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What Small Businesses Should Know About Running Background Checks

As an employer, you know that keeping your workplace safe, productive and efficient means that the hiring process is crucial to your success. Background checks can save you money by helping identify candidates who will reduce turnover rates. 

Yet, with employment laws changing frequently, it can be tricky to know how to safeguard your company from privacy violations while at the same time, balancing the need for background checks to uncover any potential risks. 

Fortunately, there are some things that you can do to make sure that you screen candidates legally. The following tips can ensure that your background check process is legal, low-cost, and effective.

Understand Important Background Check Laws

Both federal and state laws determine how and what you can check on prospective employees. At the federal level, the Fair Credit Reporting Act (FCRA) and Title VII of the Civil Rights Act of 1964 outline the legalities as well as liabilities and penalties involved.  

At the state level, the Department of Labor issues specific practices that must be followed, and defines how violations are addressed. 

Understanding these laws and statutes can take time and HR departments of small businesses should be prepared to do what is necessary to remain compliant.

But in general, any FCRA compliant company can be trusted to conduct the background checks and outline your responsibilities for when a background check failed

However, if you choose to run the background check yourself, using free state and federal resources, these laws still apply and are enforced by the Equal Employment Opportunity Commission (EEOC).

Know the Types of Background Check to Run

There are several background check options available, with graduating levels of intensity. For most small businesses, a full fingerprint background check isn’t needed, but there are some basic checks that can go a long way toward ensuring that you hire the best possible candidate. These include:

  • Identity and Social Security Number Verification

  • Criminal Records Search

  • Motor Vehicle Reports

  • Education and Employment History

  • Pre-Employment Drug Screening and Reference Checks

With the exception of the pre-employment drug screening and personal reference check, all of these searches access public records, which are available to anyone.

Check Your State’s Social Media Laws

Although some small businesses are concerned with a potential employee’s social media presence, using a social media post or profile can be tricky. 

Many states have recently passed laws preventing companies from using social media as criteria for employment or continued employment. You can check the laws of the state where you operate by visiting the Department of Labor.

Create a Company Background Check Policy

When using background checks, there needs to be a written policy in place for conducting them. This includes:

  1. Writing the policy (or using an example template) so that it complies with all relevant laws.

  2. Making the policy apply to all applicants. The company-wide process shouldn’t have any exceptions and every person in the company should have a copy.

  3. Explaining the types of background checks will be used for which positions. For example, an office employee may not need to undergo a MVR report check, but delivery personnel will.

  4. Ensuring that the policy is explained to all applicants, and that you obtain written consent for the background checks to be performed.

  5. Including that reports are kept for one year, then disposed of securely.

Running background checks can help improve your small business hiring success. By ensuring that your policy complies with federal and state laws, and that you run the right types of background checks, you can employ tools that will reduce costs and improve productivity.