Employee Background Checks: What's Legal, What's Not

When hiring new employees, it's better to be safe than sorry.

More and more businesses are using background checks during the hiring process to help ensure they aren't bringing someone into the workplace who is dangerous or dishonest. Recent research from the Society for Human Resource Management found that nearly 70 percent of employers conduct criminal background checks on all of their job candidates, while 47 percent conduct credit checks.

Lester Rosen, founder and CEO of Employment Screening Resources, said businesses that don't use background checks when hiring are putting their business at risk. He said when a new employee who hasn't been properly vetted is hired, employers are basically welcoming a stranger into their business.

"That stranger has access to your customers, your cash, your IT, everything," Rosen told Business News Daily. "It would make as much sense to do that as it would to walk down the street and give the keys to the front door of your home to a total stranger."

Employment background checks generally include three main aspects: criminal record checks, employment history and education verification.

When it comes to criminal records, Rosen said employers are looking for convictions of serious crimes that would affect the candidate's ability to do the job. He said just having a criminal record, under new federal laws, isn't enough of a reason to disqualify the candidate from consideration.

"You can't automatically throw away the application from someone with a criminal record just because of their criminal record," Rosen said.

He said the law mandates that employers learn more about the criminal conviction to determine if it would have an impact on the job and in the workplace.

Attorney Mark Briggs of the Arizona-based Briggs Law Group said the new law forces employers to have a clear connection for why someone's criminal record makes them unfit for the job they are applying for.

"For example, having five speeding tickets in the past two years may be a valid reason to not hire a delivery driver, but their misdemeanor vandalism conviction 10 years ago probably is not," Briggs said. "If the employer has inappropriately relied on something like an arrest report to deny an applicant a job, they can be in big trouble."

When it comes to employment and education history, employers are confirming that what the candidate wrote on their application is, in fact, true, said Mike Aitken, vice president of government affairs for the Society for Human Resource Management.

"You contact previous employers to verify the candidate did work there," Aitken said. "You are going to contact the educational institution to ensure they did graduate."

Not only will this help confirm if the candidate has the right skills and background for the job, Aitken said it will also tell an employer if the candidate has a penchant for lying.

"It can be a red flag to the employer if the person is being less than honest," he said.

Other things Rosen said employers can look at in a background check include sex offender status, driving records and Social Security traces, which show past addresses of the candidate and if any aliases were used.

Credit is another area that some employers check during a background screening. Aitken said they are used to get an overall financial picture of the candidate.

"They aren't trying to play gotcha and say 'they fell behind once or twice on their credit card payment or have an outstanding student loan debt,'" Aitken said. "It is to check their overall ability to meet their financial obligations."

Aitken said credit checks should be taken into consideration only in situations where a candidate is applying for a job handling large amounts of money or assets, such as a chief financial officer.

"If you are hiring someone to be an administrative assistant or work in government affairs at a lobbying firm, and they have a little bit of a sketchy credit report, it may not matter whatsoever," he said.
Rosen also stressed that conducting credit checks on candidates not involved with a company's money is risky.

"A credit report generally is only something that should be run in a situation where there is a clear connection between credit information and the nature of the job," Rosen said. "That should be very few jobs."

Briggs said one new area where employers should be very careful is when checking out applicants social media accounts. While they might be able to learn a lot about a person's judgment and character from their Facebook or Twitter accounts, there is some risk to viewing those.

"An employer might learn from a person's Facebook page that they belong to a particular religious group or have a disability that is not visually apparent," he said. "Knowing that information can open up an employer to liability, because they are not allowed to ask about those things in an application or interview for a job, and once you know something, you can be accused of considering that information illegally when making the hiring decision."

The key to a successful background check for employers is ensuring they are following the letter of the law. Rosen said employers who don't conduct background checks properly run a serious risk of being sued by a candidate.

"You have to make sure you dot your i's and cross your t's," because it is heavily legally regulated," he said.

The Fair Credit Reporting Act mandates that employers must get written authorization from job applicants before conducting a background check and once it's completed let the candidate know if anything harmful was found in their search.

"They are required to get the permission of the employee first," Aitken said. "The employer is then required, at the end of (the background check), to share with that employee any information that came up that had an adverse impact on their hiring."

Briggs said not following background check laws can cause employers some serious grief.

"The two biggest negative consequences are being sued by a job applicant or employee, and being investigated and possibly fined by a government agency such as the Equal Employment Opportunity Commission or National Labor Relations Board," Briggs said. "Defending against a government investigation or lawsuit is time-consuming and expensive."

To avoid lawsuits and government investigations, Briggs offers employers several tips:
Use a background check services vendor with a good reputation that provides you with clear, accurate and complete written reports. Many do-it-yourself Internet background search engines produce reports that are filled with duplicate and irrelevant information, which can be worse than having no background check at all. Also, if something with the hiring decision goes awry in the future, you will want to show exactly what information you reviewed and when. Getting a solid written report from a professional background check company is a great way to do that.
Have specific reasons for wanting to know certain information to make a hiring decision, which should be tailored for each type of job, and limit the scope of the background check to only that information. For example, you would want to know if a delivery driver candidate has a lot of speeding tickets, and you would want to confirm whether a person applying for a lawyer job graduated from college and law school, but you should not be checking every job-seeker's driving record or educational background. With the robust databases out there today, you can find out whether a person voted in the last presidential election and what magazines they subscribe to, but do you need that information to make a good hiring decision? Probably not.
Background check reports contain a lot of personal and potentially embarrassing information, so you should keep them in a secure place at your company and limit who can read them. Like most circumstances in life, you should treat others as you would like to be treated. Even if you have no empathy for the job candidates, you should keep background check reports close to the vest because your potential liability increases with each person who reads them.

In the end, Rosen said even though there is some cost associated with conducting background checks, it is a lot cheaper than hiring an employee who steals or hurts somebody.

"Most of the time, most of the people pass the background check," Rosen said. "But if you get someone who has a problem, the employer will be very happy they dodged the bullet and didn't bring someone into the workplace who is dangerous, unfit, dishonest or unqualified."

Originally published on Business News Daily.