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The Importance of Background Checks for Companies

iconHiring Tips icon5 min read
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Background checks, also known as consumer reports, are a key component of the hiring process. They can include information from a variety of sources, including credit reports and criminal records. Background checks are often used as a form of pre-employment screening to find out a candidate’s criminal, financial, and employment history. When it comes to selecting the best candidate, employers often like to go deeper than just looking at an application or going with what the candidate says during an interview. Not only do background checks help employers know more about a candidate's history, but they can also ultimately save the company time, money, and stress when it comes to hiring.

So what exactly are employers looking for when conducting background checks? 

INFORMATION FOUND IN BACKGROUND CHECKS

There are many reasons for employers to conduct background checks. Jobs that involve work with children, elderly people, those with disabilities, or involve handling confidential information are examples of jobs that require background checks. Depending on the reason for the background check, different data will be available. For employment screening, some of the information that can be found is the following:

  • Criminal Records

  • Sex Offender Records

  • Legal Working Status

  • Social Security Number

  • Driving Records

  • Education Records

  • Credit Reports

  • Bankruptcy Records

  • Court Records

  • Drug Test Records

  • Military Records

  • Workers’ Compensation

  • Incarceration Records

  • Property Ownership

Before making any employment decisions, including hiring, retention, promotion or reassignment, make sure to comply with the Fair Credit Reporting Act (FCRA). The FCRA has national standards for employment screening, which means that there is some information that does not appear in background reports. However, the law only applies to background checks that are performed by an outside company, meaning the law does not apply in situations where the employer conducts background checks in-house. The FCRA states that the following information cannot be included in background checks or consumer reports: 

  • Bankruptcies after ten years

  • Civil suits and records of arrest after seven years

  • Paid tax liens after seven years

  • Accounts placed for collection after seven years

  • Any other negative information after seven years (except criminal convictions) 

These restrictions do not apply to jobs with an annual salary greater than $75,000. Keep in mind that laws vary from state to state, so employers should always make sure to do their research before running a background check on an applicant or current employee. 

INFORMATION FOR EMPLOYEES

It is important for employees to know whether the employer decides to conduct a background check, as the employee has legal rights. The Federal Trade Commission (FTC) enforces a federal law that regulates background reports for employment, and the Equal Employment Opportunity Commission (EEOC) enforces federal laws against employment discrimination. Depending on the city or state, there may be other rules, so it is always a good idea to check with your specific state.

A criminal record does not necessarily mean that a person can never get a job. The EEOC has stated that the use of criminal history may sometimes violate Title VII of the Civil Rights Act of 1964, and it happens when employers treat criminal history differently for different applicants. The EEOC also says that a person cannot be denied employment based solely on a criminal record. Instead, the employer should make a decision based on the necessities of the business, which requires the employer to consider the nature and gravity of the offense(s), the time that has passed since the offense was made or the completion of the sentence, and the nature of the job the person is applying for. In fact, the EEOC has extensive guidelines for employers considering the criminal history of an applicant. Certain states have adopted a Ban the Box policy and fair chance policies.

If an employee thinks a background check was discriminatory, they may contact the EEOC by visiting their website. The EEOC investigates and mediates charges of discrimination in the workplace, and they also file lawsuits in the public interest. 

If an employer got a background report without permission or rejected an applicant without sending the required notices, then the employee may contact the FTC by visiting their website

INFORMATION FOR EMPLOYERS

Employers need to ask for the applicant’s consent before running a background check. Any information that is received should never be used to discriminate, in violation of federal law. Before running a background check, an employer should research what information will be available, as information they are allowed to look at varies from state to state. The EEOC requires employers to make sure they are treating everyone equally. Employers should never make a hiring decision based on a person’s race, national origin, color, sex, religion, disability, age, or any other genetic information. Additionally, the FTC says that if an employer gets someone’s background information, such as credit or criminal history, there are additional procedures the FCRA requires beforehand:

  • Employers need to get the applicant’s or employee’s written permission to do the background check.

  • Employers need to let the applicant or employee know that they might use that information for decisions about their employment. This notice must be in writing and cannot be on an employment application. 

  • Employers need to certify the company they are getting the report from, that they have notified the person and have their permission, that the employer has complied with all the requirements, and that they will not discriminate against the person or misuse the information obtained.

Depending on how much information is being requested, a background check can take longer to process. In most cases it takes anywhere from three days to one week, while others can be processed instantly. The best way to get a background check is to request it from an FCRA compliant employment screening company such as our partner, Verified First. Keep in mind that no good screening company will release a report for free. Free background checks are usually incomplete or inaccurate. 

When it comes down to it, employers should always be thorough during the pre-employment screening process, and background checks are what make that possible. By conducting background checks, you can nurture a positive work environment staffed by qualified employees.

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