What is an employee background check?

What is an employee background check?

An employee background check examines a person's historical record to assemble their criminal, financial, and commercial records. An employee background check is frequently used by businesses to hire people for positions of trust so they can be sure they are selecting the best candidates.


Verifying one's education and job status form part of the pre-employment background check. This confirms that the prospective employee attended the institutions and companies indicated, their educational background and past employment on their CV. At this moment, you may also check references.


When employing an accountant, for example, a business would undertake an employee background check to see whether the individual has been involved in financial mismanagement or has a criminal record from past work.


Purpose of An Employee Background Check

Organizations undertake an employee background check on potential hires for various reasons. Among them are the following:

1. Verify the details on the CV or job application.


Potential employees may be the subject of an employee background check by an employer to ensure that the information on their résumé or application truly reflects who they are. The employer will confirm if the applicant worked for the organizations listed, their college of attendance, and the marks they earned at different stages of schooling.


The checks also aid in differentiating the talents of all prospective candidates, reducing the application pool to those with the skills and credentials most wanted or required by the organization.


2. Examine a candidate's prior infractions

An employer is curious about a potential employee's character flaws, prior transgressions, and any threats the individual could pose to the company. Investigating criminal histories, legal cases, aliases/alternate names, etc., may be necessary. The Fair Credit Reporting Act (FCRA), for example, outlines what information companies are permitted to check on applicants and sets requirements for applicant screening. 


3. Shield employers from legal troubles

An employee background check can shield the employer from legal responsibilities as well. A company may hire an employee with a sketchy history. Employers may be liable for carelessness if an employee participates in harmful or illegal activities. For instance, if a corporation hires someone on the terror watch list without an employee background check, the organization will be held liable if that person commits terrorist acts while working for the company.


What Do Employers Look For In An Employee Background Check



Work Experience

One of the most important factors hiring managers to take into account when evaluating candidates for a position is work history. The idea is that a person's career history might indicate how competent they are for a certain position. For certain positions, applicants must have a certain number of years of experience in a particular field or job category. Employers may not be as picky about employment history in other circumstances. They will consider employment history to ascertain what abilities or practical expertise candidates may offer to the position.


Credit check

Some companies may consider a candidate's credit history as part of the pre-employment investigation. These checks are frequently used to evaluate a candidate's financial habits in positions linked to finance, such as banking or stock trading. Some companies think that assessing a person's financial management may gauge how financially responsible they will be in their professional life. When a company hires someone for a position requiring accounts, handling money, or other financial problems, a credit check that finds bad credit might occasionally be a danger indicator. Bad credit means it will cost more in terms of borrowing costs by paying higher interest rates. That's why it’s important to know the actual cost of bad credit and what to do to maintain a good credit score.


Driver's license

Employers frequently incorporate driving record investigations as part of their applicant screening process when hiring for positions that require operating automobiles. Even while motor vehicle history is not significant for every job, it is one of the most important metrics for delivery roles, trucking occupations, jobs requiring the operation of heavy construction equipment, and other professions of a similar kind. Employers hiring these sorts of employment run the danger of injury and responsibility if a candidate has a history of risky driving, including numerous speeding tickets, license suspensions, and DUI convictions.



Despite this confusion, reference checks have a distinct function from job verification checks. While professional references may comment on a candidate's character, job performance, talents, and general work style, employment validations establish whether the material on a résumé is accurate. Employers frequently request that applicants include two to three referrals on their job applications. Reference checks entail speaking with such people personally to get further information about the candidate.


Verification Checks

Verification checks can also look into a person's educational background and professional licenses, employment history, and references. A school or university is contacted to confirm a candidate's attendance, the dates of attendance, any diplomas or certificates obtained, and any honors conferred on those diplomas.


Professional license verification guarantees that a person has the license(s) required to work in a given area in a certain state. Licenses to educate, practice law, practice nursing, or practice medicine are a few examples.


Employee Background Check, Most Employers use?

Background checks relating to employment come in a few distinct forms. The pre-employment background check is the most typical. These can be carried out at any stage of the recruiting procedure, although they are most frequently done for applicants who have received a conditional employment offer.


The second type occurs when businesses regularly verify the employee backgrounds of their present workers. If you do this, there should either be a justification for the employee background check, such as a felony that has come to your knowledge and is of concern, or a corporate policy outlining how and how frequently an employee background check should be conducted. If a policy exists, make sure that it is explained to staff members and that it is followed consistently and equitably.


You may do many different types of investigations, whether you're vetting prospective new workers or an existing team. Most employee background checks companies provide you with the choice of paying for a predetermined bundle of checks or only the particular ones you require.


A fundamental strategy may, for instance, comprise a nationwide criminal search, a single nationwide criminal search, a Social Security/Identity number trace, and a check of the sex offenders' database. More extensive programs may include additional national investigations, school and job authentication, vehicle record inquiries, creditworthiness checks, and drug testing.


Related Article: What are red flags on a background check?


