September 19, 2023

How to Do a Background Check for Employment

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Tags: HR

Key takeaways:

  • Background checks ensure you hire the right person for the position while protecting the safety of your company, employees, and customers.
  • Before running an employee background check, understand the laws and create a policy.
  • Investing in background check screening services and software can help you save time and keep you compliant.

Disclaimer: This article is not intended as legal advice. Please seek counsel from an employment law attorney for specific situations.

Sept. 19, 2023: Added a video overview on how to run a background check in five steps.

Check out our Onboarding Software Guide for platforms that integrate with or offer background check services.

What to do before running a background check

Before running an employee background check for pre-employment, you must understand the laws, assess your screening needs, select the report types, and create a policy. Doing so mitigates your compliance risk and ensures you participate in fair hiring practices.

Understand the laws

Several laws and government agencies regulate employment background checks. Becoming familiar with them before running a check can prevent unnecessary violations.

Be careful when partnering with background check software companies or third-party vendors. Liability still rests on your shoulders for the entire process, including any adverse action hiring decisions.

Enforced by the Federal Trade Commission (FTC), the Fair Credit Report Act (FCRA) regulates information collected and disclosed by consumer agencies, such as tenant screening services and credit bureaus. 

The act also requires employers to receive consent from candidates before accessing any of their information for employment purposes. Employers must also provide candidates notice before taking any adverse action.

Enforced by the Office of Personnel Management, the Fair Chance to Compete for Jobs Act prevents federal employers and contractors from asking about candidates’ criminal histories before making a conditional offer of employment.

Private employers are not covered by this act unless involved in federal projects. However, most states and some cities have similar laws, known as ban-the-box laws.

Anti-discrimination laws, enforced by the Equal Employment Opportunity Commission (EEOC), prevent employers from asking about or collecting information in background checks related to race, color, religion, national origin, sex, gender, age, marital and military status, genetic and medical information, and disabilities.

In addition, they bar employers from making employment decisions based on any of these actual or supposed characteristics unless substantially related to the role’s essential job functions.

Some of the federal anti-discrimination laws to know include the following:

Several states and cities have laws regulating background checks, including ban-the-box, salary histories, and birth date redaction laws. For example, Los Angeles’s Fair Chance Act requires that you weigh the nature and severity of a candidate’s criminal conviction in an individualized assessment before rescinding their job offer.

Double-check your state and municipality laws to see which apply to you. Partnering with background check companies, such as Checkr or First Advantage, or consulting with legal experts can help you understand your company’s specific responsibilities.

Assess the need

Some job occupations and industries, such as healthcare and financial services, require you to perform employee background checks by law. However, if you are not in these industries, you can choose whether you want to conduct an employee background check.

Nevertheless, ask yourself whether your open position warrants background screening. For example, if you’re bringing on a new truck driver, it’s a good idea to run a motor vehicle record check for any driving violations. The check relates directly to the position and protects your company from safety risks.

However, running a background check on a restaurant cook can be costly and may have little bearing on their actual work. You can save money and administrative work by asking yourself whether a background check is legally required or necessary based on the job position.

Select the type

When selecting which background checks you use, ensure they are relevant to your open position. For example, a criminal record check is essential for security positions, while a credit check is necessary for financial roles, especially for employees with access to customer or company money.

The most popular employee background checks include the following:

Create a policy

Creating a policy ensures background screening consistency and reduces compliance risks. The best policies outline the process’s who, what, why, and how.

  • Who: Which roles require candidates to complete background checks?
  • What: What types of background checks do these roles require?
  • Why: Why do these roles require a background check?
  • How: How will the background check results affect your hiring decision?

In addition to the above, make sure to consider the following best practices:

  • Make a conditional offer of employment before conducting a background check.
  • Avoid blanket policies disqualifying candidates based on arrests, charges, or criminal convictions.
  • Run the same background checks on all candidates to avoid claims of bias or discrimination.

After writing your policy, have it reviewed by legal experts to double-check check it follows all the relevant laws of your state and municipality. Finally, upload it into your human resources (HR) software to share with your staff and gather their policy acknowledgments.

Looking for software to help you keep track of your policies? Read: The Best HRIS Systems

How to do a background check for employment in 5 steps

Follow the below steps to provide a fast, consistent, and compliant employee background check experience.

