How to Run a Background Check for Employment

What Is A Background Check for Employment?

A background check for employment is an investigative process that allows employers to verify a job candidate’s professional, legal, and personal history before making a hiring decision. The goal is to confirm that the applicant meets job qualifications, is trustworthy, and does not pose a risk to the company.

What Does an Employment Background Check Include?

Employers can tailor background checks to meet the requirements of a specific job role or industry. Common screenings include:

• Criminal records check – Searches for felony and misdemeanor convictions, pending charges, and sex offender registry status.
• Employment history verification – Confirms past employers, job titles, and dates of employment.
• Education verification – Ensures that degrees, certifications, and professional licenses are valid.
• Motor vehicle records (MVR) check – Reviews driving history, including DUIs, accidents, and license suspensions.
• Credit history check – Assesses financial responsibility for roles involving money management.
• Drug testing – Screens for illegal and prescription drug use to ensure compliance with workplace policies.

Employers must ensure that all background check procedures align with federal, state, and local laws to avoid legal violations and discrimination claims.

Why Background Checks Are Critical for Hiring

Hiring the right employee is one of the most important decisions a company can make. A well-qualified hire can improve productivity, strengthen workplace culture, and contribute to business growth. However, a bad hire can lead to financial losses, safety risks, and even legal consequences.

A background check is an essential part of the hiring process. It helps employers verify a candidate’s work history, education, criminal record, and other important factors before making a final decision. In certain industries, background checks are legally required, and failure to conduct them can expose companies to significant liability.  There are three primary things you’re doing when you run background checks.

1. Protecting Workplace Safety

One of the most important reasons for conducting background checks is to ensure workplace safety. Employers need to verify that new hires do not have a criminal background that could pose a threat to employees, customers, or company assets.

For example, a healthcare provider hiring a home caregiver must verify criminal records to protect patients. Similarly, a business hiring a delivery driver should check motor vehicle records to reduce liability risks.

A criminal background check helps prevent workplace violence, theft, and security breaches that could harm a company’s reputation and operations.

2. Verifying Candidate Integrity

Many job seekers misrepresent information on their resumes. According to hiring studies:

• 75% of HR managers have caught candidates lying about their work experience or education.
• 25% of job applicants falsely claim to have a degree or certification they never earned.

A background check helps employers confirm the accuracy of an applicant’s credentials and prevent fraudulent hires.

For example, a financial institution that hires an applicant without verifying their credentials could later discover that the employee lied about having a required CPA certification. This oversight could lead to compliance violations, reputational damage, and financial loss.

3. Reducing Legal and Financial Risks

Negligent hiring lawsuits are a major concern for businesses. If an employee engages in misconduct, fraud, or violence and their employer failed to conduct a background check, the company may be held legally responsible.

Industries such as healthcare, finance, education, and transportation have strict regulatory requirements for background checks. Employers that fail to meet these standards can face fines, lawsuits, and even the loss of their business licenses.

For example, a trucking company that hires a driver without checking their driving history might later find out that the driver has multiple DUI convictions. This could put public safety at risk and expose the company to significant liability.

Employers that fail to screen candidates properly risk negligent hiring lawsuits, which businesses lose 79% of the time. In some cases, settlements for negligent hiring can exceed $1 million. A single mistake in hiring can lead to reputational and financial damage, making employment background checks a necessary step in protecting a company’s future.

This rest of this guide explains everything employers need to know about how to conduct a background check, legal requirements, and best practices to ensure compliance and effectiveness.

What Does A Background Check Show?

What appears on a background check depends on the type of screening, the entity conducting the search, and other factors such as laws and regulations. Here is a closer look at what shows up on common types of background checks:

• Criminal record checks provide information on a candidate’s criminal history, which may include misdemeanor and felony convictions, arrest records, and pending charges. Criminal record searches can return federal, state, and county records depending on the scope of the search. Employers use these checks to determine if a candidate could pose a threat to customers or create an unsafe work environment.
  
• Employment verification verifies a candidate’s previous employment details, including employer names, job titles, and dates of employment. Employment history verification ensures that the information provided by a candidate is accurate and that their work experience meets the position’s requirements.
• Education verification confirms a candidate’s academic enrollment, dates of attendance, and degrees earned. This process can help mitigate the risk of hiring a candidate with false credentials.
• Driving record checks display a candidate’s motor vehicle records (MVRs) for driving-related information such as license status, moving violations, accidents, or DUIs. This is crucial for positions where employees, volunteers, or contractors will operate motor vehicles for business purposes.
• Civil court checks reveal a candidate’s history of lawsuits, judgments, liens, and other non-criminal court records. These checks are particularly important for positions where employees will have financial or management responsibilities.
• Credit checks display a candidate’s credit and payment history, bankruptcies, and accounts in collections. Reviewing credit history may be required for certain jobs, particularly those where access to financial assets, transactions, and decisions are a primary responsibility.
• Drug testing screens a candidate for the use of controlled substances, including prescription and illicit drugs. Routine employment drug testing may assist employers in maintaining a safer and more productive workplace.
• Healthcare sanctions checks report penalties, suspensions, or disciplinary actions taken against a healthcare professional. This ensures compliance with federal regulations and verifies that your healthcare practitioners are in good standing.