How to Conduct an Employee Background Check

The candidate's permission is not necessary when an entity runs an employee background check on its own. However, the employer must give written notice to each applicant and get their approval before using any third-party screening organization or private investigator to investigate a job applicant's past. The proposal for the employee background check may be approved or rejected by the candidate.


An unfavorable disclosure statement must be sent to an applicant if an employer declines to hire a person due to information discovered through background investigations. The disclosure includes information on the candidate's right to contest the reports utilized, and a duplicate of the user report/background check the firm used to reach its judgment.


Here is a step-by-step procedure for doing an employee background check in an authorized, reasonable, and dependable way.

1. Consult with your insurance company and get legal guidance.

Always seek legal advice before deciding to perform pre-employment background checks. They can guarantee that you advance appropriately. It would help if you also spoke with your company's insurance provider about your liability plan.


2. Create a policy

Before starting this program, you must have a well-reviewed corporate policy for running an employee background check. Make careful to mention probable reasons for the investigations in your policy if you also want to perform continuous employee background checks.


3. Use a pre-employment check provider that complies with National Regulations.

Choose a source of an employee background check that abides by FCRA and national guidelines. Ask a potential provider if its procedures comply with the FCRA and for evidence to back up any allegations about them when you locate one you are interested in.


4. Inform candidates.

Make it clear to all candidates upfront. This provides them with fair notice and could exclude candidates who are aware that an employee background check would eliminate them from consideration.


5. Present a job offer with conditions.

Only after making a job offer, it's crucial to run an employee background check. This relates to the ban-the-box legislation. Employers cannot inquire about candidates' criminal records on a job application under the ban-the-box law. The ideal practice is to initially condition a job offer on the successful conclusion of an employee background check, even if this rule is not often enforced in states.


6. Conduct the employee background investigation.

Each employee background check company has a unique procedure. The majority of the time, all you have to do is sign in to the secure website of your provider, answer a few questions, and make the order. Checks normally take two to five days to complete depending on how many particular screens you are running.


7. Analyze and take into account the results.

Considerately examine the data you find when you do the employee background check. The report may list convictions. Check how current they are and how pertinent to the position. For instance, if a job application was charged with marijuana possession 20 years ago and not much has changed, it's usually fine to move forward with the individual. You should consider the implications of hiring this individual if they have violent or sexual convictions. Getting in touch with your lawyer can also be beneficial.


8. Review the outcomes (particularly when you rescind an employment offer).

It's fine to get in touch with the candidate and inquire further. They ought to be given a chance to set the record straight, rectify an error in reportage, or provide context.


But an argument is not what this is intended to be. If you decide not to offer a candidate, be prepared to explain the significance of the information you uncovered. Don't hold off till the candidate concurs with you. Justify your position with facts, such as \"I'm sorry, Mr. Joe, but a robbery offense dating back one year does not give us sufficient confidence to continue forward with your job at this time.\"


9. Be consistent.

Do not subject certain candidates to an employee background check while excluding others. For instance, if you interview one candidate for classification or a job with many openings, you must examine everyone who has advanced to that stage of the recruiting process.


10. Store your documents.

Include a list of all the people you have screened and potentially offered a position to. Your records should be kept for at least a year after the job advertisement has ended. It is advisable to store this data in a safe place in case a previous applicant requests a copy of their report or decides to sue your business.


What Distinguishes A Self-Run Employee Background Check From A Third-Party Check?

You must involve a third party of some kind, usually a background check organization, to conduct trustworthy and lawful employee background checks on job applicants.


These businesses are skilled in the procedure. They know the resources to consult and perceive whether information may be false. Most significantly, they comply with national regulations. If a candidate feels they were handled unfairly throughout the employee background check, this helps shield them from legal action.


You might be tempted to conduct a fast internet \"people search\" on your own to investigate a candidate's past before hiring them. The great majority of such websites, however, do not adhere to legal regulations and expressly indicate in their terms of service that pre-employment background checks should not be performed using them. These websites also include some obsolete or erroneous information. Therefore, if you exclude a candidate from consideration based on data from one of these searches, they may sue you.


Related Article: 5 Sample Background Checks


What Is Included In An Employee Background Check

The sensitivity of the investigation determines how much information is included in the employee background check. This is among its components:

1. Employment background

The employer verifies the accuracy of the employment information presented in the CV by reviewing the applicant's career history. It includes vocal affirmations of previous employment history, length of time at each position, performance, successes, compensation received, relationships with other employees, etc.  


2. Social Security/ Identity number verification 

Social Security/ Identity number validity is verified by social security validation. The validation also discloses the candidates' entire names, any aliases they may have used, their birthdates, and the places they have resided in the past.


3. Credit report

A credit report summarises the applicant's history of repaying debts. When the position for which you are applying includes managing financial resources, this is extremely crucial. Excluding applicants from the recruiting process for such roles may be justified if they have a poor credit rating. According to the FCRA, employers must get permission from potential employees before running a credit report.


