An employment background check is a process for verifying a candidate’s background and qualifications and screening for red flags by checking criminal records, credit reports, driving history, and more, when applicable. Before conducting one, it is important to implement a background check policy to ensure fairness, transparency, and legal compliance.
Your background check policy should generally include five major sections that touch on the circumstances around conducting background checks, the information obtained, the use of that information, how it’s reviewed, and what happens in light of the findings.
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1. Background Check Circumstances & Frequency
This section should be used to notify new hires and current staff that all employees are subject to a background check as part of their employment. You may want to include a clause for new hires and a separate one for current employees, as these decisions will differ.
For instance:
- New Hires: Employment may be contingent upon the results of the background check
- Current Employees: Promotions or transfers may be contingent upon the results of the background check if one has not been conducted within the past three years
The rationale for having different clauses for new hires and current employees stems from several factors, such as the following:
- Timing and Context: Background checks differ between these two groups. New hires typically undergo checks before starting employment, while current employees may be subject to checks at various points during their tenure. This difference in timing can affect how the checks are conducted and communicated.
- Legal Considerations: Some jurisdictions have laws that treat preemployment background checks differently from those conducted on current employees. For instance, the Fair Credit Reporting Act (FCRA) has specific requirements for preemployment checks that may not apply in the same way to checks on current employees.
- Consent Process: New hires typically provide consent for background checks during the application process. Current employees, on the other hand, may need to give separate consent forms for each check, depending on company policy and legal requirements.
- Potential Outcomes: A failed background check for a new hire might result in a withdrawn job offer, while for a current employee, it could lead to various actions ranging from reassignment to termination, depending on the circumstances and severity of the findings.
2. Information Obtained in Background Investigations
Reference each type of background check you may conduct and the information collected on each new hire. It is also good to note that a criminal background check will not automatically disqualify a candidate for employment. This is an important note to make, as some cities and states don’t allow employers to consider criminal histories when making employment decisions. And remember, in today’s remote work environment, the laws where your candidate lives will apply.
There are several types of background checks, each serving a different purpose. Often, what is involved in a background check can be customized, depending on the role and the organization’s background and reference check policy. Be mindful that each additional inquiry incurs costs, and that you’ll want to request only information pertinent to the position and within the guidelines of state regulations where the employee is based.
Expand the sections below for more information on the most common types of background checks:
A candidate’s criminal record can include any convictions (both felony and misdemeanor) unless they’ve been expunged—and even still, some organizations may be able to command access to expunged records, depending on the security clearance required for the position. Pending criminal cases are also likely to show, although this indicates that the candidate hasn’t officially been found guilty.
Remember to check your state laws regarding using criminal records in hiring decisions. Some states and cities have passed legislation to give applicants with a criminal history a fairer shot at getting hired (referred to as ban the box). The goal is to require employers to evaluate candidates on their experience, education, and overall fit for the position before considering their background. In most cases, cities and states with ban the box laws don’t allow employers to ask about or run background checks until an employment offer has been made or signed.
Credit reports, which detail a history of borrowing and paying back money, can shed some light on how an employee may perform. Information that companies are looking to glean from a credit report can include a history of handling money, decision-making ability, and potential for criminal activity.
Take note that employers will not be able to see credit scores. This check may be necessary for your industry (such as banking, loan, or taxes); however, currently, 10 states restrict the use of credit checks as a prerequisite to employment in most circumstances, so know the guidelines in the states in which the candidate resides.
A preemployment drug test is a test employers use to determine whether job candidates are using or have used illegal substances. Results can confirm their job offer or lead to the employer rescinding the job offer.
Existing employees may also undergo random drug tests to ensure they are still complying with the drug-free requirements of the company; sometimes, employees are tested after exhibiting suspicious behavior or being involved in a workplace accident. In these cases, their employment may or may not be terminated, depending on the company’s policy and tolerance of addiction and drug use.
Employers may verify employment and/or education history as part of the background check process to confirm the applicant’s work experience and ensure that the applicant has the education required for the position.
A candidate’s driving history report can include information on any traffic violations they’ve received, like speeding, reckless driving, or driving without a license. Suspensions and any current driving restrictions should also show.
Driving history reports are highly recommended and most common for all employees or job candidates who will be driving vehicles or operating equipment as a condition of their employment.
