Background checks were once a practice employed only by sophisticated human resources (HR) departments. However, today, background checks are a more mainstream practice—and mandatory for all smart business owners.

Misrepresentation about prior job responsibilities and achievements is altogether too common a practice, with experts suggesting that about 50 percent of the reference checks reveal differences than what's stated on the resume.

When employers take into account the risks of a bad hire, background checks become even more important. Bad hiring decisions can affect a company’s finances as well as the morale and productivity of current staff. The US Labor Department estimates the cost to replace an employee is 30 percent of that person’s salary.

Items Included in Standard Background Checks

Background checks can range from the simple verification of Social Security numbers and driver’s license records to complex credit and criminal record checks. In certain industries, more extensive checks are warranted. For example, if an employee will handle money, a credit check makes sense.

If an employee will work with children, enter customers’ homes or provide healthcare, checks of criminal records and sex-offenders lists are very important considerations and are required in many states. If the company is in a technical field, state licensing records and verification of education may be important.

Smart employers will determine the scope of the position and the various background checks needed before beginning the process.

Obtaining Background Checks

Obviously, the time and energy needed to conduct background checks is extensive. Legal experts recommend assigning this task to a professional, since there are numerous federal and state laws governing the background check process. Business owners who conduct their own background checks can be held liable if a criminal record is missed or the background check is not complaint with state or federal law.

Lawyers also warn against impermissible use of data. Employers who purchase public-record information must be aware of the legal use of information under Equal Employment Opportunity Commission (EEOC) regulations and the Fair Credit Reporting Act, which applies to criminal and credit background checks provided by a consumer reporting agency. Many databases are compiled using records that may not be provided by the courts and, therefore, may not be accurate.

Outsourcing is a great option. Companies that provide a full range of human resources services, such as professional employer organizations (PEO), can help guide small- to mid-sized businesses through the process.

PEOs will typically contract with a company that specializes in performing background checks and help businesses make the right hire decision based on the background check results. Typically, PEOs can provide access to key areas of recruitment that go far beyond the surface, such as reviewing employment and personal reference checks, criminal records, education verification and workers’ compensation claims. The process usually takes seven to 10 days and can cost about $150.

 Vol 4, Issue 5