Why Conduct Background Checks on Potential Employees?

Does your organization conduct background checks as part of the hiring process? Many organizations do, but the type of background check—and the extent of it—varies considerably. Let’s take a look at some of the most pertinent reasons so many businesses opt to perform some type of background check on any potential new employee.

Some of the Reasons for Conducting a Background Check

Probably the biggest reason employers choose to perform background checks on potential employees is safety and security. Employers have an obligation under OSHA to provide a safe workplace—one that is free of known hazards. It can be easily argued that hiring an individual with violent tendencies—tendencies that could  have been discovered with due diligence—would represent a disregard for that obligation. As such, many employers opt to perform at least a criminal background check on potential employees before finalizing any offer of employment.

Similarly, if an individual causes harm to anyone—such as a customer or vendor—the employer may be liable if there was an opportunity to learn about this tendency, such as the existence of a public criminal record.

Security is another concern, especially for jobs in which an individual is responsible for cash or for making decisions that affect the company’s profitability or reputation. For any individual in these roles, employers often consider doing a background check that confirms the individual does not have a history of fraud, negligence, or theft, for example.

Background checks can also be done on a more limited scale. Technically, even calling references is a form of background screening. In these situations, an employer is trying to gauge what the potential employee is like to work with, to better ensure it will be a good fit. These can also be done as a means to try to uncover any fabrications or exaggerations on the application, résumé, or during the interview.

Conducting Background Checks: Some Caveats

Despite these very good reasons to conduct an employee background check, there are limits to what an employer can discover and use. For example:

  • Employers should be careful not to make decisions based solely on arrest records. An arrest is not the same as a conviction, and some protected groups may be disproportionately affected by a policy that disallows a perspective employee due to any arrest—thus making such a policy discriminatory.
  • Credit checks and other background checks require employee consent. Without consent, such checks can be illegal, depending on what type of check is conducted. Consult legal counsel and get advance permission before conducting background screenings. Additionally, if you use an employee’s credit rating as part of the background screening process, first be sure there is a legitimate business purpose for doing so. Otherwise, this alone can be a form of discrimination if potential employees are excluded based on credit. This is because lower credit scores disproportionately affect some protected groups, and eliminating on this basis alone would create a disparate impact on these groups. Even with a legitimate business purpose for checking a credit score, the employer must also be sure to follow the Fair Credit Reporting Act (FCRA) rules.
  • Background checks can inadvertently turn up information that discloses an employee’s inclusion in a protected class. Even if this information is not used in the hiring process, it is risky for an employer to have such information at this stage because it raises the possibility of a discrimination claim. For this reason, many employers use third-party services to conduct background checks—and those service providers only turn over information that is relevant to the hiring process, insulating the employer from knowledge about protected class inclusion and other information that should not be used in hiring decisions.
  • There are many federal, state, and local laws that limit the type of information that an employer can seek out—be sure to consult local laws and understand the limitations.
  • Be sure any background screening is relevant to the job. For example, there is probably no need to get a driving record for someone who will not be driving for the company in any capacity.
  • Be consistent in conducting background checks. Do not conduct background checks only for certain applicants but not others who are up for the same job. It’s OK to only conduct background screening after you’ve made a short list, but it’s not OK to only conduct background checks on individuals of specific groups, such as minorities or immigrants. Be consistent in the hiring process for each job opening.
  • When something is uncovered during a background screening, consider giving the applicant the opportunity to share more information about the situation. While you still need to be consistent in how the situation is handled, it’s always possible that there’s a mistake that can be rectified or there are extenuating circumstances that change the view of the situation. Of course, if you’re going to give the opportunity for explanations, be consistent and offer this opportunity every time the situation arises.

Does your company conduct employee background checks? What advice would you provide based on your experience?

*This article does not constitute legal advice. Always consult legal counsel with specific questions.

About Bridget Miller:

Bridget Miller is a business consultant with a specialized MBA in International Economics and Management, which provides a unique perspective on business challenges. She’s been working in the corporate world for over 15 years, with experience across multiple diverse departments including HR, sales, marketing, IT, commercial development, and training.