In the current economic environment, businesses are trying to cut expenses wherever possible. One large cost is hiring: recruiting, interviewing, vetting, and training new employees can add up quickly. The repercussions of hiring the wrong person can be even more costly.
One of the most important elements of hiring is performing a background check. A single poor hiring decision can be very costly to most businesses and can affect whether a business fails or thrives. Thirty percent of small business failures are directly caused by employee theft, according to the U.S. Chamber of Commerce.
Pre-screening potential employees through a background check is a cost-effective tool to protect your business, reduce the risk of hiring unsuitable employees, and help ensure smart hiring decisions.
Liability Protection. Small businesses sometimes skip background checks because they trust employees or do not understand the legal liabilities of not screening hires. Skipping checks can open the door to costly legal liability if an employee harms a customer or has a history of wrongdoing. Insurance and legal exposure for hiring practices are important considerations; for more information see Hiring Employees and Employment Practices Liability.
Reputable Vendors. Buying instant public records from a database is not the same as a background check and can still leave you liable. Many public databases do not fact-check or update records regularly.
To protect your business, employees, and customers, choose a reputable background screening company that verifies and updates data. Match the vendor’s services to your business size and needs. Consider vendors with a staffed toll-free number and request customer reviews or references before you commit. For coverage and service options related to background screening, see Background Screening Services Insurance.
The Fair Credit Reporting Act. Inaccurate data can appear in background checks, and employers can violate applicants' privacy rights. The Fair Credit Reporting Act (FCRA) requires employers to obtain written consent from applicants before running a background check and to notify applicants about any consumer-report information used in hiring. Problems often arise when employers rely on raw database pulls rather than compliant screening reports.
Only Purchase Needed Information. Some vendors will try to sell extensive records at high prices. If your business requires extensive screening, that may be appropriate. More often, a basic background check provides the necessary information without extra cost.
A Web Search Can Supplement Background Checks. Social network profiles, blogs, and personal websites can show how someone presents themselves, but online content can be misleading and should never replace a proper background check. Many employers use online searches to supplement formal checks and to learn more about a candidate’s interests or professionalism. For guidance on hiring and workplace safety, consider resources such as Workplace Safety and Hiring Practices.
When in doubt about your hiring practices or required coverages, discuss your situation with your insurance representative or talk to an agent who can help you evaluate risks and options.
Frequently Asked Questions
How far back can a background check go?
It depends on the type of check and local laws; criminal records and employment verifications have different timeframes and restrictions.
Do I need written consent to run a background check?
Yes. Federal rules generally require written consent from the applicant before you run a background check through a consumer reporting agency.
Can I rely on free online searches instead of a formal background check?
No. Online searches can supplement but should not replace verified, up-to-date background screening from a reputable vendor.
What should I do if a background check contains incorrect information?
Provide the applicant the opportunity to dispute inaccuracies and follow FCRA procedures for resolving and correcting any errors.