4. Criminal history

Depending on the region, different laws govern employee background checks for criminal history. Verifying a candidate's arrest and conviction history is done through criminal records. Using data compiled from a variety of sources, including county records, federal court records, and law enforcement records, some websites offer fast employee background checks. Information about criminal histories is crucial for a job that demands security and trust.


5. Legal employment status

Governments have recently increased immigration raids to remove foreign workers without work permits, raising questions about the legal working status of employees. Particularly for occupations that call for resident workers, employers run employee background checks on such individuals to determine the status of their active workers.


What Are The Benefits Of An Employee Background Check?

Pre-employment background checks generally pay for themselves in benefits. Pre-employment background checks guarantee you are receiving the facts from prospective recruits because roughly over 53% of job applicants lie on their applications or during the interview process.


Establishing and maintaining an employee background check system for your business has several benefits.

  • Ensuring comprehensive workplace security: Employee background checks reveal whether an applicant has a criminal past, which lowers theft and violence in the workplace.
  • Avoiding terrible hires: Many qualities go into being a successful employee. Even non-violent convictions might provide insight into a candidate's integrity and dependability. Additionally, it guarantees that the individual has been completely honest about their prior career and education. If they lied about that, they could lie after they have a job about other things as well.
  • Reducing responsibility and legal expenses: If an event occurs with an employee with a criminal background, failing to thoroughly investigate new hires raises your obligations and potential legal costs. When an employee asserts that their company neglected to fire or dismiss another employee who had injured someone at work, this is known as \"negligent retention.\" It is one of the most serious liabilities.
  • Ensuring position fit: In some businesses and sectors, some jobs—such as those that handle money or have sizable budgets and those requiring armed security—are regarded as high-trust roles. A candidate's eligibility for a finance director or auditor post may be determined by conducting background investigations that include financial grading. The same goes for giving a service weapon to a security job applicant with a violent past.


Both small enterprises and major corporations should do employee background checks. It is crucial to develop an employee background check policy and communicate it to all candidates, given that there are no legislative obligations for employee background checks.


What Causes A Red Flag On An Employee Background Check?

Recruiting practices must be top-notch if your organization wants the finest of the best to represent and lead the business. It would be easier for a company to choose the ideal applicant for a position if it were aware of some typical employee background check red flags and how they impact a candidate's credentials. The organization may discover more about the candidates it could recruit with a thorough and trustworthy personnel screening procedure. Still, it is ultimately the organization's responsibility to weigh all the available data and how it may affect its choice.


Multiple Unemployment Periods

It's usual for people to have work gaps, and many prospective employees may have a history of unemployment on their resumes. One could have changed careers, been unwell, or taken time off to look after a loved one. But you might want to look into it more if the candidate's background shows an unemployment trend. The candidate may be difficult to deal with, unreliable, or struggle to maintain a job if there are several employment gaps.


Numerous Jobs with Short Lives

Someone who has had numerous short-lived occupations should be of worry, similar to someone who has experienced several periods of unemployment. While seasonal or temporary employment is acceptable and excellent for acquiring experience, a person who frequently changes jobs is usually not the best fit for your organization. It can hint that they were fired or forced to resign, that they quickly become bored or dissatisfied with their job. This applicant is far less likely to live up to your company's expectations of investing in trustworthy, longer-lasting staff.


Inconsistent education or experience

Inconsistency is one of the most typical warning signs in an employee background check. You should look into the situation if a background check for employment reveals information that differs from what the applicant and their résumé said. Your potential employee can make false information about their training, work history, or the roles and responsibilities they had to seem more enticing to you and your business. While many job seekers exaggerate their qualifications on their resumes to appear as impressive as possible, you should proceed with caution when these embellishments become dishonest. Even if they meet all other requirements, understanding their nature necessitates careful consideration.


A criminal history

Investigating a candidate's criminal past is arguably the most crucial step in any background screening check. Although certain instances might not prevent you from hiring a candidate, it is essential to be aware of an employee's criminal background. Your business may be liable if you don't do criminal background checks and an employee commits a crime. However, it's important to consider the context of any information that may surface during a criminal history check. Arrests don't always end in convictions, and insignificant or old occurrences, being in the wrong location at the bad moment could be the only explanation.


Refusing a Check

An applicant may be a competent and trustworthy employee to hire if they address any inquiries regarding their criminal, financial, or job background throughout the application or interview process with composure and candor. However, if someone refuses to answer questions about their past or flat-out lies about it on your bespoke background check, they could be concealing something more serious than you thought. In many circumstances, you may learn just as much about a person as you can about what shows up on their employee background check by watching how they handle any potential red flags.


You want honest, dependable individuals working for you and your business, so anyone who makes an effort to conceal information about their background—even if they make small inaccuracies—is certainly not the right candidate.


Related Article: How Long Do Pre-Employment Background Checks Take?

Richard Mapfuise
This article was written by Richard a Consultant at Industrial Psychology Consultants (Pvt) Ltd

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