How to Run a Background Check for Employment

Employers can conduct background checks in-house or work with a Consumer Reporting Agency (CRA) like EDIFY Screening, which specializes in FCRA-compliant background screenings tailored to different industries.

Step 1: Create an Employment Background Check Policy

A background check policy outlines the specifics of your screening program to ensure it is consistently applied across your organization and helps employers maintain consistency, fairness, and compliance with hiring regulations. The policy should include:

1. Which types of background checks will be performed, and on whom. It is a best practice to implement background screening across your entire organization, but tailor the employment screening packages by position. For example, you may wish to require credit checks for positions that manage money, and driving record checks for positions that involve operating motor vehicles.
2. How background check results will affect your employment decisions. Your background check policy should clearly outline the types of information that will be considered in employment decisions. Best practices suggest taking into account the nature of the position being sought, the nature of the crime, and the amount of time since the conviction occurred.
3. When and how often background checks will be conducted. Determine the stage of the recruitment process at which you intend to screen candidates and the intervals for screening current employees. Federal law permits employers to conduct employment screenings at any point after obtaining the candidate’s consent; however, state and local laws may impose more restrictive regulations.

A written background check policy ensures a fair and transparent process, prevents discrimination, and avoids litigation and enforcement from federal agencies.

Step 2: Understand Legal Compliance

Background checks are regulated by federal, state, and local laws and regulations. The employer is ultimately responsible for ensuring compliance, and failure to do so can lead to costly fines, settlements, and lawsuits.

Here are four areas of federal compliance to note:

1. Consent Forms: The Fair Credit Reporting Act (FCRA) mandates that employers notify candidates in writing that a background check will be conducted for employment purposes. This disclosure must be clear, conspicuous, and provided as a stand-alone document.
2. Adverse Action: The FCRA mandates that employers adhere to the three-step adverse action process when they intend to take an unfavorable action based on the results of a background check. Employers must provide a pre-adverse action notice, including a copy of the background report and a Summary of Rights. Subsequently, they must allow the candidate a reasonable period to respond (typically five business days) before issuing an adverse action notice.
3. Ban the Box: Ban the Box laws differ among states and municipalities. These regulations can influence when employers are permitted to inquire about a candidate’s criminal history or affect the timing of when employers can request a background check, such as waiting until after the first interview or after a conditional offer is made. Ban the Box laws may also impact the adverse action process, so it is essential to review applicable laws.
4. EEOC Guidelines: The EEOC enforces Title VII of the Civil Rights Act of 1964, which prohibits employer discrimination based on race, color, religion, sex, or national origin. It is essential to review your background screening policies to ensure they do not result in adverse treatment towards a protected group, particularly minority populations that are arrested at disproportionate rates.
   

Step 3: Choose a Background Check Company

Every business is unique, so it is important to choose a background check provider that best fits your specific hiring and screening needs. The right provider will depend on factors such as:

• Hiring volume and business size.
• Number of locations and regulatory requirements.
• Budget and screening policy.
• Integration needs with ATS or HR platforms.

Key Features to Look for in a Background Check Provider

• Built-in compliance support – A good provider should offer more than just FCRA compliance. They should help you mitigate legal risks related to EEOC, Ban the Box laws, and state-specific regulations, particularly if you hire across multiple locations.
• Automated adverse action workflows – Employers must follow a legal process if they choose to take adverse action based on background check results. A provider with integrated adverse action workflows ensures that employers send pre-adverse and final adverse action notices correctly.
• Individualized assessments – EEOC guidelines recommend that employers conduct individualized assessments when considering criminal records. A quality background check provider should have a built-in way to inform you when an individualized assessment is required.
• Flexible screening packages – The provider should offer background check packages tailored to industry, position type, and location to ensure you don’t waste resources on unnecessary screenings.
• User-friendly candidate experience – The provider should offer mobile-friendly workflows and digital consent options to make the process smooth for applicants.
• Integration with HR platforms – Reducing manual work is critical. A provider that integrates with your applicant tracking system (ATS) or HR software saves time and improves efficiency.

Step 4: Communicate with Candidates

It is crucial for employers to inform candidates about the background check process so they know what to expect. Be transparent with candidates about the reasons for conducting the background check and encourage openness in return. Inform the candidate that they are welcome to review their background check results, dispute any inaccurate information, and add comments in writing or speak with you to explain any alerts.

Be transparent with candidates about the background check process. This includes:

• Informing candidates before a background check is conducted.
• Obtaining written consent as required by law.
• Allowing candidates to review their background check results.
• Providing an opportunity for candidates to dispute inaccurate information.

By clearly communicating the background check process, employers build trust with applicants and ensure fair hiring practices.  And remember, Candidates have rights under the FCRA, as described in the document A Summary of Your Rights. 

Start Running Fast, Accurate Background Checks Today

Conducting pre-employment background checks enables employers to make more informed hiring decisions, establish safer workplaces, and mitigate risk. Collaborating with EDIFY Screening for employment screenings streamlines the background check process, delivering fast, accurate, and compliant results, which translates to quicker hiring times. EDIFY provides over 100 screening options through a user-friendly online platform and automated workflows, ensuring a seamless experience for both employers and candidates at every stage. Get started.

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