When a business begins their search for the perfect employee to fill an opening, they also want to make sure that they thoroughly understand the prospective employee's background to ensure they will be a good fit. An estimated 96 percent of employers report that they conduct at least one type of background check as they evaluate their candidates. Human resources departments use the background check process to help them sort through candidates' pre-employment and make sure they do not have any risk factors that might make them a poor fit for the position.
An employment background check can provide businesses with considerable information about the candidate's history. The information obtained can range from a criminal background check to simply making sure that the applicant did not lie about their employment history. To complete the background check, however, the prospective employer will need the candidate's social security number and their full name and address. In other words, the process will include the potential employee.
If you want to start expanding your small business with a new employee and want to run a background check on them before making a job offer? Then here is what you need to know about the legality of the background check and the type of information that you and your human resources department can check.
Why Do Employers Use Background Checks?
Employers run background checks on potential new employees for a variety of reasons. Most importantly, it is a screening tool to help guide the business's hiring decision. They want to make sure that they do not hire someone with criminal convictions that would endanger their business in any way or someone who lied about their employment history and does not have the qualifications to perform their job.
What Types of Background Checks Might an Employer Use?
As you begin to explore the possibility of running a background check on a job candidate, you will find several different types of checks that you can use. Each one focuses on different types of information in the person's background, and thus, some will have greater importance in particular industries than others. We will explore some of the most common forms of background checks and why employers might want to use them.
An Online Presence and Social Media Check
Businesses also often look at the online presence that a candidate has created for themselves through different social pages. Although social media pages are for personal use, businesses often look for insights into the professional judgment of the candidate and how they might represent the company.
A Financial and Credit Check
Employers can pull a potential employee's credit report to learn more about their credit history, such as past bankruptcies. Such checks allow the employer to see how this candidate has managed money in the past. This type of check is particularly important for positions in the financial industry or those that will otherwise be responsible for the organization's finances. However, the Fair Credit Reporting Act (FCRA) requires employers to gain consent from a prospective employee before accessing credit history.
Some Types of Medical Checks
Medical checks can be challenging to navigate, as an employer may only use them if it does not violate the Americans with Disabilities Act. The ADA forbids employers from making decisions about hires based on their disabilities or their medical situation. However, medical checks can have a legal, important purpose if a person's physical capabilities impact their ability to perform their job, for example, the military.
Drug Screening Check
Employers may use Drug screening tests to make sure a prospective employee does not engage in the use of different recreational drugs. Certain industries will require drug testing by law as a safety concern. Different states might restrict drug testing to those where it is required by law or to jobs that can prove drug usage would present a safety concern. Other states might also restrict certain drugs from the testing process.
Criminal Background Check
Eighty-two percent of employers who used background check options reported they wanted to make sure potential employees will not create an unsafe work environment or create a threat for customers.
Certain industries, such as healthcare, also have restrictions on the ability of businesses to hire people with particular types of criminal convictions. Restrictions of this manner make a criminal record background check particularly significant. Some states have restrictions about this stage of the hiring process as to when an organization can check the criminal history of a candidate. Restrictions to criminal checks can help people with convictions demonstrate their skills before being dismissed, hopefully improving their chances of finding gainful employment.
E-Verify Background Checks
E-Verify is used to help verify that a particular candidate is authorized to work in the United States. It uses Form I-9 to cross-check the entries with what the government has on file about the candidate's eligibility.
Although employees generally report their work history, education history, and any licenses or certifications they have earned on their resume, employers often want to verify this information. Reporting work history is critical in any industry where credentials and professional licenses play an essential role, e.g., medicine or law. Employers will go through an education verification and employment verification process to ensure that the candidate has been truthful on their application. Reference checks often are utilized during this part of the background check.
Motor Vehicle Records
Employers can pull reports related to a candidate's driving history. Accessing their driving record can help you verify whether or not the employee is a trustworthy driver. For any position that requires the employee to operate a motor vehicle, such as a truck driver or a delivery person for a company, this can be an important piece of employee information.
What Rights Do Potential Employees Have With Background Checks?
As a potential employer, it is important to know the rights employees have and the restrictions before starting the process. First, employers have to obtain the applicant's consent before accessing information, such as running a credit check.
The law requires that if employers find something in the pre-employment screening that ruins a particular candidate's eligibility for a position, that you have to let them know about the discovery and why you did not move forward with the hiring process. This notification plays an important role in the background check policy for your hiring manager. It gives the applicant the chance to see if something has appeared on their background check in error. If there is a mistake, they may have a chance to get it fixed. If it is not an error, they may also pursue an opportunity to explain the situation and see if you would accept their explanation.
Many states limit the time frame in which employers can access information. In some states, that limit restricts the information to the past seven years. In other states, the information can go back ten years.
Who Conducts the Background Checks?
Most companies will use third parties to conduct their screening services. By hiring someone else to perform the background check, you can receive a report in just a few business days from professionals accustomed to running the reports quickly and efficiently. These services also already have access to a variety of different databases that make the process easier.
Are Background Checks Only for New Hires?
Some employees may be surprised to learn that while an employee background check is a common screening method for prospective employees, existing employees may also be subject to the practice. Employment law allows for periodic and random drug screenings, which some businesses will do when a person works for them. Those who pursue employment in industries where drug usage could compromise their ability to perform their job and classified as a safety issue should particularly expect to receive regular screenings.
Let Skynova Help You Manage Your Accounting Throughout the Process
As you begin to build your business and bring in new employees, you want to make sure you keep your accounting organized and straightforward. As a small business owner, you want to focus your time and attention on your business. With the right accounting software, you will see how easy it can be to manage your finances and have more time for what you do best.
As you bring in your new employees, you will have to consider several additional expenses. Not only will you want to pay for a background check, but you also have to consider the costs of looking for a new employee and then bringing them on board to your organization. With Skynova, you can easily track your expenses and save your receipts so that you know the state of your finances. You can also easily monitor your revenue and profit as the new hire gets accustomed to their role. Knowledge of your cash flow will empower you to understand your ROI from your new hire better.
As you see how Skynova can simplify your accounting, you can also take advantage of our learning library to help you master topics related to your business finances. Feel confident as you invest in your small business.
Notice to the Reader
The content within this article is a general guide for running employee background checks and may not apply to your specific situation. Always consult with a professional accountant to ensure that you're meeting accounting standards.