Bad Hires—HR’s Most Costly Mistake

The best way to avoid bad hires is to gather as much objective information as possible about prospective employees. However, employers have to balance this need against the expense involved and the privacy rights of applicants.

Here are BLR^® editors’ five steps to good background checks.

Step 1: Establish a Background Check Policy

Establish a written policy regarding background checks and train HR personnel and hiring managers in the appropriate use of information obtained. Include the following in your policy:

• A list of jobs for which background checks will be required and what types of information will be collected


• A statement that a background check will be required for any applicant who receives a conditional offer of employment for one of the designated jobs


• Information on who will have access to background check reports


• A procedure for protecting the confidentiality of information obtained


• A statement regarding the types of information that might disqualify a candidate

Avoid conducting background checks on a selective basis. In addition, if certain information disqualifies one individual, similar information about another applicant should disqualify that applicant as well.

Step 2: Comply with the Fair Credit Reporting Act (FCRA)

When employers hire a third party to conduct a background check or obtain reports from outside agencies, the background checks and reports are subject to the Fair Credit Reporting Act (FCRA).

FCRA distinguishes between two forms of reports—consumer reports and investigative consumer reports. Consumer reports such as credit checks provide general financial and personal data about an individual’s payment history, overall indebtedness, addresses of record, etc.

Investigative consumer reports provide in-depth information about an individual’s character, general reputation, personal characteristics, mode of living, etc., that may be obtained through searches of public records and/or interviews with neighbors, friends, professional associates, and other acquaintances.

Due to the more “intrusive” nature of investigative consumer reports, FCRA requires employers who request this type of report to comply with additional notice and disclosure requirements. (When employers seek employment references, driving records, and criminal background information, they are requesting an investigative consumer report.)

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Notice Requirements

Before obtaining any type of consumer report, an employer must comply with very specific upfront notice requirements under FCRA.

Then, before taking any adverse action against an individual that is based in whole or in part on the information contained in a consumer or investigative consumer report (e.g., termination of employment, refusal to hire or promote), there is another series of notice obligations.

Weave these notice requirements into your procedures so they happen automatically.

Step 3: Take Care When Using Criminal History Records in Employment Decisions

No comprehensive federal law regulates an employer’s investigation or use of individual arrest and/or criminal conviction records. However, because a reliance on arrest and conviction information may inadvertently result in the disproportionate screening out of minorities and other protected groups, employers need to be particularly cautious in this area.

(Because an arrest record is not of itself evidence of criminal guilt, arrest records should generally not be used as a definitive grounds for rejection.)

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In the absence of a controlling federal or state law, employers should generally consider the following before making any negative employment decision based on an applicant’s or employee’s criminal record:

• The length of time since a conviction


• The nature of the crime


• The relationship between the job to be performed and the crime committed


• The number of convictions


• Rehabilitation efforts


• Subsequent employment history

Criminal Background Checks Required for Childcare Workers

Federal law requires federal agencies, federal facilities, and facilities under federal contract to conduct preemployment criminal background checks on all applicants seeking employment as childcare service workers.

In tomorrow’s Advisor, we’ll cover steps 4 and 5, and we’ll get a look at a special program of prewritten policies for reference checks and dozens of other topics.