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How to Conduct Compliant Employee Background Checks on New Hires

Posted by Ryan Howard on Fri, Sep 01, 2017

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If your business is hiring new employees, there are certain steps to follow to ensure a smooth process for both employer and job seeker.  Employers are legally regulated to prevent hiring discrimination, maintain security and privacy of an applicant's information, and provide a safe workplace environment.  If a candidate is not hired, especially due to the results of a background check, they could take an employer to court if the hiring process wasn't ethical or compliant. Hiring the wrong employees consumes more resources leading to lower employee morale and more time and money required to recover from employee turnover. 

To conduct compliant employee background checks on new hires, we've compiled this easy-to-follow guide. 

How to conduct compliant employee background checks

1. Know the estimated cost of each screening report and establish a budget based on your annual turnover and new hires.

Before hiring new employees, your business should have an expectation of how many employees they will be hiring each year. Is the business plan to continue growth or downsize the company? Is there a high turnover rate in your industry or business? Are you hiring international employees? 

With regards to cost of a background check, the costs will vary based on which reports will be run and if there are additional access fees for those reports. We've written a separate post detailing the general cost of a background check.

2. Identify the types of background checks you’ll need and create standard screening packages for each job function or department. Job relatedness and consistency are key.

The best way to determine the cost of a background check is to understand which screens are relevant to your new hires. Every job function or department is different and may require different levels of security checks or skills. As an example, if your new hire will not be driving, you may not require an examination of their driving record. The best way to keep background check costs down is to implement a job-related screening process. This process will prevent hiring managers from running unnecessary background checks, create efficiency and consistency.

3. Provide the candidate / employee with the proper Consent and Disclosure forms.

Before screening any new hires or employees, they must give written consent because their privacy rights are protected under the Fair Credit Reporting Act (FCRA). The disclosure and consent forms must be separate from the job application and clearly state that the applicant is giving authorization for an employer to run a background check. The employer must also make clear that the information obtained in the background check will be used in the decision to hire or not hire.  The applicant must also be given a copy of their Summary of Rights under the FCRA. VeriFirst offers a free applicant consent portal so the consent and screening process is done completely online.

Free: Online Applicant Consent Portal

4. Run the report.

The best way to obtain background screening reports is to work with a professional screening company. To determine the best partner, do some research on each background check company, including looking at their background. A full-service background check provider will adhere to FCRA compliance as well as verify the data they provide your company is accurate and reliable. An accredited and experienced partner will offer transparency to the screening process, including suggestions to improve the timeliness of the reporting.

5. Review results for accuracy. 

If the new hire's potential to work for your company is dependent on a background check, the report must be accurate. Your full-service screening partner should be able to verify the data as well as explain how to read a background check.  

Download our free Background Check Decision Matrix -

6. If the report is clear or otherwise meets your hiring criteria, your work is done.

Congratulations! Your new hire has passed all screening requirements set forth by your business to be hired as an employee. Workforce eligibility is the next step in the process (move on to step 8). The onboarding process can begin. 

7. If the report contains results that disqualify your candidate and you choose to deny employment or promotion, this is called Adverse Action.

Employers must follow the FCRA regulations for notifying the applicant or employee of Adverse Action. A Pre-Adverse notice will need to be sent to the applicant and include a copy of the completed background screening report and their FCRA Summary of Rights. This notice informs the candidate that something on their background check has raised a red flag in your hiring process and gives them time to dispute the data. If the candidate does not dispute the results after 5 business days, the next step is to send them a final Adverse Action notice informing them that they will not be hired.

8. Onboarding and verification of workforce eligibility.

Employers are required to verify an applicant's eligibility to work in the United States. Form I-9 is typically used for this but many employers will use an electronic goverment program called E-Verify. E-Verify is an online interface for employers to the USCIS (U.S. Citizenship and Immigration Services) database to reduce hiring of illegal immigrants. Full service screening agencies may offer workforce eligibility in addition to typical background checks. VeriFirst is a certified employer agent with the U.S. Department of Homeland Security and USCIS and includes the service as part of our integrated applicant consent portal and background check platform

To add more ease and compliance into your hiring process, watch the video below to learn more about VeriFirst's ComplianceCloud portal. 


Topics: Employment Background Screening, Hiring and Recruiting