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How to Use Employee Background Checks Wisely

Posted by Ryan Howard on Fri, Jul 05, 2019

How to use background checks wisely

No matter the size of the business, turnover is costly.  It's estimated that the cost of replacing each employee is about three fourths of their salary.  This, of course, means that a hiring mistake can be costly even if the employee doesn't file post-separation action such as a discrimination claim or wrongful termination suit.

In order to protect the company's investment in the assets that are its employees, HR professionals are increasingly relying on tools designed to help ensure that only the "best" candidates are selected. They expect that these candidates are already perfect or are likely to develop into great employees. Among the most popular and effective of those tools is employment background screening. 

Here are best practices for using employment background checks wisely.

Consistent and Fair Hiring Policies

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

 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. Remember that these laws change all the time so you'll have to really pay attention to those that may apply to your business.  

To withstand unwanted scrutiny or court decision), your hiring 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. 

Do Background Checks Right

Although your business aims to hire the best, you do need to make sure you're doing your best during background checks. Here are some factors to incorporate into your employment 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 your candidate'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?
    Sample Adverse Action Notices
Employment background screening can be a powerful tool for hiring the best employees for your business. It can also be costly and ineffective, if not handled correctly.  Use it wisely, use it consistently, but use it! 

Topics: Employment Background Screening