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Using Employee Background Checks Wisely

Posted by Ryan Howard on Fri, Jun 15, 2012

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During difficult economic times, turnover is costlier than ever.  It's estimated that the cost of replacing each employee now runs about $17,000.  This, of course, means that a hiring mistake can be costly even if the employee doesn't file post-separation action (e.g., discrimination claim or wrongful termination suit).

Let's remember we are talking about "human resources" here, sometimes referred to as "human capital".  In order to protect the company's investment in the assets that are its employees, H.R. professionals are increasingly relying on tools designed to help ensure that only the "best" candidates are selected (and by best we mean those who are likely to develop into good employees, not cause you reason to question why you do what you do in the first place!).   Among the most popular and effective of those tools is employee background screening. 

While of great benefit to employers, employee background screening, also known as pre-employment screening and background checking, can itself be the cause of costly employment-law problems if handled incorrectly. There are do's and don'ts when screening.  

Before examining some of them, review your current hiring policies (you do have formal pre-employment policies, right?).  Have them reviewed by competent legal counsel to make sure they are compliant with applicable state, local and federal employment legislation/regulations, which change.  Frequently.  To withstand unwanted scrutiny (or, worse yet, an unfavorable administrative tribunal or court decision), your policies should be clearly defined, fair and balanced, nondiscriminatory and  consistently applied

Employee background screening helps protect the company from negligent hiring claims.  As well, background checks will lessen the chance that you'll hire someone who poses a risk to the safety, health and well-being of your workforce, your customers, vendors and business partners. 

Here, then, are some factors to incorporate into your employee background screening process: 

  1. Train.  Failure to appropriately train each individual involved in the screening/hiring process is a recipe for disaster, potentially laying waste to even the best written policy and procedures.
  2. Check. Double check.  And advertise that your company uniformly conducts employee background screening; it'll help keep the less-desirable candidates from applying in the first place.
  3. Always, always, ALWAYS verify the identity of your applicants.  Untrue or inaccurate information regarding someone's identity will likely render any background check useless.
  4. Obtain consent.  As obvious as it may seem, always obtain the prospect's permission to engage in any and all aspects of your pre-employment screening.  This is especially critical when conducting a pre-hire credit check or criminal background check. 
  5. Check referencesEvery single time (no matter how senior an applicant might seem).  It's hard, we know.  Prior employers are loathe to provide information other than dates of employment and position held, and that's assuming someone will even talk to you.  Keep checking.   This might help:  When going over the list of references during an interview, ask the applicant to describe, in detail, what each reference is likely to say about him/her when you contact that person.  You'll often find the responses to be illuminating.  In other words:  Do not take any resume at face value.
  6. If your organization engages in work that warrants ongoing employee screening (e.g., a financial services firm), then use it.  Periodic vetting of employees can deter dishonesty; those with nothing to hide won't mind. 
  7. "We're really sorry but...."  Have a policy for handling negative background checks.  Which results automatically disqualify a candidate from further consideration?  Which don't?  Who decides?  How are those decisions conveyed to the applicant?  Do you send proper adverse action notices?
Employee background screening:  Use it wisely, use it consistently, but use it! 

Topics: Employment Background Screening