Careers Succeeding at Work How to Use Background Checks to Pre-Screen Prospective Employees 5 Keys to Doing a Back Ground Check on Potential Employees Share PINTEREST Email Print Sam Diephuis / Getty Images Succeeding at Work Human Resources Hiring Best Practices Job Search Resources Glossary Employment Law Employee Motivation Employee Management Management Careers Management & Leadership Employee Benefits By Susan M. Heathfield Susan M. Heathfield Susan Heathfield is an HR and management consultant with an MS degree. She has decades of experience writing about human resources. Learn about our Editorial Process Updated on 12/05/19 Background checks are a critical component in hiring. When it comes to your business, you cannot afford to make a poor hiring decision. In fact, for most smaller and mid-sized businesses, one bad hire can make the difference between success and failure. One of the biggest expenses for businesses is locating, interviewing, and training new talent. Prescreening candidates through background checks can reduce these costs by identifying those candidates that are likely to cause problems. Not only do background checks cut down on costs, but background checks also proactively protect your company. Protect Your Legal Liability With Background Checks Small businesses often forgo candidate background checks for one of two reasons. The first is the false sense of security and trust that small business owners develop working closely with their employees. The second is that most business owners don't understand the legal liabilities associated with candidate screening and background checks. Outsource Your Background Checks While employers can do background checks on their own, it may be worth considering a company that specializes in background screening for hiring purposes. This can ensure the thoroughness and reliability of background checks. Before choosing a company to help you with background checks, be sure that the company will follow the guidelines set by the Equal Employment Opportunity Commission (EEOC). A reputable company that provides background checks will also make sure that the data you receive is current, accurate and in line with regulations. In order to perform background checks, you must have the potential employee’s consent. You might consider having this permission given on your job applications to reduce any wait times between correspondence. Many businesses use this technique. Purchasing instant public records, i.e., a webpage that provides information gathered from the web is not appropriate for doing potential employee background checks. If you confirm your hiring decisions are based on searchable public record data, you may be more likely to be held liable for employee misconduct via the theories of negligent hiring and negligent retention. Negligent Hiring and Negligent Retention These two theories hold that employers are responsible for the actions of their employees if they did not reasonably attempt to identify potential dangers to others when hiring, or did not take immediate action to remove an employee who has caused harm or been convicted of a crime in an area that can be proven to be relative to the business. For example, hiring or keeping a delivery driver with a DUI conviction is not illegal, but could lead to liability. This is because it demonstrates bad judgment on an employer's part. If the driver hits another car and is found to have been drinking the company may be held liable. If the DUI conviction was received while employed as a delivery driver, and the employer took no action they could be liable in the same circumstance. Fair Credit Reporting Act Requirements The Fair Credit Reporting Act (FCRA) was set up to protect consumer information. However, the act includes a sub-section that discourages employers from running a credit check by requiring consent from the applicant. If an employer makes a hiring decision based on information found from the credit check, they must inform the job seeker of the source used for the credit check. Background Checks via Web Searches While it is not illegal to conduct a social media search on your prospects, it is a controversial topic. Some view it as a breach of privacy while others do not. You may want to consider obtaining permission from the applicant, or at a minimum letting them know you may be looking. A social media search can be a supplement to background checks because you can obtain insight into an applicant's life that may or may not be beneficial to your company. Don’t just look for reasons not to hire the potential employee, however; you might actually confirm your hiring decision. You may find that, in addition to their positive background checks, your potential employee is passionate about their profession and that your company could benefit from their experience and talent. Only Pay for the Information You Need A common practice for background check providers is to encourage businesses to purchase every piece of information they can find about a potential employee. There may not be a need for this drastic of a measure unless your business needs to know an applicant's complete background. These services are quite expensive, so be sure it is necessary for you to have the information. For example, if you are hiring a teleworking employee to program your website a reference check, criminal background check, and a technical certification check should be all you need.