Employment Background Checks

Formerly the domain of corporations, government, institutional and security fields, employment background checks are now common practice.

Pros and cons of employment background checks

Numerous factors have made this pre-employment practice more essential. Further, the Internet has made the investigation of public records easier, hence more affordable, often averaging $50 a person or less. This same technology allows small businesses to employ in-house investigations at an even a lower cost.

While security issues since September 11th have played a role in the increase of employment background checks, these are of little practical meaning to most small business. Not to say national security is less vital but rather it not in the forefront when evaluating potential employees. These investigations are often intended to thwart financial loss as well as protect a company's reputation and proprietary data, insofar as an employee's character and competency can be assessed. Some are performed as required by law. Commonplace concerns for conducting employment background checks include:

• Negligent hiring lawsuits
• Resume' or qualifications fraud
• Identity theft
• Expense involved for replacing employees
• Rising healthcare costs
• Federal and state laws
• Protection of children and the elderly
• Protection of sensitive data
• Protection of assets

From a business standpoint, not conducting employment background checks poses a considerable financial risk. One of the more costly concerns is negligent hiring lawsuits, and just one can ruin a company. These may arise when an employee injures someone or otherwise acts maliciously or carelessly in a way that results in physical, financial or other harm. If the employee is under-qualified or has a criminal record, and a reasonable investigation was not performed or ignored, a negligence lawsuit may arise as a result.

Negligence aside, some considerations are common sense, such as positions involving the care of children or the elderly, or individuals working with proprietary data or significant sums of money. Regardless of the position, employment background checks can provide business owners some peace of mind. Yet, significant drawbacks exist with this pre-employment process.

To fully appreciate the limitations of employment background checks, it helps to know what information can be collected, legally used or not – such as age discrimination. The extent of available data differs by location and variations in state law, as well as the consumer report provider. Generally pre-employment screens contain any of the following:

• Personal data (Social Security number, age, address)
• Driving and vehicle records
• Former Employers
• Credit/Bankruptcy records
• Criminal background
• Sex offender listing
• Former residences
• Civil court records
• Property ownership
• Professional licensing
• Character references and neighbors
• Military records

The following may be available to a more limited degree unless explicit consent is provided:

• Education records
• Medical records
• Workers' Compensation claims (following employment)

Some of the problems with employment background checks include:

• Inaccurate information: News reports of credit reporting errors and receiving the wrong employment background information entirely are on the rise. Identity theft plays a role in this problem as does the preponderance of inaccurate data.
• Time-limits: Many background reports, from credit to criminal, are limited to seven years. Alternatively, questions on applications, such as arrest history, have no time limits.
• Relevancy: Though employment background checks are useful, they are largely an inadequate indicator of character and competency unless outright fraud or a criminal background is found.
• Legalities: Before conducting an employment background check or using the information for hiring purposes, ensure that you are familiar with the Fair Credit Reporting Act and related employment law. Though loopholes exist, failure to notify applicants of obtaining and/or using investigative data properly, and within the confines of the law, makes a business owner vulnerable to legal repercussions.

Minimize the chances of turning away a potentially valuable employee by putting background information in context. For example, say you are considering hiring a Web designer. He has terrible credit and a few speeding tickets, but graduated with honors from a top art school, volunteers regularly for the Red Cross, and has a stable work history. In this case, the positives speak louder than the negatives.

Honesty is a primary characteristic to look for in an employee. If derogatory information exists but does not contradict the applicant's information, it may be worthwhile to discuss issues of concern.

If distinct contradiction or outright fraud is found, despite qualifications, this is not an employee you wish to have. However, if the candidate is potentially a worthwhile employee and surprisingly derogatory or false information exists, be sure to validate the accuracy of the report.

Review more information about your responsibilities concerning employment background checks at the Privacy Rights Clearing House. For information on your protection and rights as an applicant, view the section on jobseekers.

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