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What Are Employee Background Checks and What Do They Include?

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    Employee background checks help businesses verify the quality of their hires and confirm employment eligibility. Organizations also use these screenings to ensure compliance while protecting other employees, clients and customers. Read about how employee background checks work, the different forms they take and how they help ensure a positive working environment.

    Every employer wants hiring peace of mind. After all, the Society for Human Resource Management estimates it costs organizations $4,700 per hire. What that figure doesn’t capture, however, is how much damage the wrong recruit can inflict on your carefully maintained work culture.

    Luckily, you don’t have to recruit blindly. Employee background checks help companies ensure an applicant is who they say they are by vetting:

    • education
    • previous employment
    • national or federal records
    • criminal and financial history
    • and more

    While background checks can’t ensure an exceptional worker, they can help validate hiring decisions and avoid harm to your employee experience.

    It’s time to get the backstory on background checks. Let’s examine how they work, why employers should conduct them and how the best screenings verify individuals thoroughly and efficiently.

    What are employee background checks?

    Businesses use employee background checks to ensure the quality of hires and confirm an individual’s employment eligibility. Ultimately, background checks just provide information, not a recommendation. It’s an employer’s responsibility to determine how to proceed with the data pulled from a background check.

    For employees, conducting a background check doesn’t guarantee a job. However, most organizations won’t move forward with a check unless they are serious about a candidate. Additionally, background checks don’t always follow the same structure or verify the same components. They can cover a spectrum of different databases, though the most reliable and comprehensive options will include:

    • national criminal scans
    • county criminal searches
    • sex offender registries
    • education verification
    • employment verification
    • drug testing and health services
    • and more

    Keep in the mind that certain states and even federal laws like the Fair Credit Reporting Act (FCRA) regulate how employee background checks are conducted. Ensure that your process complies with all relevant rules and regulations before assuming.

    Why do employee background checks matter?

    Employers need every assurance the person they hire can adequately perform a job and healthily contribute to the organization at large, regardless of the specific position they fill. Among employers surveyed by the Professional Background Screening Association about their recruiters’ use of employee background checks:

    • 83% use them to protect the safety of employees and customers
    • 51% use them to improve the quality of hires
    • 40% use them because of a legal requirement

    Think of a background check as an extra level of assurance. For example, a bank that’s hiring a financial controller may want to consider reviewing an applicant’s credit history. This will help ensure that — at least personally — the potential employee is responsible with money.

    Again, background checks can’t guarantee an ideal employee. They can, however, help justify a new hire.

    How do employee background checks work?

    Employee background checks typically work by cross-referencing an individual’s identity and Social Security number (SSN) against a collection of relevant databases. Most background checks vet educational info, criminal records and even social media for potential risks.

    However, no background check services decide for an employer. Ultimately, the organization will need to determine if the results of the screening justify reconsidering a potential hire. On that note, employers can technically run a background check at any point in the hiring process, provided they don’t violate the requirements of a local, state or federal law.

    Even so, many businesses won’t invest in a background check until they feel prepared to hire an applicant. In some cases, a job offer may be contingent upon the applicant successfully passing a background check.

    What is included in an employee background check?

    Employee background checks can include as many searches as the employer that requests it deems necessary. Some businesses may find drug screenings and simple reference checks sufficient, whereas others may require more extensive vetting such as credit and criminal history.

    Here are just a few examples of common checks businesses request and why they’re useful. Keep in mind that while we’ll discuss how these checks can apply to prospective employees, any of the following can be run for current workers, too.

    Criminal background check

    Criminal background checks analyze local police and federal court records to verify a candidate is of good or otherwise acceptable character. While a criminal record may not automatically disqualify someone for employment, an employer may consider this previous history to determine if someone is fit for a specific role.

    For example, a nursing home would likely decline an applicant if a criminal background check revealed history of theft and elder abuse. The U.S. Department of State uses criminal background checks in a similar way to authorize citizens to work, attend school or adopt a child abroad.

    Social Security verification

    In an era of frequent identity theft, Social Security verifications help ensure someone is who they say they are. These screenings place the SSN and names of candidates against the Social Security Administration’s records to confirm what an individual provided is legitimate. In most cases, this will require an employer to gather a valid document from a candidate, like their Social Security card or an unredacted tax document.

    This process is relevant for businesses, but it’s also regularly used with banks and other financial institutions. After all, most SSN theft results in attempts to take out fraudulent loans or lines of credit.

