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Home » Are you Conducting Background Checks the Right Way?

Are you Conducting Background Checks the Right Way?

by | Jan 4, 2023 | HR Legal Compliance

While background checks are important to employers in their hiring process, it is equally important to do them properly. This article will explain why background checks are valuable and also provide some tips on how to conduct your applicant background checks without violating any laws or the rights of your applicants.

Why do I need to conduct a background check?

The most important reason to conduct routine background checks on applicants, from a legal standpoint, is to protect your business from potential liability in the future. It is common for employers to be sued for negligent hiring. If it can be shown that your employee caused someone harm while performing their job duties, and you should have known that they were incompetent or that they had a potential to engage in certain conduct that led to someone being harmed, then you can be liable for their actions.

Essentially the purpose of a background check is not to tell employers who they should hire, but instead, who they should not hire. So, if you do not conduct background checks or you don’t conduct them properly, you may put your business at risk for liability. Here are a few useful tips for conducting appropriate and effective background checks for all of your job applicants in order to protect your business and guard against potential liability.

Use an Accredited Screening Company

First, be sure to use an accredited background screening company to perform all of your background checks. Not every company offering screening services is the same and not all are accredited. Choosing one that is means you are protecting yourself even more.

Make Your Applicant Screening Process as Simply as Possible

If your screening process is simple and user-friendly, there is less of a chance of error or confusion. Consider initiating the process by sending a text or email which guides applicants to the website to complete the necessary forms online. It is recommended that employers use an applicant tracking system (ATS) to automate the hiring process. This system will streamline the process and give your hiring managers the tools needed to efficiently manage the screening process.

Make Sure You Comply with the Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA) is a federal law that regulates employment screening and provides the requirements for consent, disclosure and notice when employers use third parties to conduct background checks on both job applicants and employees. Some states have their own specific requirements, as well.

When an employer violates the requirements of the FCRA, they put themselves at risk for class-action lawsuits which can lead to enormous damages, attorney’s fees and costs meant to deter employers from committing future violations. One of the most common violations is failing to provide applicants with prior notice before making hiring decisions based on the results of the background check. So be sure to familiarize yourself with these requirements and take steps to ensure compliance.

Limits on the Use of Credit and Salary History in Hiring

It is also important to understand that an employer’s use of an applicant’s credit or salary history in hiring decisions is limited. Credit reports should not be used in hiring decisions unless it can be shown that there is a business necessity or that information is relevant to the position being filled. There are some state and local laws that ban or limit questions regarding an applicant’s salary history in order to avoid perpetuating pay disparities that result in gender or other discrimination.

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