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Are the contractors bolstering your workforce safe and reliable employees? Understanding how to evaluate contractor background checks is critical for companies today. Take a closer look at what might disqualify contractors and what to do when they fail a background check.
Over the last decade, the role of the contractor in the general workforce has undergone considerable expansion. Today, a huge number of businesses augment their regular workforce with temporary and contract workers. The "gig economy" has also launched many new businesses whose entire existence depends upon finding people willing to work as "independent contractors" in a murky category of labor ostensibly separate from regular employees.
These changes mean that in some ways, contractors remain viewed as expendable, easily replaced workers filling a temporary role on an as-needed basis. Such thinking makes it dangerously easy to assume that you do not need to handle hiring contractors with the same level of care or attention to detail as a regular employee—but if anything, the need for thorough due diligence is even greater with contractors.
When you exercise that diligence, you may not always discover that a contractor has a spotlessly clean background check—you might find some information that gives you pause. Although the decision is ultimately always up to every individual business, it's important to understand what information in contractor background checks you should consider potentially disqualifying. At the same time, you must understand the procedure to follow to comply with the law. First, let's consider why all this legwork for a contractor is necessary.
Vetting contractors is about more than ensuring they have the appropriate credentials and, where necessary, licensing to do the job. It is also about protecting the public and the business from potential bad actors, and by extension, shielding your business from liability for negligent hiring. By carrying out a thorough due diligence process, you can reduce the likelihood that someone committing a crime on company time will have direct consequences for the company.
It is vital to show that you made a good faith attempt to understand someone's background and to clear them for the job. There are too many stories in the news to count that concern a contractor with a checkered past who then stole from employers, assaulted customers, or committed other crimes. Vetting can't prevent or predict crime, but it can help you foster a more secure work environment.
Except where mandates exist by law for particular employers, such as commercial transportation companies or childcare organizations, businesses retain a wide degree of latitude for making employment decisions. This means that what constitutes a failed background check for one business might not be the same for another company. Even at the same company, evaluating individual circumstances can lead to different outcomes for two people with similar criminal backgrounds.
It is an employer's prerogative to determine what is disqualifying and what is not in their policies. However, there are broad categories of problems that all owners should consider when defining those policies. Some of the reasons you might decide an applicant has failed your background check include the following:
Based on the background check policies your business creates, one of the above scenarios could be potentially disqualifying for a contractor candidate. Things are not always as cut and dry as a murder conviction, though—there are many layers of nuance to evaluating background checks and giving applicants a fair chance. However, a background check can only tell you about the existence of the record—not what happened before or after.
If the information you uncover leads you to believe you may change your mind about an applicant, you must send them a pre-adverse action letter as required by the Fair Credit Reporting Act. This letter informs the applicant you may take adverse action based on their background report, provides a copy of the report, and includes a notice of the individual's rights under the FCRA.
In most best practices, you must provide the applicant with a "reasonable" amount of time to respond to the pre-adverse action letter, typically around five business days. This is a candidate's opportunity to come back with one or more of the following items:
You must consider this information carefully in light of the facts of the crime, the job role in question, and any local laws (such as conditions attached to a "ban the box" law) that apply. For example, in some jurisdictions, it is illegal to deny a job based on a background check unless the job provides a clear opportunity to re-offend.
If you do not find enough evidence to change your mind, you can end the hiring process with the contractor and move on to someone else. To do so, you will need to send the applicant another letter, simply called an adverse action letter. This letter must contain the details of the reporting agency that provided the report, a statement that the decision was made solely by your business, and a notification that the individual can receive a second, free copy of their report from the agency if requested within 60 days. You can then move on to another application.
Yes, it is always your prerogative to determine who continues through the hiring process. If you determine that a contractor's failed background check is not severe enough to take adverse action or because of evidence presented after pre-adverse action, you can always continue the process. Simply be sure to follow your policies with consistency and to think carefully about applicant suitability.
Though contractors can provide your business with the flexibility necessary to meet sudden staffing demands for projects or seasonal business, they can still harm your business through negligence and malice. Ensuring that you're hiring trustworthy and safe individuals to support your work demands that you use the same background check procedures for contractors as regular employees—including following the adverse action pipeline.
By equipping your business with the right tools and understanding how to evaluate the results of a background check effectively, you can make smart personnel decisions now and in the future. Learn more about how to build legally compliant procedures and access background information today in our Learning Center.
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