A reference check is when an employer contacts a candidate’s previous employers, peers, and other sources to learn more about their on-the-job performance, employment history, and qualifications for a job. The contacted parties are generally provided by the prospective employee, and reference checks can be conducted via email or telephone through a series of questions about the experience had with the candidate.
A back-channel reference check is when a hiring manager contacts a former colleague of the candidate (typically one they know personally) to discuss what it was like for them to work with the prospective hire. This type of reference check can be highly effective because people are more likely to divulge information when they know the person calling.
Civil record searches examine public court documents for civil lawsuits involving an individual. They should be included in background checks for positions involving financial responsibility or significant trust, such as a bank branch manager or investment advisor. These searches can reveal important information about a person’s past legal disputes, financial conduct, and professional history that may be relevant to their suitability for certain positions.
3. Use of Information Obtained in a Background Investigation
Your background check policy should always acknowledge that any information collected during a background investigation would be used to determine employment eligibility. Additionally, notify the candidate or employee that all information provided will be thoroughly reviewed to determine eligibility.
Before conducting any background check, you must notify the candidate or employee and receive their consent to investigate. Include this language in your background check policy under this section.
Several states have specific laws around background checks and what can and cannot be considered when determining hiring eligibility. Although this list is by no means exhaustive, limitations in some states include the following:
- Conviction Reporting Limited to Seven Years: California, Colorado, Connecticut, Hawaii, Kansas*, Illinois, Maryland, Nevada, Oregon, Texas, Vermont, Washington State, Washington, D.C., Chicago, NYC, and Philadelphia, Massachusetts, Montana, New Hampshire
- Prevention of Non-convictions Being Reported: California, Kentucky, New York, and New Mexico
- Pending Criminal Cases Are Not Reportable: Kentucky
- Ban the Box Laws: Many states, cities, and counties currently have laws that prohibit asking about criminal history—learn more about it in our ban the box laws guide.
- Birth Date Redaction Laws: California, Wyoming, and Michigan
- Salary History Laws: Visit our salary history ban guide to learn if your state has restrictions.
*Convictions older than seven years can’t be reported for jobs paying less than $20,000 per year
4. Adjudication
Adjudication is the act of reviewing information received to determine an action. Background check adjudication guidelines provide consistent criteria for evaluating screening results and determining candidate eligibility. They help ensure fair, unbiased decision-making and compliance with relevant laws and regulations in the hiring process.
In the case of your background check policy, notify the candidate or employee that you will be reviewing their background check should anything adverse be found.
You may include the following reasons to review:
- Relevance of incident
- Nature of work to be performed
- Time since the incident
- Age of candidate or employee at the time of the incident
- Seriousness of the incident
- Number of offenses
- Pending charges
- Relevant evidence, or lack thereof
5. Adverse Action
Note in your policy that should you find anything in the background check that could prevent you from hiring the candidate (or cause you to release a current employee), you will provide them with a copy of the report obtained, the company’s background check policy, and an FCRA Summary of Rights. You should also advise the candidate which part of the background check made them ineligible for employment and offer them an opportunity to dispute the findings.
Conducting Background Checks During the Hiring Process
A wide array of organizations utilize background checks as an important part of the hiring process. Whether you decide to use a third-party screening company is often determined by your organization’s size, the nature of your business, and the types of employees working for you.
For instance, while one employer may only need a basic criminal background check on every employee, another might decide to specifically request driving history for their employees who will be driving a company-issued vehicle. Similarly, if the organization is a CPA firm, it may request credit history from each of its new employees who would be dealing with financial business.
The key to establishing an effective process is understanding your industry-specific regulations and being consistent—even when applying role-specific background check standards.
When to Run a Background Check
Employers can conduct a background check during the prehire and post-hire stages. Best practices suggest, however, that a conditional offer should be made before the applicant screening process begins.
- A preemployment check occurs before employment starts.
- A postemployment background check occurs after an employee has started work; it could be ongoing throughout their time with the company, depending on the organization’s specific policy.
If a candidate is converting from temporary employment or contractor status to a permanent employee, best practices would dictate conducting a background check before being hired in a permanent capacity—even if that individual has been affiliated with the organization for some time. Be sure to apply consistent standards across the board, however, so all candidates undergoing background checks are subject to the same process at the same point in their candidate journey.
