Background checks are nearly universal, with 96% of employers conducting some form of background screening, according to a survey by HR.com and the National Association of Professional Background Screeners (NAPBS). They’re a valuable way to mitigate the risk of bad hires.
They’re also tricky territory. Employers must navigate host of obstacles and challenges when conducting this type of screening to avoid falling afoul of legal requirements and running into other problems. Here’s what employers need to know to ensure their background screening process doesn’t backfire.
Issue 1: Cost concerns
For the 4% of employers who don’t do any type of background check, per the NAPBS, the most common reason is cost. Even those who perform background checks may limit them due to the expense, which can rise very quickly. Background checks can include criminal history searches, credit and financial checks, educational verification, drug and alcohol testing, personal license verification, fingerprint-based checks, and more – and each check costs money.
Issue #2: Compliance requirements
A complicated patchwork of privacy and consumer protection laws make background screening a minefield of potential legal problems. The Fair Credit Reporting Act (FCRA), for example, implements protections for job applicants such as requiring written permission from the applicant. Even minor technical violations (like not providing the notice in a standalone document) can be grounds for litigation.
The Fair And Accurate Credit Transactions Act (FACTA), meanwhile, govern how this information can be collected, used, shared, and destroyed to protect consumer privacy. State and local laws also make a difference. Many states prohibit companies from making hiring decisions based on the job applicant’s credit report, for instance. Other jurisdictions have “ban the box” regulations in place that prevent employers from asking about criminal history.
Issue #3: Out of date, incomplete, or inaccurate information
A background check is only as effective as the quality of information that can be procured. Even national criminal databases are typically incomplete; most local and county records, for example, are not included. To gain a complete picture of the candidate, companies must query multiple databases and sources. Then, there’s no guarantee of accuracy. For example, information from people with similar names can show up on the wrong person’s background report. As TheBalance.com puts it, “What may look like a red flag could actually be a red herring.”
CoAdvantage, one of the nation’s largest Professional Employer Organizations (PEOs), helps small to mid-sized companies with HR administration, benefits, payroll, and compliance. To learn more about our ability to create a strategic HR function in your business that drives business growth potential, contact us today.