clear any mistakes or explain the situation. Employers are required to allow candidates to review their background check results and file a dispute with the screening service if they choose to go that route.
In addition, there are candidates who simply want to be honest and open about their past. For example, an applicant with a past misdemeanor could have learned from their mistake and be a great fit. That decision comes down to the employer, but it’s important to give employees the ability to exercise their FCRA rights before you make a call either way.
5. Make a decision
Once you have all the necessary information, it’s time to make the best call for your company. If the candidate is the right fit, then you’re all set to make an employment offer and prepare for the onboarding process.
How Long Does A Background Check Take?
On average, a typical background check is completed in three to seven days. There are times when checks are delayed due to incomplete or inaccurate check request forms or release forms. However, the majority of checks should be complete within a week. One exception is that any FBI checks can take around 30 days, but most jobs won’t require that type of timeframe.
Can A Background Check Be Done Before A Job Offer?
While background checks are traditionally done after an employer selects a final candidate, there is no federal law that prevents employers from running checks before an employment offer is made. There are certain state laws that dictate when you can run background checks during the hiring process, along with which types of checks are allowed. Make sure to check your local laws before if you want to test early background checks.
Protect Your Business with Proper Background Checks
While we highlighted several areas that should be included in a background check, there are several other areas that may be important depending on the nature of a business. Financial institutions may want to run a credit report. Other companies may want to verify an applicant’s educational degrees and school history. The answers to these inquiries are crucial, as a bad hire can lower morale, hurt company productivity, and cost as much as three times the salary of the person being replaced.
Regardless of how much an employer decides to include, a thorough background check is a complicated process that can pull business owners away from other important tasks. As a Professional Employer Organization, GMS has the human resources experts to manage the background check process and many other critical HR functions. Contact GMS today to talk to one of our experts about human resource outsourcing and how it can save you time and money.