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Employee Background Check Tips

General Business News

October 2015

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Employee Background Check Tips

Performing due diligence is the cornerstone of any business decision, including who to hire. When hiring an employee or an independent contractor, running a background check – which may include a criminal background check, work and educational history, among other components – can help ensure your next hire will be a good fit. But what are some obligations that employers must follow?

How to Obtain Permission to Run a Background Check

While background checks vary according to state and federal laws, including the Federal Credit Reporting Act, there are some general recommendations and legal requirements that must be followed. Employers must request the authorization from each prospective employee on a separate document. Employers are also required to inform potential candidates they have the right to learn about the background checks if interviews with other individuals are included. Guidelines also require employers to produce a hard copy of the background check results for the candidate prior to any negative determination with respect to employment, and advise each candidate as to their rights and the protocol they should follow to challenge any information that is in error or is incomplete.

What’s Checked

Depending on state laws and the individual candidate’s job role, a background check can be quite expansive. Criminal history is a major component of a background check, though the types of crimes disclosed and time frame covered can vary by state. Credit checks also may be part of an employee background check, which may provide a candidate’s payment history or defaults, including any legal action resulting from lack of payment.

An important component related to checking a candidate’s credit history is the nature a negative indicator. For example, is it due to a single late payment of a utility bill, a medical emergency that resulted in large bills, or the result of a large credit card bill sent to collections for non-payment which ultimately led to court proceedings?

The latter scenario may be interpreted as an irresponsible or untrustworthy candidate – and possible predictor of how they may perform on the job. Other records available in a background check may include the candidate’s education, professional licenses, driving record and drug testing, among others.   

Background Check No No’s

It’s against the law to perform a background check on candidates and current workers when employers are exclusively seeking their country of origin, gender, age (40 years and older), physical or mental disabilities, and race, among others.

Complementing the Background Check

Whether the background check is run in-house or through a third-party contractor, another way to check a candidate is to scrutinize their resume and online presence. Calling a candidate’s college or university to verify a degree and going online to verify if a license is active are two easy ways to determine a candidate’s trustworthiness. Performing an online search for the candidate’s social media presence can determine their judgment based on posted photos and comments. You also may be able to determine if he or she is a well-rounded person based on extra-curricular interests and hobbies.

Mistakes to Avoid During a Background Check

Mistakes and oversights are known to occur during a background check. Checking records exclusively through national or federal criminal databases can miss records in state, county, and town or city files. Performing background checks on permanent staff is the norm for many companies, but a business also can have its files and physical premises compromised through independent contractors or seasonal employees.

Crossing your t’s and dotting your i’s during an employment check can vet an employee to make sure they are a good fit for the organization.

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These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact their CPA regarding the topics in these articles.

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