Why Companies Do Background Checks?

Why Companies Do Background Checks?

When it comes to hiring new employees, conducting thorough background checks is an essential step for any organization. This article aims to explain why companies invest in this process, especially from the perspective of those seeking a new background screening provider that is comprehensive, fast, affordable, and compliant with the FCRA and local and state laws.

The Importance of Background Checks

Background checks serve multiple critical purposes in the hiring process:

  1. Ensuring Safety and Integrity: They help ensure that potential employees do not have a history that could harm the workplace’s safety and integrity.
  2. Protecting the Company’s Reputation: Hiring individuals with problematic histories can damage a company’s reputation and trustworthiness.
  3. Legal Compliance: Companies are legally obliged in many jurisdictions to perform due diligence in their hiring processes, which includes conducting background checks.
  4. Reducing Negligent Hiring Risks: Employers face significant risks in negligent hiring and retention cases. Statistics show that employers lose more than 79% of these cases, with settlements averaging over $1,000,000 per incident​​​​.
  5. Cost-Effectiveness: Background checks can be a cost-effective way to avoid the high costs associated with bad hires, such as training expenses, lost productivity, and potential legal fees.

Key Steps in the Background Check Process

  1. Consent and Initiation: Obtaining consent from the candidate and initiating the background check process.
  2. Data Collection: Gathering necessary personal and professional information from the candidate.
  3. Investigation: Conducting various checks including criminal records, credit history, employment and education verifications.
  4. Analysis and Reporting: Analyzing the findings and compiling a detailed report for the employer.

Statistics Highlighting the Importance of Background Checks

  • Employers who neglect proper background checks and end up facing negligent hiring lawsuits lose more than 79% of these cases, often leading to settlements exceeding $1 million​​​​.
  • Negligent hiring and retention lawsuits are becoming increasingly common, especially among smaller employers, highlighting the need for comprehensive background screening​​.


In today’s business world, where safety, integrity, and legal compliance are paramount, background checks are more important than ever. Companies looking to safeguard themselves from potential legal and financial repercussions should invest in thorough background screening processes. A qualified consumer reporting agency like EDIFY Background Screening offers the experience and technology to complete background investigations efficiently and affordably. By choosing such a partner, companies can minimize risks associated with negligent hiring, protect their reputation, and ensure a safe and productive workplace.

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