Essentials of Background Checking
Regardless of the size of your business, pre-employment screening is a necessary hiring practice to avoid lawsuits and costly hiring mistakes. Gone are the days of a simple reference check and a few phone calls to screen new employees. Amid security concerns, corporate scandals, and workplace violence, pre-employment screening has been gaining ground.
Pre-employment screening is the process of using psychometric testing, background checks, and drug testing to determine the background and identity of hiring a new employee. Background checking is a popular method of pre-employment screening. Over 82% of HR professionals report that their companies do background checks of new hires, up from 66% in 1996 according to The Society for Human Resource Management Workplace Violence Survey.
Employee Background Check Precautions
Before you delve right into a thorough background check of your new recruit, consider the potential legal landmines that can impact your small business.
Investigating the background of a potential hire can help minimize the risk of negligent-hiring lawsuits. You and your company can be held liable for the actions of a new employee especially if you did not perform a background check. Prior to beginning a background check, it's important your small business complies with the Fair Credit Reporting Act and the American With Disabilities Act.
The Fair Credit Reporting Act (FCRA)
Under the FCRA, your small business is required to have employees sign a disclosure form granting authorization to perform a background check. The FCRA is not just restricted to credit reports but includes all “consumer reports." Laws will vary from state to state in how and what information can be used during the pre-employment screening process.
For instance, your state laws may prohibit using certain aspects of a criminal record during a background check. Your state may have different laws, such as California's Investigative Consumer Reporting Agencies Act. Consult with local regulators and legal counsel before going too deep into the criminal past of a new hire.
The American With Disabilities Act (ADA)
The Equal Employment Opportunity Commission (EEOC) defines a disability as a person who:
- has a physical or mental impairment that substantially limits one or more major life activities
- has a record of such an impairment
- or is regarded as having such an impairment
Under ADA, employers are restricted in using medical or disability data in the hiring process. Simply put, you cannot ask during the interview or background check about a person's disabilities. The ADA covers businesses with 15 or more employees, including state and local governments.
What is included in a background check can vary. Background checks can access a full range of data including:
- credit records
- academic records
- social security number
- personal references
- driving records
- criminal records
- workers’ compensation
Outsourcing Your Pre-Employment Screening
One solution for small businesses undertaking pre-employment screening is to employ the services of a background checking company. Hiring an outsider can help in finding accurate, complete information on job candidates. Your outsourcing partner should be able to steer you through the legal requirements as well as federal and State regulations of background screening. Another added bonus is under FCRA, your small business can have limited legal immunity by using a third-party background pre-employment screening company.
Whether your small business decides to outsource or conduct pre-employment screening practices on your own, take the necessary time to educate yourself on the process. Many small business agencies such as SCORE or the Small Business Administration (SBA) can provide counsel. Visit your government’s websites on FCRA and ADA. Background screening should now be a standard practice of operating a successful small business.