Whether screening a candidate prehire or posthire, the Fair Credit Reporting Act, or FCRA (15 U.S.C. §1681), requires that employers must get written consent from a candidate or employee before conducting a background check.
Why Run a Background Check
Companies are responsible and obligated to protect their employees, customers, and reputation. One of the most effective ways to do this is to conduct proper due diligence when considering converting an applicant into an employee. If the best indicator of future behavior is past behavior, it is important to research both past activities and employment details divulged by the applicant to confirm their legitimacy.
It may be beneficial to add a note to your posted job ad indicating that candidates will be subject to a background check that’s compliant with local and federal law. This note is not a substitute for a clear consent form that will need to be signed by the applicant before actually conducting the check.
Here’s why background checks can be important:
- Improves workforce quality: Background checks help ensure you’re hiring qualified candidates with the right skills and experience, leading to a more competent workforce.
- Reduces risk of criminal activity: By screening for criminal history, you minimize the chance of hiring individuals who may engage in illegal activities at work.
- Verifies applicant information: Background checks confirm the accuracy of details provided by applicants, such as education, work history, and credentials.
- Avoids negligent hiring liability: Conducting thorough checks helps protect your organization from legal issues that could arise from hiring someone with a problematic history.
- Ensures workplace safety: By screening out potentially dangerous individuals, background checks contribute to a safer work environment for all employees.
- Provides investment protection: Hiring the right people protects your company’s resources, reputation, and long-term success, safeguarding your investment in human capital.
Background Check Policy Best Practices
Creating and implementing a robust background check policy is essential for any business. Here are some best practices to consider:
- Consistency: Apply the same standards to every applicant to avoid discrimination. Ensure all candidates for the same position undergo the same checks.
- Legal Compliance: Familiarize yourself with local, state, and federal laws regarding employment background checks. This includes respecting the rights of applicants under the FCRA, the EEOC, and local ban the box laws. Remember, the local laws you need to review are the laws of the state and city where the applicant lives, not where your business is located.
- Relevance: Only conduct checks that are relevant to the job at hand. For example, a driving record check may not be necessary for a role that doesn’t involve driving.
- Transparency: Be clear with candidates about what the background check entails. Obtain their written consent before starting the process.
- Confidentiality: Keep all information gathered during the background check confidential. Limit access to this information to only those involved in the hiring decision.
- Candidate Feedback: If the background check results in negative action (e.g., not hiring an applicant), provide them with a copy of the report and a “Pre-Adverse Action” letter, as required by the FCRA.
- Review and Update: Regularly review and update your background check policy to ensure it remains relevant and legally compliant.
Frequently Asked Questions (FAQs)
A manual background check is usually conducted by someone in your organization (such as an HR manager) and involves looking into a candidate’s previous work history. This is conducted by making phone calls to former or current colleagues and inquiring about the candidate’s previous jobs. A more thorough background check involves a criminal check through a state or government entity.
A typical background check usually takes three days. Delays can occur because of incomplete or inaccurate information provided by the applicant, slow responses from previous employers or educational institutions, or the need to verify information from multiple jurisdictions or countries.
No, while background checks can provide valuable insights about a candidate’s past behavior, they’re not necessary for every role. A background check would be appropriate when hiring for finance roles and for current employees moving into positions with higher levels of responsibility or access (i.e., executive positions, government jobs requiring access to classified information).
Not necessarily. A candidate can begin onboarding while an ongoing investigation is conducted into their background. You can still retain the right to refuse to hire based on the results of a background check.
Bottom Line
Background checks can be a vital part of the due diligence process. Employers conduct them to get to know potential employees better and protect the company and its reputation. To protect the candidate, however, there are guidelines, laws, and policies that should be closely adhered to. Creating a consistent and compliant policy that is enforced across the organization will prevent possible legal concerns while setting the foundation for a safe environment for all.
A common way to learn more about a candidate informally is to view their social media profiles (Instagram, Facebook, Twitter, Snapchat, etc.). Use caution, however, when looking into the personal lives of prospective hires as this can lead to hiring bias.
Checking out a candidate’s LinkedIn profile is both free and expected by candidates. It can also give insight into your candidate’s work accomplishments, work ethic, and relationships by showing who might be in their network and if anyone has written a reference for them on their profile.