Employment Background Check

The best way for employers to secure information about potential applicants is reference checks and background checks. A background check helps to uncover any issues the applicant may have that might affect your business. This includes poor credit history, criminal record, motor vehicle violations, or whether the applicant has misrepresented their work history or education.


A reference check means contacting former employers to verify their work history and education. They may also obtain information about their skills, character, knowledge, and character.


Most employers conduct some kind of background check when hiring new employees. Some employers also conduct background checks at random throughout employment.


Employers often conduct employment background check for the following reasons:

  • 60% only during the hiring process
  • 14% legal mandate
  • 10% other cause


What Are the Reasons to Conduct a Background Check or Reference Check?

There are many reasons to conduct reference checks or background checks on applicants during the hiring process. The HR.com report found the following top reasons employers conducted background checks.

To protect their customers and employees 86%
To ensure quality hires 52%
Because it was mandated by law 39%
To protect their company’s reputation 38%
To reduce the risk of theft or embezzlement 36%


Safety

Employers often cite safety as a major reason for conducting background checks. This protects them from any legal liability for hiring someone with the potential to put customers and employees at risk. A background check can reduce the potential for harm to:

    • The public due to negligent driving
    • Other employees due to workplace violence or sexual harassment
    • The employer’s business due to reputation damage or financial losses
    • Customers due to sexual assault, harassment, or violence on the premises.

When an employer is accused of negligent hiring in a legal claim, they should conduct background checks on all employees to search for criminal records.

Maximize Productivity

A reference check can provide information about an applicant’s past behavior at work. Employers can gain valuable information about the applicant’s skills, productivity, interpersonal skills, and professionalism from their former employers.

Data Verification

Reference checks will also help to verify information about the applicant’s credentials. It will help you to identify if an applicant embellished their resume.

Legal Considerations When Conducting Background Checks

There are several legal challenges involved in conducting a background check that employers and HR professionals must know.

Federal Law

There are several federal laws which directly regulate background checks and the applicant’s privacy.

  • FCRA -The Fair Credit Reporting Act regulates third parties conducting background checks on behalf of an employer. This comes into play when you ask for personal opinions, such as job performance information alongside verifications of facts. FCRA requires applicants to give written permission for these checks and to be notified of the check in advance.

  • FACTA -This regulates the disposal of credit information to ensure it is not seen by anyone without authorization to view it.

  • Equal Employment Opportunity Laws – Employers should comply with EEO laws by having a background check and referencing policy that avoids discrimination. This may mean that all applicants undergo a background check. Employers should also avoid relying on background checks alone, otherwise they may find there is adverse impact discrimination.

  • IRCA – This law prohibits any discrimination based on citizenship or national origin. It regulates employers with four employees or more.

State Laws

States may require additional requirements for background checks and reference checks. The states may regulate how employers:

  • Keep records
  • Check criminal histories before they hire an employee
  • Keep information secure
  • Obtain consumer credit reports for applicants

Employers should check the state laws for the states they operate in.

Common Law

When a background check is not conducted correctly, employers leave themselves open to the following common law claims:

  • Invasion of privacy
  • Defamation
  • Negligent hiring
  • Tortious interference with future employment
  • Tortious interference with current employment

Types of Background Checks and Reference Checks

There are many kinds of background checks that employers can conduct before they hire an applicant. Here are some of the common types:

Employment History

Applicants may embellish or outright lie about their work history when creating a resume. They might lie about the dates of their employment, job titles, employers, or skills. When HR check references, they should verify:

  • Job title
  • Dates of employment
  • Duties performed
  • Why the separation occurred

Education

Applicants may lie about degrees or accreditations they have, or say their degree was from another institution than the one they attended. There have been several high profile cases of CEOs resigning after it was discovered that they did not possess the degrees they claimed. No matter the level of an employee, you should check their degrees.

Criminal History

Criminal history checks can prevent employers from being accused of negligent hiring if an employee harms another person at work. Sometimes, if an employee has a record of theft, employers cannot claim insurance if they did not conduct a criminal history check. Many employers will conduct criminal history checks before hiring an employee, and either periodically or before promoting or transferring employees.


When conducting a criminal history check, employers should check the guidelines on the EEOC website to ensure they comply with regulations.

Consumer Credit Reports

If the role an applicant is applying for involves financial responsibility, employers should run a consumer credit report. This will ensure the employer does not hire someone whose financial situations would lead them to make poor financial recommendations or theft. The EEOC prohibits these checks unless the employer can prove compelling business reasons for them. Therefore, they should be used only when the position requires them.

Motor Vehicle Records

If the position requires an applicant to drive a vehicle for the company, then employers should check their driving records. An employer may be held liable for any accidents that occur when an employee is driving for work purposes.

Industry Regulations

There may be extra laws regulating certain industries and required background checks. For example, jobs in education, child care, public transportation, and health care may require additional background checks.

National Security

If employers happen upon information that would be cause for concern, they should report it. Employers need not check the federal list of Specially Designated Nationals, but any matches they find must be reported immediately.

Social Media

Many employers do a quick check of social media to get an idea of job applicants. While the user controls the information posted online, it is a quick way to weed out any potential controversy or leaking of sensitive information.

Personal References

A personal reference check involves contacting employers, university professors, or anyone else that knows the applicant well to find out about who they are as a person. These will include information about their relationship with the applicant and how long they have known them. The reference will be asked about the applicant’s work ethic, personality, etc.

How Long Does a Background Check Take?

A background check can take anywhere from 48 hours to a week. If you are employing a third party to conduct background checks, they can advise how long it will take. It is at the employer’s discretion whether they make an offer subject to a clear background check or if they conduct the background check before they make an offer.

Automated Background Checks

Some third-party specialists allow references to provide information through an online portal. This allows the reference to be provided securely and quickly. This does not allow probing or follow up questions, as there will be a generic set of questions provided. Hiring managers can always call to follow up on a reference if necessary.

Screening of Contractors, Temps, or Freelancers

Employers may see liability issues with anyone that works for them, even on a temporary basis. This means that temps, freelancers, and contractors should also be screened to ensure employers are protecting their business interests.