The Role of Background Checks in Hiring

Hiring a new employee involves more than finding someone with the right experience on their resume. Employers also need to determine whether candidates have the qualifications, credentials, and background required for the position. That is where pre-employment background checks can play an important role.

A background check can help verify information provided by a candidate and give employers additional information before making a final hiring decision. Depending on the position, screening might include employment verification, education verification, criminal history searches, driving records, professional licenses, or other information.

However, employers also need to be careful about how background information is obtained and used. Federal laws, including the Fair Credit Reporting Act (FCRA) and federal anti-discrimination laws, can apply to employment screening. State and local laws may add further requirements.

Understanding the role background checks play in hiring can help businesses develop a more consistent and informed screening process.

What Is an Employment Background Check?

An employment background check is a review of information about a job candidate that may be relevant to an employer's hiring decision. Exactly what is included depends on the employer, position, industry, and type of screening ordered. Common background checks can examine areas such as:

• Employment history

• Education

• Professional credentials and licenses

• Criminal records

• Driving records

• Credit or financial history for certain positions

• Other public records

Employers do not necessarily need the same screening package for every position. A driving record may be particularly important when hiring a delivery driver, for example, while verifying a professional license may be more important when hiring someone for a regulated occupation.

The goal should be to obtain information that is appropriate and relevant to the responsibilities of the position.

Why Do Employers Conduct Background Checks?

Employers invest considerable time and resources into recruiting, interviewing, hiring, and onboarding employees. Background screening can provide another source of information before the hiring process is completed.

Verify Candidate Information

Applications and resumes contain information that employers frequently need to verify. A background screening process may confirm previous employment, dates of employment, educational credentials, professional licenses, or other qualifications. Verification can help employers determine whether the information they relied upon during the interview process is accurate.

A discrepancy does not necessarily mean a candidate intentionally provided incorrect information. Employers may want to give candidates an opportunity to explain discrepancies before reaching conclusions.

Help Protect Employees, Customers, and the Business

Some jobs give employees significant responsibilities or access. Employees might enter customers' homes, operate company vehicles, handle money, work with sensitive information, or interact with vulnerable populations.

Appropriate screening can provide employers with additional information when evaluating candidates for these positions. The type of screening should reflect the responsibilities and risks associated with the job rather than simply applying every available check to every applicant.

Reduce Hiring Risk

A poor hiring decision can be expensive. Employers may need to restart recruiting, conduct additional interviews, train another employee, and manage the disruption caused by turnover. Background checks cannot tell employers everything about a candidate or guarantee that someone will become a successful employee. They can, however, add another layer of information to the hiring process.

Meet Position or Industry Requirements

Certain positions and industries may be subject to specific screening requirements under federal or state law. Employers should determine whether any special rules apply to the positions they are filling and incorporate those requirements into their hiring procedures.

Common Types of Pre-Employment Background Checks

"Background check" is a broad term. Employers can choose among several types of screening depending on what information is relevant to a position.

Employment Verification

Employment verification can help confirm information about a candidate's previous jobs, such as employers, positions held, and dates of employment. This can be useful when previous experience is an important qualification for the new position.

Education and Credential Verification

Some positions require a particular degree, certification, professional license, or other credential. Verification can help an employer determine whether a candidate possesses the qualifications listed on an application or resume. For regulated occupations, employers may also need to confirm that required licenses are current and valid.

Criminal History Checks

Criminal background checks may identify certain criminal records associated with an applicant. Employers should be particularly careful about how this information is interpreted and used.

The Equal Employment Opportunity Commission (EEOC) advises employers considering criminal history to evaluate factors including the nature and gravity of an offense, how much time has passed, and the nature of the job. An arrest by itself also does not establish that criminal conduct occurred.

Employers should avoid assuming that the existence of any criminal record automatically disqualifies a candidate from every position.

Driving Record Checks

Motor vehicle record checks can be relevant when driving is an important part of an employee's job. A business hiring commercial drivers, delivery employees, service technicians, or other employees who regularly operate vehicles may have a legitimate reason to review driving records.

Credit Checks

Some employers may consider credit information for positions involving financial responsibilities or access to significant financial assets. However, employment credit checks are subject to federal requirements, and states and municipalities may impose additional restrictions. Employers should determine whether a credit check is appropriate and legally permitted before including it in their screening process.

Drug Screening

Drug testing may also be incorporated into an employer's pre-employment screening program. Requirements and restrictions surrounding workplace drug testing can vary considerably based on the employer's location, industry, position, substances being tested, and applicable federal or state laws. Employers should develop clear policies that reflect the laws applicable to their workforce.

