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Background Checks

Knowing potential employees' backgrounds helps businesses make smarter hiring choices.

Background checks are often necessary for security issues, among other reasons. [©Jupiter Images, 2009]
©Jupiter Images, 2009
Background checks are often necessary for security issues, among other reasons.

When seeking out employment, many hiring companies require background checks for all potential employees. Certain jobs require the screening due to federal or state regulations. With the addition of the Fair Credit Reporting Act (FCRA), employers have to be careful and follow all the rules when checking backgrounds or when looking at applicants' credit reports, employment history or educational background. By law, applicants must sign a consent form, allowing employers access to this information .

Reasons for Background Checks

The need for employee background checks has increased over the years due to heightened security and safety in the workplace. Employers are liable if a potentially dangerous employee is hired and does something detrimental, which has caused a rise in negligent hiring lawsuits.

After the attacks of September 11, 2001, employers increased their security standards by implementing identity-verification strategies to ensure they were hiring the best potential candidates. This can save wasted time and money spent when companies hire and train the wrong applicants. Also, verifying education and previous employment can ward off wrongful termination lawsuits.

With more and more companies performing background checks -- according to the Privacy Rights Clearinghouse, the numbers are close to 90 percent -- employers want to ensure that all their employees are telling the truth. For the more public companies, there is a fear of bad public relations if word gets out about employees who slipped through the cracks and who either lied about their resume or were unqualified for the position. By using a background check, these potential pitfalls could be avoided.

What is Included in a Background Check

With the click of a mouse, a recruiter or employer can run an informal background check through searches on the computer. Thanks in part to burgeoning social networking sites such as FacebookMySpace or Friendster, employers can see how applicants represent themselves outside of a work environment. A simple search on Google to see what pages pop up with the applicant's name is another option.

For the more formal option, many items that are included in a background check are already part of public record. Some of these pieces of information include:

  • Driving records
  • Criminal records
  • Education records
  • Social Security numbers
  • Past employers
  • Credit report

In addition to these six items are several other pieces of information, which can still be important depending upon what information the employer thinks is vital.

For those who work in the health care industry or a job that involves close interaction with children, potential employers should check to see if applicants are listed in a sex offender database. Also, those in the trucking industry benefit from a national criminal report and license verification. Whoever employs the background check should search through a list of public record files and see what information would benefit the company when hiring applicants.

There are a few caveats when employers wish to use a background check. It is important to remember that employers can only request this information when given written consent. Although the candidate can refuse, the employer oftentimes negatively interprets this. Information of bankruptcy, civil judgments and tax liens might be included, but there is a seven-year limit on civil judgments and tax liens and 10 years on bankruptcy. Also, according to the Privacy Rights Clearinghouse, the FCRA does not apply to jobs with an annual salary of more than $75,000.

Interpreting Results of a Background Check

Some employers hire outside companies, such as consumer-reporting, credit-reporting or background-check agencies , to do background checks for them. This can free up time and energy while allowing experts to delve into potential employees' history.

However, since numerous pieces of information are available through public record searches, such as legal and financial documents, it is also easy for an employer to do the work internally through the Human Resource department .

According to the Federal Trade Commission (FTC), a consumer reporting agency (CRA) must be the entity to prepare the report in order for the report to be covered by the FCRA. Before the consumer reports can be requested, the employer needs to notify all applicants that it will be asking for these reports and receive written approval from the potential employees. Furthermore, if the employer denies a potential employee from a job based on one aspect of the consumer report, such as a credit report, the employer has to notify the applicant and provide him with a copy of the credit report and a summary of his rights under the FCRA. However, employers are not required to tell applicants who ends up getting hired or what reports were requested.

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