Businesses can suffer losses from employees who commit fraud, steal company property or otherwise damage the brand. These losses can be even more devastating for small and startup companies that may not have the resources to absorb them.
Background checks verify employment history, education and professional licenses. They also help employers comply with federal, state/provincial and local laws such as the Fair Credit Reporting Act and guidance from the EEOC.
They Help You Hire the Right Person
A background check involves a deep dive into an applicant’s past using third-party resources to look at public records, law enforcement, credit bureaus and academic or work history. This step helps to make sure the person who you are hiring is who they say they are and doesn’t hide anything from your company in their application.
Depending on the role, it may also include checking government-issued credentials such as licenses and teaching or medical credentials. It will likely include a motor vehicle record, which uncovers any accidents or citations a candidate has had as well as driving-related convictions. It can also include a check of education, verifying the dates that an applicant attended school and their majors and degrees earned.
It’s important to remember that employers can’t ask for extra background information if they don’t offer you the job, as it could be a form of discrimination. However, they can ask for medical information in limited circumstances if they need to determine whether you are safe or not to perform the job safely.
They Help You Avoid Legal Issues
As a business owner, you must follow strict guidelines when it comes to background checks. This is because there are a number of laws that prohibit discrimination based on certain protected classes (race, religion, national origin, sex, age). It’s also illegal for employers to make hiring decisions based on criminal records unless they’re directly related to the position and your business.
You can also be sued for negligent hiring if you fail to conduct a background check and an unsuitable employee ends up jeopardizing your organization or customers. Taking the time to conduct a background check can help you avoid these legal issues.
In addition, some positions require a federal or state-specific security clearance. This requires a more in-depth background check and may include things like restraining orders, even if they’ve lapsed. Using a qualified and reputable company to run background checks is crucial for your business’s compliance with these regulations.
They Help You Save Money
When your team is comprised of reliable, high-character people, it reduces your business’ liability and can help you avoid unnecessary lawsuits. This is especially important for businesses that rely on their employees to work with sensitive information or handle financial assets. Background checks also show your insurance providers that you’re taking precautions to mitigate risk and can lower your premiums.
Hiring the wrong person can be costly for a small business, and that cost goes far beyond the initial investment in recruiting and training a new employee. In addition to the lost productivity and morale of a bad hire, the legal costs associated with negligent hiring claims or workplace violence can be devastating. By budgeting for background checks and working with a trusted screening provider, you’ll save your organization from making costly hiring mistakes. The return on investment from a professional background check is significant and can be well worth the initial outlay. It’s an investment in human capital that pays for itself by improving the quality of your workforce and reducing the cost of turnover.
They Help You Avoid Mistakes
When businesses don’t perform background checks, it can lead to lawsuits from applicants and employees. These lawsuits can cost a company a significant amount of money and damage its reputation. Background checks help mitigate these risks by making sure that all candidates are being treated fairly and equally.
It’s also important to have a standardized screening process. This ensures that the same searches are being conducted on all candidates and that no important details are being missed. For example, if you’re hiring for a nursing position, it’s a good idea to include a search of state licensing databases and employment exclusion and debarment lists.
Another common mistake is failing to check social media accounts. These can reveal important information about an applicant, such as their past criminal history or whether they’re a risk for your business. This is one of the easiest ways to avoid a bad hire. A background check can also help you weed out applicants who are lying on their resumes by verifying important data points, such as their education and experience.