An Introduction to Background Checks for Employers

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For the new HR professional, and perhaps even for more seasoned HR managers, the process of conducting background checks can be a difficult one to manage. Corporate Screening, one of ERC's Preferred Partners, has provided us with some background knowledge to help us answer our key questions.

What is a background check? Why should my company conduct them?

Background checks help employers minimize risk for their company and their employees. They provide varying levels of information, depending on the type of position and job duties. Job applicants, current employees, and volunteers may all be asked to submit background checks... and for some positions, screening is required by federal or state law.

As emphasis on security & safety in the workplace heightens, numbers of employment background checks dramatically increases. Some points to consider when weighing the need for a background check include the following circumstances:

  • Recent child abuse and abduction cases have resulted in new laws for almost every state, requiring criminal background checks for those working with children. This move toward child protection now includes volunteers serving as coaches and troop leaders.
  • Terrorist acts have resulted in heightened security and identity-verification strategies by employers. Both potential candidates and tenured employees alike are examined with a new eye following September 11, 2001.
  • The Enron debacle and other corporate scandals have prompted a new degree of scrutiny in both professional and private life for executives, officers, and directors.
  • Unfortunately, resume fraud is a reality employers must face. HR professionals are becoming more alert to this fact and are wary of accepting a candidate's word at face value.
  • Federal and state laws often require background checks for certain jobs. These positions include anyone working with children, the elderly, or the disabled.
  • As the 'information age' has made it easier and less costly to conduct background checks, many employers find it more feasible to include screening in their hiring policy.

What are the different types of background checks?

Common types of background checks include:

  • Criminal record searches
  • Verifications
  • Driver history reports
  • Credit history
  • Reference interviews
  • Numerous public records

How do I know which candidates should be screened, and what type of screening to use?

Greg Dubecky, President of Corporate Screening Services, advises employers to work together with their background screening provider to design an appropriate program for their organization. Since every organization is a little different, each program needs to uniquely fit around the factors of your business - such as laws, regulations, company philosophies, and strategy.

He states, "Contrary to conventional thought, background screening is a very complex process that is highly regulated. It is one of many means employers may use to mitigate risk. Employers should not take lightly the process needed to determine if and how background checks can assist in overall corporate strategy."

What about temporary employees, independent contractors, and interns?

Employers should understand that each employee working in their organization could be a potential risk regardless of their schedule or status. Critical thought should be given to the organization as a whole in regard to how background checks can mitigate risk across the company.

A good rule of thumb is to always conduct a thorough background check on each new hire, including these groups. A consistent hiring/on-boarding policy is critical not only for organizational success, but also for safety.

What legal guidelines should employers know?

Though background screening is incredibly complex, listed below are some general primary guidelines to be aware of when creating your organization's policies:

  • Fair Credit Reporting Act
  • State consumer reporting laws
  • EEOC
  • Privacy laws
  • Industry regulation (i.e. Healthcare, Banking, Nuclear, etc.)

Also, some recent legal trends to consider include "ban the box" legislation. This prohibits employers from inquiring about criminal history during the early stages of the hiring process.

Who conducts background checks?

Since nearly 90% of employers conduct some level of background screening, it's clearly an effective means of decreasing risk. However, President Greg Dubecky of Corporate Screening warns that an improperly designed program can actually increase an employer's risk.

He explains, "The best way to mitigate risk is to always conduct a thorough background check and not rely solely on database information. Employers may want to use the following guidelines:

  1. Seek out a vendor with experience designing background check policies.
  2. Strongly consider a firm that is accredited by the NAPBS.
  3. Select a firm that will continue to educate you on changes in the screening industry.”

When to conduct and what to do about discrepancies

Employers should follow the EEOC’s guidance on the use and timing of criminal background checks, as well as numerous other statutes suggesting the background check process be pushed to the very late stages of the hiring process.

If a discrepancy (between information the candidate provided and what was found during the check) or criminal activity (i.e. felony, misdemeanor, or conviction) should be found, several items should be considered before an employer takes action. These items include legislation, regulation, and company philosophy.

Communicating background check results to a candidate

If your organization uses a consumer report from a Consumer Reporting Agency (CRA) – i.e. a background screening company – and it is used in any 'adverse action' (such as denying employment or promotion, reassigning or terminating employment), certain actions need to be followed. Doing so will protect your company, as well as the rights of the candidate on which the consumer report was based.

First, employers should provide the candidate with a 'pre-adverse action' notice. This consists of a letter to the individual indicating that adverse action may be taken as a result of the consumer report, a notification that the CRA did not make the decision to take adverse action, a notice to the individual of their right to dispute the completeness/accuracy of the report, and direct contact information for the CRA. Along with this notice, the employer must provide a copy of the consumer report and a copy of the individual's rights under the Fair Credit Reporting Act (FCRA).

Following the initial notice, the individual is afforded a reasonable amount of time to respond to the pre-adverse action notice. They can contact the prospective employer, or the CRA to dispute the results of the report. In general, a reasonable amount of time is considered to be 5-10 business days.

If the candidate doesn’t reply with intent to dispute the report within this time, the employer must send them a second notice. The second notice should indicate that the employer is taking 'adverse action' based on the report. Again, a copy of the individual's rights under the FCRA should accompany the report.

It's important to comply with these 'adverse action' provisions, since non-compliance could be penalized under the FCRA. Your organization should have specific procedures in place to ensure your company is following these critical steps as part of the on-boarding policy.

Want more?

For additional information about the latest in background check trends and legislation, view the Corporate Screening website and blog at:

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