How to do Background checks on Prospective Employees

Hurried hiring is bad hiring. Yet many businesses still hire new employees hastily, filling everything from entry-level positions to key strategic roles. Fast-growing businesses are the most at risk for rushed hiring because they have the most open positions and the greatest incentive to fill them quickly. Unfortunately, this can be a recipe for disaster, derailing competitive momentum and stymying long-term growth. 

The days of “check for a pulse” hiring are over. Even in today’s low unemployment job market due diligence must be performed to ensure new hires are qualified and poised for success. Background checks are a key tactic that employers use to screen candidates. While larger companies are more likely to perform thorough background checks, businesses of all sizes should be looking into candidates’ pasts.  

Types of Background Checks
While “background check” is a term that colloquially refers to a criminal records check, it also encompasses other types of hiring-related inquiries and investigations. Background checks give employers a way to examine a candidate’s past to make a more informed hiring decision.

Checking Criminal Records
Examining a job candidate’s criminal records allows a company to deny employment based on past criminal convictions. However, criminal background checks must abide by strict legal regulations.

According to the EEOC (Equal Employment Opportunity Commission) if an employer runs background checks they must be done for every candidate, not just for some applicants based on race, sex, religion, disability, age, or other defining characteristic. Companies must also give applicants notice that information obtained by a background check can be used as a basis to deny employment and get written permission to conduct the check. Without receiving this approval, a criminal background check cannot lawfully be conducted.

Once the criminal background check has been completed, it violates federal law to discriminate based on information obtained. If employment is refused as a result of the information learned through the background check, the FTC (Federal Trade Commission) further requires that the candidate be:

• Informed of the decision
• Provided a copy of the report
• Given the name of the company doing the check
• Granted time to review the report
• Given the opportunity to dispute the accuracy of the report

Regardless of the action taken, however, the personnel documents generated (both paper and digital copies) must be retained for 1-2 years and then disposed of securely.

Verifying References
Some employers do not take the time to verify references at all, or just spot check top candidates before making offers. However, substantiating references is a key background check tactic.

Provided references should act as character witnesses, portraying the candidate in the best possible light. Remember, because they are provided by the candidate, references will represent only the most positive aspects of a candidate’s character, which is why it should raise a red flag if the information provided is not stellar.

Analyzing who the references are from will offer a sense of who is most approving of the candidate. Direct managers and senior leadership listed as references indicate that the candidate has done exemplary work that has earned recognition from others in more senior roles. Peers listed as references intimate that the candidate is respected and well-liked by fellow employees, signaling the possibility of a good cultural fit. However, listing only family members and friends as references can imply that the candidate either lacks work experience or has had problems with work colleagues.

Consulting with Former Managers and Peers
References attest to a candidate’s character and professional attributes, but because they are self-volunteered, they may not portray a complete picture. A better way to learn more about a candidate is to reach out to former managers and peers who are not expecting to be asked. If hiring managers or HR personnel have personal or professional connections at a candidate’s previous employer, request additional information about topics directly related to the functions of the job from earlier on in a candidate’s employment record.

Important – Never consult with personnel at a candidate’s current employer!

Testing Listed Skills
For technical roles, a test can assess whether demonstrable skills measure up to stated proficiency. However, before administering a skills test ensure that the skillset being evaluated is directly related to the job and is an indicator of how successful a candidate will be in the role, otherwise the testing process could be construed as a form of discrimination. If real company data, confidential information, or proprietary processes will be provided, have the candidate sign an NDA (non-disclosure agreement) beforehand to safeguard the business.

Exploring Social Media Usage 
Looking up candidates on social media is a hot topic in recruiting and hiring these days because it is still controversial. Advocates argue that social media platforms are publicly viewable so applicants choosing to disclose information about themselves openly are inviting anyone, even prospective employers, to see it. As such, they feel justified in viewing this information, and factoring it into the offer decision. Opposers, however, argue that demographic characteristics, opinions, beliefs, and attitudes expressed on social media do not directly correlate with what kind of an employee the candidate will be. Furthermore, it can be argued that personal biases and prejudices of hiring managers can lead to overt or implied discrimination or favoritism during hiring. While employment law has not evolved as quickly as the questions around social media use in hiring, companies engaging in blatantly illegal or unethical employment practices can still face legal action. Any use of social media background checks should be approached cautiously.

The common objection to conducting background checks is the cost. There is a fee to conduct a criminal background check and verifying references and performing skills testing takes time. However, the cost of not doing background checks is far greater. Employee turnover costs a business heavily in the form of re-hiring and re-training. In fact, a CareerBuilder study estimates that between lost productivity, decreased morale, and brand damage this cost may be as much as $50,000. For smaller businesses that contract out hiring duties, this cost can be even higher.

Background checks for bookkeepers and accountants is even more critical to a business which is one of the reasons so many rely on ASP. As you consider how to grow your business and build your team, be sure to keep us in mind!  Contact us here.