Or, you can watch our video how-to:

1. Get candidate consent

Under FCRA, you must obtain a candidate’s consent before running a background check. Furthermore, the authorization form must be a standalone document, meaning the candidate receives it separately from other preboarding paperwork.

The consent form should also include the following elements:

  • All FCRA necessary language, including what information you will obtain for employment purposes.
  • A list of the background check types you will conduct and why.
  • A checkbox to request a copy of the completed report (per California, Minnesota, and Oklahoma laws).
  • An area for candidates to supply their full name, birth date, Social Security number, driver’s license number (if applicable), physical addresses for the past seven years, and authorization signature.
  • A separate disclosure form indicating a consumer reporting company will perform the check, what the report will include, and the company’s name and contact information.
  • Any additional language or forms from relevant state or local laws. 

It’s best to have legal counsel review your background check consent form before implementing it.

2. Submit to background check company

Contacting multiple agencies and past employers can be tedious and time-consuming, especially for small HR teams. Instead, background check screening services with recruitment and applicant tracking system (ATS) software integrations can fast-track the process without sacrificing compliance.

For example, Paycom’s Enhanced Background Checks software integrates with its applicant tracking and onboarding solutions, keeping data all in one place. It also includes built-in FCRA compliance and adverse action workflows to simplify procedures for rescinded offers following background check results.

With Paycom’s Enhanced Background Checks software, you can start the candidate screening process with just a few clicks and monitor their progress from one dashboard. Source: Paycom

Besides software add-ons, you can also use a background screening service. Most reputable screening services cost anywhere from $10 to over $100 per background check. However, despite the steep price, most of these services follow all necessary laws so you remain in compliance.

They are also conscious of presenting their findings to employers in a way that prevents bias. For instance, some services include warnings next to unverified social security numbers stating you should not automatically assume the candidate is an illegal immigrant or unauthorized to work in the U.S.

This attention to detail sometimes comes at a higher price point, so we recommend caution before leveraging solutions that cost less than $20.

3. Wait for results

Background checks can happen instantaneously, but most take one to five business days. Delays usually occur if the candidate has several aliases or paper records instead of digital files.

You may also get certain checks back before others. For example, many federal and state criminal checks are relatively quick, while county criminal checks can take many days. So, don’t be surprised if portions of your background check come in sooner than others.

4. Review results

If the background check comes back without any major red flags, you can move forward with employee onboarding. However, if you see concerning results in the finalized report, especially the criminal background check or civil checks portion, ask yourself the following questions first:

  • Are the offenses related to the position?
  • How serious was the offense?
  • How many times did the candidate commit the same offense?
  • How long ago did the offense occur, and how old was the candidate?
  • What has the candidate done since the offense?
  • Are there any discrepancies between the report and the candidate’s résumé or application?
  • Was the candidate honest about offenses before running the background check?
  • Is there anything in the report to indicate they cannot perform the position well?

When evaluating the results, remember to take in the totality of the hiring experience, give more weight to recent job-related offenses, and potentially seek the advice of legal counsel.

5. Follow adverse action procedures if not hiring

Under FCRA and several state laws, you must follow adverse action procedures if you decide not to hire the candidate based on the background check results.

First, supply the candidate with a pre-adverse action notice to let them know you are considering rescinding the job offer. Along with the pre-adverse action notice, you must provide the candidate with a copy of the finalized report and a summary of their rights under the FCRA.

Then, provide the candidate with a reasonable amount of time to review and dispute any inaccuracies in the report; most employers provide candidates with five business days. The EEOC also recommends considering the candidate’s circumstances when determining the due date.

If you decide not to hire the candidate due to their delayed or unsatisfactory response, you can send the post-adverse action notice stating you have rescinded your employment offer. This final notice should include all necessary FCRA language, including clarification that the background check company did not make the decision.

Step-by-step background check downloadable

Are you wary about running a background check yourself? Download our free background check step-by-step guide to help you do it right the first time.

Why is it important for employers to do background checks?

Beyond industry-specific requirements, conducting pre-employment background checks ensures you:

  • Are hiring the best candidate for the position.
  • Remain compliant with federal, state, and local laws.
  • Minimize liability risks.
  • Protect the safety of your employees, customers, and company assets.

For platforms that partner with top consumer reporting agencies, check out our Onboarding and Recruiting Software Guides.


Jessica Dennis Avatar

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