The ABCs About Background Checks

Background checks should be a part of every company’s standard hiring procedure. As such, your HR team or PEO should know how to perform a background check thoroughly and efficiently, so that it doesn’t put undue strain on business operations. After all, finding the right worker can be difficult enough; you don’t want an otherwise simple step in the process to trip you up.

Background check procedure is guided by federal as well as state laws. The U.S. Equal Employment Opportunity Commission (EEOC) restricts the type of information you can request and/or consider when vetting employment applicants. It is illegal to perform a background check on someone because of their race, ethnicity, disability, sex, religion, family medical history or age. Don’t ask medical questions, either.

In short: Treat every applicant the same. That means performing background checks on everyone you are considering for employment.

The Federal Trade Commission’s Fair Credit Reporting Act (FCRA) mandates that you notify the person—in writing—who is to be investigated, and that person must agree to the check. Have your HR company create a standard form that explains the procedure and present it to the applicant to be signed. This form should specify the scope of the investigation; if the background check will involve personal interviews to determine an applicant’s character and reputation, you must be explicit and receive written permission to proceed.

Of course, the background check itself is subject to various restrictions, depending on state, especially with regards to criminal history. The FCRA allows you to investigate arrest records over the last seven years, but state laws vary on to what degree these records can affect the hiring process. In some states, an arrest history cannot influence whether or not you hire a person; other states specify that prospective employers cannot consider arrests that did not result in a conviction. Familiarize yourself with your state’s laws on to what extent criminal history can affect employment.

While some information involved in background checks may be a matter of public record, there are federal laws in place limiting who can access certain information—like credit history, for example. The National Association of Professional Background Screeners is a list of valid consumer reporting agencies (CRA) regulated by the FCRA. Search the list for accredited and insured CRAs in your state and vet them accordingly.

You will have to supply the CRA with the written permission you’ve received from the applicant to perform the check, along with assurance that you will follow FCRA hiring standards. When the CRA provides you with a report about an applicant, they should also supply a summary of rights under the FCRA. Both a copy of the report and the summary of rights should be given to the applicant so that they have a chance to dispute explain the findings.

Most prospective employees should be open and understanding to a company’s need to perform a background check. However, concerns about privacy and equal opportunities are fair. Make sure your HR team or PEO are well acquainted with all of the details of background check regulation in order to put your applicants’ concerns—and your own—at ease.