Your Ultimate Guide to Small Business Background Checks
Hiring the right people is one of the most important decisions a small business owner can make. Background checks play a critical role in ensuring your hires are qualified, trustworthy, and a good cultural fit. In this guide, we’ll explore everything small businesses need to know about background checks, from costs and depth to compliance and best practices.
Why Are Background Checks Essential for Small Businesses?
Small businesses face unique risks when it comes to hiring. Negligent hiring lawsuits are not uncommon and often result in devastating financial and reputational damage. Employers lose more than 79% of negligent hiring cases, with settlements often exceeding $1 million. Conducting thorough background checks can help mitigate these risks, safeguard your business, and build a strong team. That’s why we’ve written Your Ultimate Guide to Small Business Background Checks to help you navigate these complexities of running background checks to protect your small business.
For a deeper dive, read EDIFY Screening’s article on Mitigating Negligent Hiring Risks.
How Do Small Companies Do Background Checks?
Small businesses typically follow these steps when conducting background checks:
- Choose a Reliable Provider
Working with a trusted provider like EDIFY Screening ensures access to accurate, FCRA-compliant reports. Learn about our customizable solutions tailored for small businesses in our article Customizing Background Screening Solutions for Your Business. - Obtain Consent
Legally, you must secure written authorization from candidates before conducting any background check. This step also builds trust. - Select the Right Screening Services
The scope of the background check depends on the role.- Basic roles: Employment history and Social Security verification.
- Sensitive roles: Criminal record checks, credit history, and more.
- Analyze Results
Review findings carefully to assess their relevance to the position.
For more detailed steps, see What You Need to Know Before Running a Background Check.
How Much Does It Cost a Business to Run a Background Check?
The cost varies based on the type and depth of screening required:
- Basic Checks: $20–$50 (e.g., Social Security verification, basic nationwide criminal database search, and an on-site county or statewide criminal search).
- Comprehensive Checks: $50–$150 (e.g., basic plus, expanded 7 yr criminal, employment verification, education verification, credit checks, and more.)
Investing in quality checks prevents higher costs associated with bad hires, such as legal fees and employee turnover. Learn more in EDIFY Screening’s Breakdown of Background Check Costs.
What Background Check Do Most Companies Use?
The most common background checks include:
- Criminal Background Checks
Searches federal, state, and county records for criminal history. - Employment Verification
Confirms previous job titles, dates, and reasons for leaving. - Education Verification
Validates degrees, certifications, and schools attended. - Credit Checks
Assesses financial responsibility, especially for fiduciary roles. - Social Media Screening
Reviews public online behavior for potential red flags.
For a deeper dive, read the Ultimate Background Screening Checklist.
Can a Company Do a Random Background Check?
Yes, but it must be done transparently and with proper consent:
- Consent: Employees should agree to potential ongoing or random checks at the time of hire.
- Consistency: Apply checks uniformly to avoid discrimination.
- Policy Communication: Clearly state random check policies in employee handbooks.
For compliance details, consult SHRM’s Guide on Background Checks.
How Strict Are Company Background Checks?
The strictness of background checks depends on:
- Industry Standards: Finance, healthcare, and education often require more stringent checks.
- Role Sensitivity: Positions with access to sensitive information may involve in-depth investigations.
- Company Risk Tolerance: Some businesses opt for stricter screenings to minimize liability.
What Comes Up When a Company Runs a Background Check?
A standard background check may include:
- Criminal Records: Felonies, misdemeanors, and pending cases.
- Employment Verification: Past roles and reasons for leaving.
- Education Credentials: Degrees and certifications.
- Credit History: Debt and financial behavior.
- Social Media: Public posts and activities.
- Driving Records: Essential for vehicle-related roles.
How Deep Do Company Background Checks Go?
The depth of a background check depends on:
- Standard Checks: Cover the past 7 years.
- Extended Checks: May go back 10 years or more for executive roles.
- International Checks: Include global criminal records and verifications.
Learn more about how deep checks should go in EDIFY’s Comprehensive Guide to Screening Depths.
How to Run a Background Check on Someone?
To run a compliant background check:
- Partner with a CRA: Use a trusted Consumer Reporting Agency like EDIFY Screening.
- Obtain Written Consent: Secure authorization before proceeding.
- Select Relevant Services: Tailor checks to the role.
- Submit Information: Provide necessary candidate details.
- Review Results: Evaluate findings carefully.
- Follow Adverse Action Protocols: Notify candidates if decisions are based on the report.
Do Companies Pay for Background Checks?
Most companies cover the cost of background checks to attract top talent and maintain professionalism. While some pass costs onto candidates, this practice is less common and may deter qualified applicants. Many states do not allow employee self-pay for background checks, even if those costs are reimbursed, so be sure to check your local laws before requiring applicants to pay for their own background checks.
How Much Is a Full Background Check?
A full background check ranges from $20 to $150, depending on the depth and scope and any required court or third-party access fees. EDIFY Screening offers transparent pricing with no hidden fees. See our Pricing Guide.
What Is a Red Flag on a Background Check?
Common red flags include:
- Inconsistent work history
- Serious criminal convictions
- Financial instability for fiduciary roles
- Inappropriate social media activity
Learn to address red flags in Our Guide to Hiring Challenges.
Protect Your Business with EDIFY Screening
A comprehensive background screening process is an investment in your organization’s safety, reputation, and success. Small businesses can avoid costly hiring mistakes by implementing thorough, legally compliant background checks. With customizable solutions, EDIFY Screening ensures accurate, cost-effective results tailored to your needs.
Don’t wait for a hiring mistake to impact your business. Contact EDIFY today to create a screening solution tailored to your needs.
- Phone: 336-283-0237
- Email: [email protected]
- Website: www.edifyscreening.com
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