Background Checks: What Every Employer NEEDS to Know

Introduction

Background checks are an essential part of the hiring process, ensuring that you bring the right people into your business. They help you verify a candidate’s history, previous employment, and ensure a safe working environment. With over 25 years of experience in recruiting, I’ve seen the good, the bad, and the ugly when it comes to background checks. Let’s dive into everything you need to know about conducting HR-compliant background checks.

Understanding Background Checks

What is a Background Check?

A background check is a review of a person's commercial, criminal, and (occasionally) financial records. They help employers confirm the validity of information provided by candidates and uncover any potential red flags.

Personal Anecdote: I once worked with a small retail business that skipped background checks for a few hires. Unfortunately, one new hire had a history of theft, which led to significant losses. Implementing thorough background checks afterward helped them avoid similar issues.

Types of Background Checks

There are several types of background checks, each serving a different purpose:

• Criminal Background Checks: These reveal any criminal history and are crucial for positions of trust.
• Employment and Education Verification: Confirms the accuracy of a candidate's work history and educational background.
• Credit Checks: Often used for positions that involve financial responsibilities. I recommend proceeding with caution as there are often legal constraints.
• Drug Testing: Ensures a safe and productive workplace, particularly important in industries like transportation and manufacturing.
• Reference Checks: Provide insight into a candidate’s previous job performance and character from past employers or colleagues.
  

Legal Considerations and Compliance

Key Legal Requirements

Understanding and complying with legal requirements is crucial when conducting background checks. The Fair Credit Reporting Act (FCRA) is a federal law that regulates how background checks are conducted and ensures the accuracy and privacy of the information.

Fair Credit Reporting Act (FCRA)

Requires employers to obtain written consent from candidates before conducting a background check. It also mandates that candidates are informed if the results of a background check will negatively impact their employment.

Additionally, be aware of state-specific regulations and "ban-the-box" laws. These laws prohibit employers from asking about criminal history on job applications.

Regulations Preventing Certain Types of Background Checks

It's important to be aware that some regulations restrict certain types of background checks or the use of specific information in making employment decisions. Here are a few key examples:

• Marijuana Use: Many states, such as California, New York, and Illinois, have laws that prevent employers from considering marijuana use in pre-employment drug tests, especially if the use was during off-duty hours. This reflects changing societal attitudes and legal statuses of marijuana.
• Credit Checks: Some states, like California and Connecticut, limit the use of credit checks in hiring decisions, typically allowing them only for specific positions where financial responsibility is crucial, such as in banking or managerial roles.
• Criminal History: "Ban-the-box" laws in various states and municipalities prohibit employers from asking about criminal history on initial job applications. Furthermore, some jurisdictions, like Massachusetts and Washington D.C., require that criminal history inquiries be delayed until after a conditional job offer is made.
• Salary History: Although not directly related to background checks, it's worth noting that several states and cities, including Massachusetts and New York City, prohibit employers from asking about a candidate’s salary history. This aims to reduce gender and race-based wage gaps.

Personal Anecdote: I once consulted for a company in Colorado that has specific restrictions on considering marijuana use in employment decisions. By updating their policies and training hiring managers, we ensured compliance with state laws and avoided potential legal pitfalls.

Staying informed about these regulations is critical. Regularly review your background check policies to ensure they comply with federal, state, and local laws. Consulting with legal experts can also provide clarity and help you navigate the complexities of compliance. By understanding and adhering to these legal considerations, you can maintain a fair, compliant, and effective hiring process.

Avoiding Discrimination

It’s vital to ensure that your background check process is fair and non-discriminatory. The Equal Employment Opportunity Commission (EEOC) provides guidelines to help employers avoid discriminatory practices.

Tip: Always apply the same standards and processes to every candidate to avoid any claims of discrimination. For instance, if you run a criminal background check on one candidate, you should do the same for all candidates for the same position.

Implementing HR Compliant Background Checks

Developing a Background Check Policy

Start by creating a clear and comprehensive background check policy. This policy should outline the types of checks you will conduct, the positions for which they are required, and how the information will be used.

Personal Anecdote: I helped a small business develop a background check policy after they faced a lawsuit for inconsistent hiring practices. Establishing a clear policy helped them avoid future legal issues and ensured a fair hiring process.

Choosing the Right Background Check Service

Selecting a reliable background check service is crucial. Look for providers that are accredited by the National Association of Professional Background Screeners (NAPBS) and offer compliance with FCRA regulations.

Tip: Evaluate services based on their accuracy, turnaround time, cost, and customer support. This ensures you get reliable information without unnecessary delays or expenses.

Conducting the Background Check Process

Obtaining Consent

Before conducting a background check, it’s legally required to obtain written consent from the candidate. This involves informing them about the check and how the information will be used.

Tip: Use a standard consent form and make sure candidates sign it before you proceed with the background check.

Reviewing Background Check Results

When you receive the background check results, review them carefully. Look for discrepancies or red flags, but also consider the context. For example, a minor offense from many years ago may not be relevant to the candidate’s ability to perform the job today.

Personal Anecdote: One of my clients found a minor discrepancy in a candidate's employment history. Upon further investigation, it turned out to be a clerical error. Taking the time to verify such details can prevent losing a potentially great hire over a simple mistake.

Best Practices for Background Checks

Ensuring Accuracy and Fairness

To maintain high standards, follow these best practices:

• Double-check Information: Ensure the information you gather is accurate and up-to-date.
• Stay Consistent: Apply the same criteria to all candidates for a particular role.
• Communicate Clearly: Inform candidates about the process and any findings that may affect their employment.
  

Keeping Records

Maintain detailed records of all background checks and related documents. This not only ensures compliance with legal requirements but also helps protect your business in case of disputes.

Tip: Use secure, organized systems for storing these records, and be aware of the legal requirements for record retention.

Common Challenges and How to Overcome Them

Handling Discrepancies

When discrepancies arise, communicate with the candidate to clarify the information. This can often resolve misunderstandings or errors.

Personal Anecdote: A client once discovered a discrepancy in a candidate’s education history. After discussing it with the candidate, they realized it was a mistake on the part of the background check service. Clearing up the confusion allowed them to proceed with a valuable hire.

Navigating Legal Changes

Stay informed about changes in employment laws and regulations to ensure your background check practices remain compliant. Subscribe to HR newsletters, attend industry conferences, and consult with legal experts as needed.

Routine Auditing and Consulting with HR Experts

Identifying and Closing Gaps

Routine auditing of your hiring practices can help identify and close any gaps. Regular audits ensure that your practices are compliant with current laws and aligned with your company’s commitment to diversity and inclusion. Consulting with HR experts can provide valuable insights and recommendations for improvement.

Why It’s Important

Routine audits can uncover unconscious biases or overlooked areas in your hiring process. HR experts can offer fresh perspectives and industry best practices, helping you stay ahead of potential issues.

Personal Anecdote

I once worked with a small business that was confident in its non-discriminatory hiring practices. After conducting an audit, we discovered several areas that needed improvement, such as outdated job descriptions and inconsistent interview procedures. By addressing these issues, they were able to improve their hiring outcomes significantly.

Conclusion

Background checks are a crucial component of the hiring process. They help ensure that you hire trustworthy, qualified candidates while maintaining compliance with legal requirements. By following these steps and best practices, you can implement an effective and compliant background check process that supports your business’s growth and success.

Call to Action

Ready to improve your hiring process? Start by developing or reviewing your background check policy today. For more resources and insights on creating an inclusive and compliant workplace, check out our other blogs or schedule an HR consultation.