Background Check Policy: What to Include + Free Template

An employment background check is a process an organization uses to verify a person’s background and qualifications and screen for red flags by checking criminal records, credit reports, driving history, and more. Before conducting background checks, it is important to implement a background check policy. This policy should outline when it is appropriate to conduct a background check and how to determine which items will be checked.

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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, and what happens in light of the findings.

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 be different. 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

2. Information Obtained in Background Investigations

Reference each type of background check you may conduct and the information that will be collected on each new hire. It is also good to note that a criminal background check will not automatically disqualify a candidate for employment.

There are several types of background checks, each serving a different purpose. Often, background checks can be customized, depending on the role and the organization’s policy. Be mindful that each additional inquiry incurs costs, and that you’ll want to only request information pertinent to the position and within the guidelines of state regulations where the employee is based.

Click through the tabs 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 of expunged records, depending on 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 the use of criminal records in making hiring decisions. Some states 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.

Credit reports, which detail a history of borrowing and paying back the 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. Employers will not be able to see credit scores. This check may be necessary for your industry (such as banking, loan, or taxes); however, several states prohibit the use of credit checks as a prerequisite to employment in most circumstances, so know the guidelines in the states in which you are practicing.

A pre-employment 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 be sure 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 who is calling.

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 eligibility for employment. 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. Be sure to 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:

Conviction Reporting Limited to Seven Years: California, Kansas, Maryland, Massachusetts, Montana, New Hampshire, New Mexico, New York, and Washington
Prevention of Non-convictions Being Reported: California, Kentucky, New York, and New Mexico
Pending Criminal Cases Are Not Reportable: Kentucky
Ban the Box Laws: Over 31 states and 100 cities and counties

4. Adjudication

Adjudication is the act of reviewing information received to determine an action. 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 within.

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 will 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 or not you decide to use a third-party screening company to perform a background check 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 their 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.

If you need a background check service to help you conduct efficient checks on your candidates, consider ShareAble for Hires. You can get up-to-date information on their credit, financial, and employment history without having to do the research yourself, and packages start at just $25 per report.

Employers have the option to conduct a background check both during the pre-hire stage (only for final candidates) and post-hire. Best practices suggest, however, that a conditional offer should be made before the screening process begins.

A background check that occurs before employment starts is called a pre-employment check, while a post-employment background check refers to a check that occurs after an employee has started work; the latter 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 pre- or post-hire, 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.

Companies have a responsibility and obligation 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 a permanent employee. If the best indicator of future behavior is past behavior, then important considerations in conducting proper due diligence include researching 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. 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.

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.

Background Check Policy: What to Include + Free Template

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1. Background Check Circumstances & Frequency

2. Information Obtained in Background Investigations

3. Use of Information Obtained in a Background Investigation

4. Adjudication

5. Adverse Action

Conducting Background Checks During the Hiring Process

Bottom Line

About the Authors

Charlette Beasley

Jennifer Hartman