    Employment verification

    Employment verification helps ensure the validity of an applicant’s work experience. This gives employers a better idea of if a prospect is truly qualified and the skills they claim can be backed up by a third party. These screenings also help reveal false claims and explain gaps in employment. For example, if you notice a candidate hasn’t worked in six years with seemingly no explanation, employment verification can reveal if they actually worked during that period and provide an opportunity to further investigate.

    Reference check

    Chances are, you’ve had to provide a list of references for a job. Reference checks put that info to use by verifying the legitimacy of someone’s professional contacts and education history. This process has the dual effect of verifying someone’s background and ensuring the qualifications an applicant provides can be validated by other parties. In some cases, this can be as simple as a brief phone conversation or requesting the references complete an online questionnaire. However, reference checks can be more intensive in other industries, like law enforcement and criminal justice.

    Legal working status (I-9 verification)

    Certain states require employees to complete a Form I-9 to verify their employment eligibility with the Department of Homeland Security. While citizens and noncitizens must complete this form, employers must determine if the documents their people provide authorizing their work eligibility are genuine and accurate. Businesses must then retain their workforce’s I-9s for federal audits or inspections.

    To complete a Form I-9, employees must provide at least one supplemental document. Read our blog post for more details about I-9 requirements, penalties and what your organization can do to simplify I-9 compliance.

    Credit history check

    A credit history check (aka a credit report) examines an individual’s financial records to determine how responsible they are with money. These screenings can reveal:

    • debts
    • open credit cards
    • credit limits
    • bankruptcies
    • names, addresses and SSNs
    • and more

    In certain situations, applicants with poor financial history may not be seen as responsible enough to hold a certain role. Like all other background checks, however, credit history checks only help inform an employer’s decision.

    Driving record checks

    Driving record checks reveal information about an applicant’s driving history. This screening can include parking violations, speeding tickets and any licenses an employee has held. This verification is ideal for candidates who will spend any time operating a motor vehicle for their role. For example, an applicant who’s been at fault for multiple collisions might not make the best forklift operator.

    Global background checks

    A global background check verifies information about a candidate outside the U.S. As such, global background checks can be a combination of different screenings, such as a criminal background check or employment verification. These checks are vital for international organizations and can also verify where a candidate has lived and any aliases they’ve previously assumed.

    Preparing candidates and employees for background checks

    While not always required, you may find it useful to help a candidate prepare for a background check. Here are just a few useful tips to help applicants and employees prepare.

    1. Get official records

    Clearly inform candidates of the documents they should provide. This can include a specific list or a few relevant examples. The U.S. Citizenship and Immigration Services office maintains a list of acceptable Form I-9 documents you can use as a reference.

    2. Keep copies of records

    In addition to securing documents, it’s important for applicants to make copies of these records, too. Keep in mind that a copy may not always be an acceptable form of verification, but it can be useful, should a question arise.

    3. Notify references

    Encourage applicants to contact their professional references in advance of a check. This could help expedite a background screening and remind the references of their history with the candidate.

    4. Double check information

    Encourage candidates to verify their info and documentation before submitting it. This can help you avoid unnecessary bottlenecks during the background check process.

    5. Inform candidates of their rights

    Make sure you inform applicants of their rights in writing. Keep in mind laws like the FCRA require certain employers to obtain consent before running a credit history check.

    How long do employee background checks take?

    The duration of a background check varies depending on the information it’s combing. For example, a particularly comprehensive report could take weeks, depending on the responsiveness of the parties contacted. Even so, employers should invest in an option that expedites employee background checks as much as possible to prevent talent from falling through the cracks. It should also include a tool to simplify communication with applicants.

    Employee background checks: FAQ

    Is it mandatory to conduct background checks?

    Not always, but a state or federal law could require a specific kind of background check for a certain purpose. More commonly, acts like the FCRA regulate how businesses should conduct background checks.

    How often should background checks be conducted?

    In most cases, organizations only conduct background checks as a condition of hiring an applicant. However, different industries may feel the need to routinely conduct background checks on their employees. The motivation for doing so will depend on your company’s industry and overarching values.

    What happens when an employee background check fails?

    Failure is relative when it comes to background checks. When a screening yields a questionable result, it’s up to an employer to determine if they want to reject an applicant or terminate a worker.

    What is the process after background verification?

    While every business may conduct background checks at different phases of the hiring process, most do so right before a candidate executes a job offer. A successfully passed background check may also open the door to further salary negotiations or go straight to onboarding.

    Explore Paycom’s resources to learn more about talent acquisition, HR compliance and more.

    DISCLAIMER: The information provided herein does not constitute the provision of legal advice, tax advice, accounting services or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional legal, tax, accounting or other professional advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation and for your particular state(s) of operation.