Background Check Laws Employers Need to Understand

Running a background check is only one part of the process. Employers also need procedures governing how they request, review, store, and act on the information they receive.

The Fair Credit Reporting Act

When an employer obtains a background report from a company in the business of compiling background information, the Fair Credit Reporting Act can apply.

Before obtaining a covered background report, employers generally must provide the applicant with a written disclosure and obtain written permission. Additional requirements apply when an employer is considering taking adverse action based on information contained in the report.

Before taking the adverse action, the employer generally must provide the individual with a copy of the report and a Summary of Rights under the FCRA. If the employer ultimately takes adverse action, additional notice requirements apply. Employers should establish these procedures before they begin ordering background reports rather than trying to determine the requirements after an issue appears.

EEOC Guidance and Anti-Discrimination Laws

Background screening policies must also comply with federal anti-discrimination laws. Employers should apply their screening procedures consistently and avoid treating applicants differently based on protected characteristics.

Criminal-history policies deserve particular attention. The EEOC recommends that employers using criminal records consider how the particular conduct relates to the risks and responsibilities of the position. For criminal-history screening, relevant considerations can include:

• The nature and seriousness of the offense

• The amount of time that has passed

• The responsibilities and circumstances of the position

Employers should develop policies around job-related factors rather than automatically excluding every applicant with a particular type of record.

State and Local Background Check Laws

Federal requirements are only part of the compliance picture. States and municipalities can impose additional rules governing employment background checks. Some jurisdictions have "ban-the-box" or fair-chance laws that restrict when employers can ask about criminal history. Others place restrictions on employment credit checks or establish additional notice requirements.

For businesses operating in multiple locations, this can make background screening more complicated. A procedure that is appropriate in one jurisdiction may need to be adjusted somewhere else. Employers should review the requirements that apply in each location where they hire employees.

When Should You Conduct a Background Check?

The timing of a background check can be just as important as the type of check being performed. Many employers conduct screening later in the hiring process, when they have narrowed the applicant pool or made a conditional offer. Some state and local laws may also dictate when employers can inquire about certain information.

Waiting until later in the process can allow the employer to first evaluate a candidate based on experience, qualifications, interviews, and other job-related criteria. Whatever approach an employer chooses, consistency matters. Candidates applying for similar positions should generally move through a standardized screening process based on established policies and applicable laws.

What Happens If a Background Check Finds Something?

A background check that returns information about a candidate does not necessarily provide an automatic hiring decision.

Employers first need to consider whether the information is accurate and relevant to the job. The significance of a particular record can depend heavily on the position. For example, information directly related to an employee's ability to safely or legally perform essential job duties may deserve different consideration than information with little relationship to the position.

Employers should also remember that background reports can contain mistakes or incomplete information. Providing applicants with the required opportunity to review and dispute certain information is an important part of the FCRA process when applicable.

When criminal history is involved, employers should also consider applicable EEOC guidance and state or local requirements before making a decision.

Best Practices for Employer Background Checks

A consistent background screening process can make hiring easier for managers while helping businesses address compliance responsibilities. Consider these practices when developing your process:

• Create a written background screening policy.

• Determine which screenings are relevant to each type of position.

• Obtain required authorization before ordering covered reports.

• Apply screening criteria consistently to similarly situated candidates.

• Establish procedures for reviewing potentially negative results.

• Follow applicable pre-adverse and adverse action requirements.

• Protect confidential applicant information.

• Train managers involved in hiring and screening.

• Review federal, state, and local requirements regularly.

• Work with reputable background screening providers.

Screening policies should also be reviewed as a company grows into new states, begins hiring for different types of positions, or changes its hiring procedures.

Simplify Hiring and Onboarding With Horizon Payroll Solutions

Hiring does not end once you choose a candidate. Businesses still need to manage background screening, new-hire documentation, onboarding, payroll setup, benefits, and numerous other HR responsibilities.

Horizon Payroll Solutions provides hiring and onboarding solutions designed to help businesses manage these processes more efficiently. Horizon's employee screening services can help businesses conduct pre-employment screening, while its onboarding technology helps move new hires through paperwork and into the workforce.

Horizon also partners with Verified First for background screening services, including pre-employment screening, criminal background checks, and drug testing. Combined with Horizon's broader payroll and HR solutions, employers can create a more connected process from recruiting and screening through onboarding and payroll.

If your business is looking for a better way to manage hiring, onboarding, payroll, and HR, contact Horizon Payroll Solutions to learn more about the solutions available for your workforce.

This content is for general information purposes and does not constitute tax or legal advice, nor does it address federal, state, or local law.  Employers should consult qualified legal and tax counsel regarding their specific obligations.