Protect Yourself: How to Run Background Checks on Employees

small-business-employee-background-checksEmployers are running background checks more frequently than ever. Background and reference checks help to ensure that new employees don’t present a risk to the company or its workers and are also used to confirm information provided by prospective employees.  Background checks are an important way of conducting the necessary due diligence, but must be handled with care and within the bounds of legal requirements.

Depending on the type of business and the nature of the jobs for which employees are being hired, employers can find themselves walking a fine line between legitimate checks and ones that may be seen to be unreasonable invasions of privacy.  So employers should protect themselves by learning what types of background checks are legal to do and how to handle them properly.

The advent of Google and other internet search vehicles has made information on individuals almost too available and also may be of questionable accuracy. While conducting background checks is considered to be a necessary business function these days, employers need to be careful about the extent and type of information they gather on an individual.  Web-based background information may be helpful, but it is best to use a reputable credit or background checking company for any serious employment searches.

Taking into consideration the type of position that is being filled, employers should be sure to sure adopt a sensible approach to their background checks and to limit to information that is relevant to the business and employment position.

Know the Law

This is definitely an area of Employer Beware. While federal laws and regulations form the basis of many of the hiring practices with which employers must comply, each state has layered on its own set of rules which must also be followed when hiring.  Employers should seek the counsel of an employment attorney or other employment law specialist when developing their hiring procedures and paperwork. This is especially important with credit or background check procedures, as there are myriad different laws and regulations that apply. Employment law is also a litigious area, so employers should take care to know their rights as well as the rights of prospective hires.

Conduct a Legitimate and Sensible Check

Employers who adopt an aggressive and intrusive approach to gathering information may find themselves at odds with the law and face possible lawsuits from prospective employees who feel the background check exceeded the necessities for the job. In such cases, the employer will find itself having to defend the reasoning for the search and, if it is found that the search was improperly handled and/or not appropriate for the job, an employer could be subject to fines or damages.

Guidelines for Keeping it Legal


Get Consent

Above all else, a company must get the consent of applicants before it looks into any aspect of their background.  This also serves the purpose of letting job-seekers know that a background check will be done and thus they have the option of withdrawing from the application process.

Consent can be done during the application process or at the point when you have developed a short list of candidates. But consent should be obtained before running any search. Searches into sensitive areas such as credit histories, educational transcripts, driving records, drug tests, and court records require specific consent for each type inquiry.  And remember to get the consent in writing, so you have proof in the event there is ever a question.

Keep it Work-Related

The amount and type of information being gathered should be directly related to the position being filled and the type of business.  Many positions, especially those that require bonding, may require a search of court records, for instance. However, if the position is not one that requires the handling of money or access to sensitive data, such a search may not be necessary or reasonable. 

Keep it Sensible

Many employers may feel that they can’t be too careful when selecting their employees.  But employers should balance their need for prudence with common sense.  Not only should the information be work-related, it should be considered necessary for legitimate risk-management purposes.

Be Consistent

Set up business policies that allow you to implement your background check requirements in a way that is not discriminatory. Again, have the policies in writing and keep excellent records showing how you implement the policies.

Be Informed

Employment law and regulations are complex. In addition to issues around background checks, there are federal and state laws related to wages and hours, disabilities, benefits, workers compensation, worker safety, age, sex, etc., etc. In short, there are dozens of ways you can create a problem for yourself and your business. So get appropriate legal or other counsel about the requirements in your state before you hire. And then follow the rules consistently to minimize any exposure to employment liability.

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