Before buying a car, consumers typically take it for a test drive. Before buying a house, they have it inspected. Before purchasing stock, they consult a broker. Now, finally, business owners are taking the same care, research and time commitment when hiring new employees through a simple background check.
“Pretty much everybody is doing it,” says John Gilbert, chief operating officer at easyBackgrounds, a Newfields company that performs background checks. “It’s rare when you come across a business that’s not.”
Background checks, whether performed through a third party, in-house investigation or simple search of public records, are used for a variety of reasons, from looking into a candidate’s criminal history to checking credit in appropriate situations such as financial advisers. “The companies that do it do see the benefit,” says Jennifer Parent, director and chair of the litigation department for the McLane Middleton law firm in Manchester.
According to A Matter of Fact, a founding member of the National Association of Professional Background Screeners, 39 percent of all background checks, 10 percent of county criminal record checks, 10 percent of education verifications, 23 percent of employment verifications and 44 percent of driving record checks nationally generated serious flags.
Matt Nagler, a managing partner at Bank W Staffing in Bedford, says almost every company he works with requires some kind of screening and estimates about 20 to 30 percent use a full background check as part of their hiring decision.
Protect Your Investment
However, background checks can be used for more than just hiring. A background search can also provide the employer with the information that protects businesses from costly legal action.
For example, assume a truck driver is hired without a background check and then gets into a multi-vehicle accident while on the job. Police at the scene arrest the worker for driving under the influence, and it turns out that person had committed two past DUI violations. Because there wasn’t due diligence to ensure this person was a fit candidate for the job, the employer could be held liable for the accident.
Furthermore, a casual approach to a background check is inadequate. If an employer opts to run a background check, it must be done properly. Both Gilbert and Parent agree policies, such as required checks for certain positions, must be in place, and they should have the candidate’s written consent before doing so.
Gilbert says the cost to run a background check is typically less than 1 percent of what an employee will be paid. He says the most common services his company provides are criminal checks, as well as employment and education verification. The firm also checks for any relevant sanctions such as debarment against a candidate, credit reports and driving history.
The amount of time needed to conduct a background check varies, depending on ease of access to information, how records are stored and response time from resources to agency, according to Gilbert. He says the average turnaround is 24 to 48 hours.
Play by the Rules
There are also rules regulating background checks and, if a “protected category” pops up during a background check, it may not be able to be used against a candidate.
These categories are defined by NH statute RSA 354-A and include age, sex, race, color, marital status, physical or mental disability, religious creed or national origin.
Employers are subject to the Fair Credit Reporting Act (FCRA) when they use third parties to perform background checks on job applicants or employees. That means that any time background information is used to make an employment decision, regardless of how the information is obtained, the employer must comply with federal laws outlined in the FCRA that protect applicants and employees from discrimination. That includes discrimination based on race, color, national origin, sex, or religion, disability, genetic information (including family medical history), and age (40 or older). These laws are enforced by the Equal Employment Opportunity Commission.
The FCRA requires employers to notify applicants or employees before ordering a background check or taking an adverse employment action based on the results of a background check. And, prior to ordering a background check, an employer must obtain consent, per the FCRA. Failure to comply with these requirements can result in civil penalties, punitive damages and even attorneys’ fees.
Employers may use their own employees, such as an HR department, to conduct background checks by verifying references or credentials without invoking FCRA regulations. But, once a business hires an outside agency (other than a government law enforcement agency like the state police) to conduct a background check, FCRA requirements are in effect.
“It becomes a very challenging effort to stay ahead of these requirements,” says Gilbert, as there are so many bases to cover, including federal, state and local regulations.
That’s just one reason Parent says some companies run background checks through a third party. Nagler uses a third party for his background checks because they have better systems in place to gather the information, can be more extensive if needed and guarantee compliance with federal regulations.
Ban the Box
While businesses are within their legal rights to conduct background checks, some question whether they should. There is an international campaign to remove check boxes on applications that ask about criminal records. Proponents of the movement, called Ban the Box, argue that employers are helping to increase recidivism by not employing those with a criminal past.
Ban the Box is spreading rapidly, with 25 states and more than 150 cities and counties having such laws. Though NH is not among them, employers in the state are not immune from the movement. When it comes to hiring, the law defers to the most stringent requirements, so if a candidate is from a state with Ban the Box in effect and applies for a job in a state where it is not, the employer must adhere to the other state’s Ban the Box requirement.
While employment screening processes can be long, stressful and expensive, background checks can be an effective tool in helping to make the right hire.
Current Issue - April 2024