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How to do an Employee Background Check

What You Need to Know About Conducting Background Checks

Have you thought about including background checks as part of your hiring process? Background checks are a common practice in a number of industries where employees have access to confidential information. This includes the banking and financial services industries, as well as the healthcare industry. If you’re wondering whether background checks are the right move for your business, check out our overview of the process below.

Determine why you want to do pre-employment background checks.

Background checks are an important process but they can take time and create risk. If you’re thinking about conducting them company-wide or for specific positions, you should know why you want to conduct one.

In many cases, the aim is to protect the organization or the people within it. An employer might not want someone handling large sums of money if they’ve been convicted of theft or fraud. An applicant with a history of abusing others probably shouldn’t be in the profession of supervising children or caring for elders.

If there’s no pressing need for background checks, however, you might want to avoid performing them. If you’re required or have a good reason to do so, you may proceed to the next step.

Learn the federal and state laws pertaining to background checks

Background checks are considered a type of consumer report under the Fair Credit Reporting Act (FCRA). They may include credit history and criminal records, as well as employment histories. Before getting a consumer report, you must inform the applicant or employee that you use information in their consumer report for decisions related to their employment, get written permission from the applicant or employee, and certify compliance with FCRA requirements to the company running the check. Check here to learn more information about these and other requirements under the FCRA.

The Equal Employment Opportunity Commission (EEOC), responsible for enforcing anti-discrimination laws, provides information on how to obtain and utilize criminal records. According to the EEOC you should:

  • Only inquire about felony convictions
  • Inform the applicant that a criminal record does not automatically bar employment
  • Ensure there is a legitimate business reason for requesting this information. You can learn more about these EEOC guidelineshere.

Additionally, each state has its own set of regulations regarding background checks. You can locate any needed state laws here.

Make the employment offer contingent on passing a background check.

Once you’ve chosen a lucky finalist for your position, you can issue an employment offer that’s contingent upon passing a background check. Essentially, you’re telling the potential new hire that they’ll get the position only if the background check turns up detrimental information. Making the offer contingent protects your business while also letting the finalist know exactly what to anticipate so they’re not taken by surprise.

Get written permission from the applicant

Before conducting a background check, you must obtain written permission from the applicant or employee if the information you need to get is considered a consumer report. If, however,

you’re merely conducting an investigative report based on personal interviews regarding the applicant’s character, general reputation, or personal characteristics, then you should inform them in writing that you requested this report within three days of doing so.

Decide whether the results would prevent employment

Before reading the report, you should decide what kinds of results would prevent a potential employee from moving to the employment stage. With these criteria in mind, you may evaluate the report to see whether you should continue with the hire or withdraw your offer.

The EEOC cautions employers not to discriminate when using background information. Employers, it says, should:

  • Apply the same standards to everyone, regardless of their race, national origin, color, sex, religion, disability, genetic information (including family medical history), or age (40 or older);
  • Take special care when basing employment decisions on background problems that may be more common among people of a certain race, color, national origin, sex, or religion; among people who have a disability; or among people age 40 or older;
  • Be prepared to make exceptions for problems revealed during a background check that was caused by a disability.

Move forward or withdraw the employment offer

If you want to withdraw a job offer after receiving the results of a background check, you must follow specific notification procedures under the federal Fair Credit Reporting Act (FCRA).

Before taking any action based on information in a consumer report, you must provide the applicant with a notice that includes a copy of the consumer report you used to make your decision, as well as a copy of A Summary of Your Rights Under the Fair Credit Reporting Act. This document should have been provided to you by the company that gave you the report.

“There are very specific notification steps required under the federal Fair Credit Reporting Act (FCRA) should you elect to revoke a job offer after receiving the results of the background check.”

Here are your next steps:

  • Inform the applicant of the adverse action either orally or in writing.
  • Provide them with the name, address, and phone number of the consumer reporting company that supplied the report.
  • Provide a statement that the company that supplied the report didn’t make the decision to take the unfavorable action and cannot give specific reasons for it;
  • Inform the applicant of their right to dispute any inaccurate or incomplete information and get an additional free report from the company if the applicant asks for it within 60 days.

Keep the report on file

After a background check has been completed or after personnel action is taken, records must be kept for one year. If an applicant or employee were to file a charge of discrimination against you, you must keep the documents until the case is resolved.

After that time, you should securely dispose of the report and any information gathered from it. Securely disposing of the information means doing so in a way that it cannot be read or reconstructed. We recommend shredding these items.

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