Learning Center

Background Screening 101

What you need to know before choosing a background screening company and running your first background check

What is a background check?
When most people think of a background check they think of a simple criminal history check. In reality, a background check is much more than that. It’s the process by which you find your best candidate by looking at, yes, criminal records, but also education and employment history, civil records, references, etc. Each is a very important piece of the puzzle.
A background check helps your company stay safe through the criminal history check. It helps ensure that applicants can do what they claim they can through employment and education verification. It verifies that applicants are who they claim to be and aren’t wanted internationally. Background screenings, background checks, pre-employment screenings – call them what you will, they help protect your company, your employees, and your clients.

Why should I run background checks?
First and foremost, you should run background checks to help keep your clients, your employees and your business safe. Lack of background checks, or poorly done background checks, can lead to horrific crimes. The sad fact is that people rape, people murder, people steal. You don’t want anyone to experience that, but you have a responsibility to protect your clients and your employees. Protection of your employees is imperative in any business. A 2005 survey found that 2.3% of all businesses experience some form of co-worker violence, ranging from .6% to 8.1% for businesses with up to 250 employees and up to 34.1% for businesses with 1000+ total employees. In addition, a 2006 survey discovered that 13% of all workplace fatalities were caused by assaults and violent acts. This includes homicides, which accounted for 9% of all workplace fatalities.

Another very important factor is protection of your customers. In an article appearing on bnet, the Journal of Business and Entrepreneurship, the author cited a case in which an unnamed company hired Jesse Rogers as a home healthcare aide without running a background check. Rogers, who had a number of larceny convictions, killed the 32-year-old quadriplegic and 77-year-old woman he was supposed to be caring for in an attempt to cover up additional thefts.

Claiming that the failure to run a background check was negligence in hiring, the parents of the 32-year-old successfully sued the company for $26.5 million in 1999. Even aside from lawsuits, failure to complete background screenings can cost the company. According to the 2010 National Retail Security Survey, 45% of all retail shrinkage is due to employees - an annual price tag of about $15.9 billion. Moreover, the same study found that the average employee theft was over $960, while the average shoplifting incident was just $337.
In addition, a non-industry specific study released in late 2008 found that 24% of respondents saw a rise in employee theft following the economic downturn.

Monetary repercussions can come through more circuitous routes as well. According to the book Freakonomics, an estimated 50% of the population lie on their resumes. In addition, according to available data, about 50% of all references checked in 2004 contained inaccurate information.

These cause monetary loss when your new employees cannot perform the services they claimed they could, or when the news breaks that your CEO never actually graduated college. The negative media attention hurts your company as well. All of these facts point to a distinct need for background screenings.

While we all wish we could trust in the basic goodness of humankind, background checks are a critical way to protect the many facets of your business that need to be protected.

Are background checks required by law?
A number of industries, especially those that require the handling of other people’s personal and private information, require background screenings. These include the home healthcare, financial, and insurance industries among others. But even if your business does not operate in or provides services to these industries, there are still enough crucial reasons to run them.

Do I need to get permission?
Yes, you do. If you want to order and review any kind of background check in order to determine somebody's eligibility for employment, you need to ask their permission. Two forms specifically must be completed by the applicant, the authorization and the disclosure. You can read more about this in the FCRA compliance article.

What information do I need to know about the applicant to run a background check?
The basics are:
  • candidate's full name (first , middle and last name)
  • full date of birth
  • Social Security Number

Criminal records are NOT identified by Social Security Number, but it may be used in other pieces of the background check.

What is the standard background check package? Is this package appropriate for all applicants in all industries?
There is no standard background check package because different industries, and even different companies within the same industry, will have different criteria regarding what constitutes an eligible candidate. Your company should have packages set up based on business necessity, packages that should be different for different types of jobs. Any executive position should be subject to more stringent testing than a basic minimum-wage employee. The depth of your screening should reflect the risks arising from criminal misconduct in each specific position. When creating the packages, remember that if screening guidelines are too lenient you may hire criminals and welcoming unnecessary risks to your business, but if screenings are too stringent you may miss opportunities to hire well-qualified applicants who pose no threat – and you may even run afoul of the EEOC.

What background check product should I at a minimum consider?
A lot of companies that run background checks start with a number of direct court searches in the jurisdictions where the person lived in the recent past and supplement that with a multi-jurisdictional criminal database search to make sure they do not miss records from places where the applicant worked or traveled. After that they add role specific reports and verifications. Read more about the most commonly used background check products.

How long do screenings typically take and how are they done?
As with anything, how long the screenings take depends on which specific service you choose and how that service is done. Many searches simply require the company to enter the relevant information into a database, yielding instant results. However, most services take longer due to the need for a live record search. A few services require a combination of database and live searches and some take a more unique approach.

Instant, database-driven searches include criminal history searches, credit history, name and address history, national security lists, sex offender registry and SSN verification/trace searches, while live searches include county, state and federal criminal history.

Some services require phone interviews. Those include education and employment verification as well as reference checks. How long each of these services takes also depends on a few other factors.

Another factor to consider is which company you choose. A company that has an interface with a county will take less time to search that court than a company that has to send someone to the physical courthouse. Then you have to consider where you are requesting the information from. Records from a Department of Motor Vehicles can be accessed instantly in many states, but can take three days in others.

The most important contributing factor (aside from how information is gathered) is the difference between hits and clears. For instance, many companies, that run a criminal database check, will know instantly if there is no record. However, depending on the type of search ordered, if the database returns a hit, the information may need to be verified before it can be passed on.

How far into the past can screenings go?
The FRCA limits bankruptcies to 10 years and civil lawsuits, judgments, tax liens, collection amounts and any other adverse information (excluding criminal convictions) to 7 years unless you have legal authorization to access records farther back. Criminal convictions are the only source of information which has no federal limitation. That being said, just because the federal government has no limitation regarding criminal convictions, that does not mean that the states also do not have a limitation. Many states have enacted a more restrictive version of the FCRA. In California, for example, criminal convictions can only be reported for 7 years. For this reason, the industry standard is to only go back 7 years unless specifically agreed upon to do otherwise.
How often should background screenings be run?
The industry standard is to perform background checks on contingent job offer and not before. A large factor in this is that over 40 local jurisdictions across the US utilize “ban-the-box” initiatives to eliminate employment barriers for qualified job-seekers with criminal backgrounds. Many ban-the-box laws prohibit inquiries about criminal history on job applications and prevent use of a background check until the final stages of hiring. In addition to pre-hire background checks, the industry best practice is to perform background checks upon promotion or transfer from one job class to another with different requirements, and periodically during tenure (every year or so).

What happens if I choose to decline an employment applicant based on the background screening?
If you intend to decline an employment applicant based on what was found in the background check, you are legally obligated to follow the adverse action process as described in the FCRA compliance article. (backgroundchecks.com has sample pre-adverse-action and adverse action notices available for you to send out.) You should also consider sending an Individualized Assessment letter in accordance with recent EEOC guidance. In addition, each company should have some sort of a dispute process, which you should be aware of and know your part in.